How Houthi Attacks in the Red Sea Threaten Global Shipping
The Houthi strikes are only the latest in a series of disruptions that have highlighted the interconnected nature of shipping and its crucial role in the global economy. In 2019, Iran attacked several oil tankers in the Strait of Hormuz, leading many freight companies to opt for the Cape of Good Hope route. In 2021, a ship ran aground in the Suez Canal, holding up $10 billion in goods each of the six days the canal was clogged. Most recently, a drought in Panama has compounded shipping woes as the country’s namesake canal, through which 5 percent of global trade flows, is operating at a fraction of its usual capacity.
But as of early January 2024, these trials have yet to produce major price increases for consumers, especially in energy markets. The price of brent crude, a U.S. benchmark, remains lower than the October average, though it has flared after major strikes. Europe is likely to feel economic stress sooner than the United States, CFR Fellow Zongyuan Zoe Liu says, because the Red Sea is the only route to the Suez Canal, which links some of the largest European consumers of tradable goods to their Asian suppliers.
What can be done?
To ensure freedom of navigation, long a primary goal of U.S. foreign policy, the United States has spearheaded a twenty-country naval task force to protect commercial ships in the Red Sea and the neighboring Gulf of Aden, and deployed aircraft carriers to the region. The coalition approach was also applied during the 2019 spate of attacks. However, that effort included regional powers such as Saudi Arabia and the United Arab Emirates, who experts say are unlikely to join the operation today.
Skeptics of this strategy argue that a defensive posture alone is unlikely to deter Houthi attacks. The Houthis are using relatively inexpensive weaponry, including drones, to wreak costly damage, and naval vessels cannot escort every commercial ship. As a result, “it’s harder now than it’s ever been” to protect commercial vessels in the Red Sea, says CFR Military Fellow John P. Barrientos, who has commanded ships in the region.
Some Pentagon officials and independent analysts argue that the United States should go on the offensive against Houthi positions in Yemen, citing a track record of deterrence. After Houthi rebels attacked commercial and U.S. military vessels in 2016, Washington responded with strikes of its own, and the Houthis stood down. “If the United States wants to protect freedom of navigation in the Red Sea and its environs, it is going to have to take the fight directly to the Houthis,” writes CFR Senior Fellow Steven A. Cook.
But such strikes could raise the risk of regional conflict, including with Iran, which has sent its own warship into the sea. The Houthis openly relish the idea of war with the United States, and unlike in 2016, they are no longer mired in daily conflict with their northern neighbor Saudi Arabia. Every option the West could take therefore has “serious downsides,” the Brookings Institution’s Bruce Jones writes. “Tensions and bad choices abound in the Red Sea—but they are also a harbinger of tougher choices and turbulent waters ahead.”
Noah Berman is Assistant Writer/Editor, Economics, at CFR. This article is published courtesy of the Council on Foreign Relations (CFR).
