Geopolitical Risk in the Red Sea
Geopolitical Report ISSN 2785-2598 Volume 38 Issue 7
Author: Silvia Boltuc
The US and British militaries conducted a significant retaliatory strike against Houthi forces in Yemen, targeting over 60 sites. President Biden emphasised that these strikes were in response to Houthi attacks on international maritime vessels, posing threats to personnel, civilian mariners, and trade and increasing the regional geopolitical risk.
The coordinated assault to degrade Houthi military capabilities and safeguarding the Red Sea involved multiple nations, albeit notably absent of participation from neighbouring countries in the Red Sea region.
The absence of key Arab nations, including Egypt, UAE and Saudi Arabia, poses challenges to the effectiveness of the coalition, while Saudi Arabia’s strategic considerations, rooted in diplomatic overtures towards the Houthis and Iran, explain its non-participation.
The criticality of Red Sea maritime routes, also for China’s trade, and Russia’s growing relations with Arab nations, underscores the broader geopolitical implications and risks associated with the US-British bombings.
Key Findings
- The counterattack on Houthi forces in Yemen has the potential to escalate the existing conflict between Israel and Hamas to a wider scale, potentially spreading to the broader Middle East.
- The ‘Red Sea coalition’ lacks participation from neighbouring Arab countries, with only Bahrain joining the effort.
- Saudi Arabia, despite significant Red Sea reliance, refrained from participating, showcasing a strategic focus on diplomatic solutions and regional stability.
- China’s significant reliance on Red Sea maritime lanes, where 60% of its exports to Europe traverse, highlights its vested interest in ensuring uninterrupted shipping routes.
- Oil prices rose more than 2.5% as the United States and Britain carried out air and sea strikes on Houthi military targets in Yemen.
Background Information
On October 19th, 2023, Yemen’s Houthi movement initiated a series of attacks, targeting the ships in the Red Sea linked to Israel. The Yemeni rebels asserted unwavering support for the Palestinian cause.
The United States assembled a multinational naval coalition to help safeguard commercial traffic from attacks by Yemen’s Houthi movement, known as Operation Prosperity Guardian.
The hesitancy of numerous nations, including certain NATO members, to join the coalition, raises concerns about the effectiveness of it. The root cause of this lack of confidence lies in the understanding that achieving a ceasefire in Gaza would be sufficient to halt the crisis in the Red Sea, a feat within the capabilities of the United States. However, Washington’s ongoing support for Israel’s bombing of Gaza has led to a division in Western support.
Analysis
The absence of key regional players in the coalition underscores the complexity of Red Sea geopolitics. Saudi Arabia’s non-participation reflects a nuanced approach, balancing security concerns with a desire for regional peace and stability.
The Houthis have been engaged in a prolonged conflict with the Saudi Arabia-backed Yemeni government. Recent positive diplomatic engagements between Riyadh and the Houthis indicate a Saudi effort to seek regional stability, aligning with Vision 2030 goals, tourism initiatives, and preparations for hosting major events such as the FIFA Cup.
The Houthis have previously targeted cities in Saudi Arabia, and there is a risk of renewed attacks if Riyadh decides to join the coalition.
Moreover, Riyadh and Tehran recently normalised relations after years of tension, a development that could face obstacles if Saudi Arabia were to join the coalition conducting airstrikes in Yemen.
Arab nations are grappling with a challenging situation. Notably, Egypt, which holds control over the Suez Canal, has refrained from joining the international coalition. The Arab League consistently calls for a ceasefire in the Israeli conflict with Gaza, while Western nations predominantly express strong support for Israel.
In addition to the Western front and Arab players, China’s dependence on Red Sea shipping routes adds a layer of global significance to the conflict, influencing international decisions and complicating regional dynamics. 60% of China’s exports to Europe traverse the Red Sea. While it aligns with China’s interests to weaken US maritime capabilities, it is crucial for China and its investments that maritime routes operate efficiently.
Significantly, the UN Security Council resolution urging an immediate cessation of Houthi attacks on shipping in the Red Sea encountered abstentions from Russia and China. This highlights a nuanced approach by these superpowers, both of which have witnessed a considerable increase in relations with Arab countries in recent years.
Geopolitical Risk Assessment
The non-participation of key regional actors introduces risks of limited effectiveness in the coalition’s operations. The Saudi-Houthi diplomatic efforts, while positive, may face challenges, and China’s interests could be jeopardised if conflict escalation disrupts vital shipping lanes.
The bombing carried out by the United States and Britain, indeed, poses a risk of escalating the conflict in the Middle East, even though it is specifically targeted at certain locations within Yemen. Nevertheless, there is a concern that it could impede the ongoing efforts made in recent years to stabilise the country, which has been devastated by a prolonged civil war.
On January 12nd, 2024, after the strike, oil prices rose more than 2.5%. A sudden oil price shock has various economic consequences, including inflationary pressures, reduced consumer spending, a global economic slowdown, adverse impacts on energy-intensive industries, currency depreciation for oil-dependent nations, heightening geopolitical tensions. Persistent tensions in the Red Sea or a broader conflict in the Middle East would significantly impact oil markets, triggering a substantial geopolitical shock.
Last, the reputations of both Arab countries and the United States are on the line. They are confronted with escalating pressure from their populations to secure a ceasefire in Gaza. Launching attacks on the Houthis, who support Palestine, may have repercussions on internal support. Simultaneously, the perceived power of the United States in the Middle East has recently been doubted. The results of this operation will undoubtedly play a crucial role in shaping the future of U.S. involvement in the region.
Scenarios Analysis
- Regional Stability Scenario: Diplomatic/military efforts result in a de-escalation in the Red Sea, gradually paving the way for the restoration of regular transit.
- Limited Coalition Effectiveness Scenario: Without active regional participation, the coalition’s effectiveness remains constrained, and diplomatic complexities persist.
- Global Economic Impact Scenario: Escalation of conflict disrupts Red Sea shipping routes, impacting global trade and oil markets, triggering a substantial geopolitical shock.
Conclusion/Recommendations
The situation demands continued diplomatic engagement to address regional dynamics comprehensively. A balanced approach, considering geopolitical complexities, is crucial for achieving sustained stability in the region and safeguarding global economic interests.
The current prevalence and intensity of global conflicts should prompt international actors to reassess overly aggressive policies, as they pose a risk of uncontrollable consequences for global stability. The shift towards a multipolar world necessitates increased adherence to international law and a commitment to diplomatically resolving crisis events.
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