The battle over shipping lanes tips toward the Houthis

The Houthis have succeeded throughout the period following the initiation of their military support for Gaza in disrupting commercial shipping passing through the Red Sea to countries they consider hostile; and the military operations of the US alliance inadvertently aided them in achieving their objective.
26 March 2024
The Houthis have proven that they hold the key to navigation in the Red Sea, forcing other actors in the region, including Israel, to grapple with this unanticipated development. [AP]

Since October 2023, the Houthis have continued to mount military operations in the Red Sea to block the passage of ships destined for Israeli ports, in an attempt to force Israel to end its aggression on the Gaza Strip.

Houthi efforts have successfully disrupted maritime traffic in the Red Sea, with global implications. Container traffic has declined by some 35 percent, and insurance costs for ships that continue to use the Red Sea lanes have increased dramatically, up to 0.5–0.7% of the value of the shipment, compared to 0.07% prior to Tufan Al-Aqsa. Several shipping companies have suspended Red Sea operations, forcing them to reroute around the Cape of Good Hope, also driving up costs due to the extra 10–15 days this adds to the journey.

Houthi successes have bolstered the group’s strength and cachet. They are no longer seen as a sectarian Yemeni faction subordinate to Iran, which has burnished their domestic political legitimacy and so improved their ability to mobilise and recruit. In geopolitical terms, the Houthis have proven that they hold the key to navigation in the Red Sea, forcing other actors in the region, including Israel, to grapple with this unanticipated development. Having seen their performance, Iran will no doubt seek to foster closer ties. Due to all of these factors, the Houthis are able to draw on greater political, financial and military resources in their campaign.

As Houthi operations have been undeterred, the response to them escalated. Initially, the United States mustered an international coalition to carry out defensive operations in the Red Sea; and in early 2024, the United States and United Kingdom launched Operation Poseidon Archer, taking the battle inside Yemeni territory. The United States has focused on airstrikes designed to erode Houthi military capabilities, hitting drone stores, missile caches and launch pads, and weapons manufacturing plants. Thus far, however, Poseidon Archer has not put an end to Houthi operations. Airpower alone—and the United States is unlikely to commit ground forces to Yemen—is of limited utility in an asymmetric confrontation like this, in which Houthi positions are largely unknown and undetectable. In contrast, armed with relatively low-cost weaponry and the element of surprise, the Houthis are able to penetrate US coalition defenses. This suggests that the Houthis will be able to continue, and even expand, their operations for the foreseeable future.

Given this context, the battle in the Red Sea could play out in three different ways. First, the status quo may hold as US military operations continue at their current level, though airstrikes may be scaled down over time as the Houthis adapt and move equipment into underground bunkers. Shipping costs will remain higher than before the war, with consequences for European consumer markets that will become more severe as time passes.

Second, the war on Gaza could end, if the US concludes that its support for Israel has become too costly domestically and internationally and consequently suspends its supply of weaponry, at which point the Houthis, too, will suspend their operations. There are indications that US congressional and presidential backing for Israel’s war is flagging. Cracks may also widen within Israel, toppling the Netanyahu government and bringing in a new leadership that accepts a permanent ceasefire. But this seems an unlikely prospect in the near term given the Israeli-American consensus on the need to defeat Hamas.

Third, the confrontation may escalate precipitously if the United States intensifies airstrikes to target Houthi political and administrative institutions and assassinate military commanders. The Houthis would likely escalate in turn, perhaps targeting naval military assets and US and allied troops, or bringing Red Sea shipping to a complete standstill. The Houthis could also damage the underwater data cables in the Red Sea, which carry 25% of data flows between Asia and Europe. This scenario is not likely. The US is eager to contain the fighting to avoid another Middle East quagmire, and its military operations in the Red Sea lack domestic support. An escalation could also send a major shock through the global economy and financial markets, triggering a new round of inflation and bolstering right-wing anti-democratic forces. Additionally, it might spur other powers feeling the consequences of the disruption, like China, to pressure Israel to end its war or challenge the US position on the Israeli occupation.

*This is a summary of a policy brief originally written in Arabic available here.