The Suez Canal is a critical chokepoint and vital global trade route, handling roughly 12% of the world's seaborne trade. However, the ongoing conflict in Yemen poses a serious threat to the stability and security of this maritime lifeline.
In this video, we explore how the fragile situation in Yemen, including the blockade of the port of Hodeidah and attacks on shipping in the nearby waters, is creating a crisis for the Suez Canal. We examine the potential economic fallout if the Suez Canal were to be disrupted, including supply chain bottlenecks, skyrocketing shipping costs, fuel price shocks, and widespread shortages of essential goods around the world.
Through expert interviews and analysis of trade data, we unpack the geostrategic significance of the Suez Canal, the delicate balance of power in the region, and the urgent need for diplomatic solutions to safeguard this critical artery of global commerce. This video serves as a wake-up call about the vulnerability of the global economy to regional conflicts and the importance of ensuring the uninterrupted flow of goods through the Suez.
In this video, we explore how the fragile situation in Yemen, including the blockade of the port of Hodeidah and attacks on shipping in the nearby waters, is creating a crisis for the Suez Canal. We examine the potential economic fallout if the Suez Canal were to be disrupted, including supply chain bottlenecks, skyrocketing shipping costs, fuel price shocks, and widespread shortages of essential goods around the world.
Through expert interviews and analysis of trade data, we unpack the geostrategic significance of the Suez Canal, the delicate balance of power in the region, and the urgent need for diplomatic solutions to safeguard this critical artery of global commerce. This video serves as a wake-up call about the vulnerability of the global economy to regional conflicts and the importance of ensuring the uninterrupted flow of goods through the Suez.
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TVTranscript
00:00As the world's attention is still largely focused on the brutal war being waged in Gaza
00:04that's already claimed the lives of tens of thousands of people,
00:06something else is happening nearby to the south in the Red Sea
00:09that has the potential to escalate the war between Israel and Hamas
00:12into a greater Middle East-wide conflict
00:15that's already severely affecting the entire global economy.
00:18You see, after Israel initiated its full-scale invasion of Gaza,
00:21the Houthis, a Shia Muslim military organization in Yemen that's funded and armed by Iran,
00:26declared their full, unwavering support for Hamas and the Palestinian cause against Israel.
00:31But, geographically located about 1,600 kilometers away from Israeli territory
00:35and more than 1,800 kilometers away from the main fight going on in Gaza,
00:39the Houthis were incapable of participating in the war happening around Gaza directly.
00:43And so they decided to begin intervening on the side of Hamas more indirectly.
00:47In November of 2023, the Houthis declared that they would begin attacking
00:51every single ship they could find sailing nearby to their territory in the Red Sea
00:55that was linked in any way to Israel,
00:57including any ships traveling to or from Israeli ports,
00:59any ship with Israeli ownership, any ship flying an Israeli flag,
01:02or any ship with an Israeli crew.
01:04And then, they further stated that these attacks on Israeli shipping would continue indefinitely
01:08until Israel fully withdrew from Gaza and ended its war against Hamas.
01:12But, there was a slight problem with the Houthis' plan.
01:15You see, the ownership structure of the globalized 21st century merchant shipping fleet
01:19is a very complicated business.
01:21Merchant ships very often travel between origin and destination in different countries.
01:25The ownership structure of the ship itself is often divided between multiple different nationalities
01:29that may have nothing to do with where the ship's origin or destination is.
01:32The flag of call that the ship flies may be completely different altogether,
01:35while the crew that's operating the ship may be of completely different nationalities
01:38from everything else as well.
01:40Determining which merchant ships operating on the world's oceans are considered Israeli or not
01:44is not as simple a task as it appears at first.
01:47But that didn't dissuade the Houthis from deciding to intervene anyway
01:50by attacking whatever ships they determined were Israeli.
01:53Their attacks began on the 19th of November, 2023,
01:56with a brazen hijacking of an empty car carrier sailing through the Red Sea
02:00that was traveling from Turkey to India.
02:02The Houthis raided the ship with a helicopter
02:04that transported a heavily armed special forces squad onto the ship's deck,
02:07who quickly managed to subdue the ship's crew
02:10and rerouted it back to the Houthi-controlled port of Hodeidah in western Yemen.
02:14The ship was called the Galaxy Leader,
02:15and its registered owner was a company known as Galaxy Maritime Limited
02:18that's based in the Isle of Man, a UK dependency.
02:21The ship was being chartered by a Japanese company,
02:23its flag of call was based in the Bahamas,
02:25and its 25 crew members hailed from the Philippines, Romania, Bulgaria, Ukraine, and Mexico.
02:29The only connection that the ship had to Israel
02:31was that the company that owned the ship, Galaxy Maritime Limited,
02:34was further owned by another company known as Ray Car Carriers,
02:37which is a business that's co-owned by a well-known Israeli businessman and billionaire
02:40named Abraham Ungar, who has a current net worth of approximately 3.25 billion US dollars.
02:46Based on that, the Houthis decided that the ship was fair game to attack and hijack,
02:50and it would be far from the last.
02:52In the weeks and months that have followed after that initial attack,
02:55the Houthis have unleashed a torrent of hundreds of missiles and drones
02:58and launched further hijacking attempts against dozens of merchant ships
03:01caught sailing through the Red Sea,
03:03merchant ships that have been linked to dozens of countries from all around the world.
03:06And the missiles, drones, experience, and intelligence that they've received
03:09to launch all of these attacks have largely all come from a single source,
03:13their biggest patron, the Islamic Republic of Iran.
03:16Iran has spent years carefully cultivating the Houthis from a ragtag group of militia
03:20into a legitimately dangerous state-like military force,
03:23with a massive arsenal of guided anti-ship missiles
03:26and swarms of cheap explosive kamikaze drones
03:29that they can use to overwhelm maritime anti-air defenses with through sheer numbers.
03:34Backed by Iran, the Houthis have arguably become the most dangerous
03:37and heavily armed piracy force in modern history.
03:40And unlike the pirates before them that used to launch out from Somalia
03:43and raided commercial shipping in the Arabian Sea,
03:45the Houthi pirates control a significantly more advantageous geography
03:49to wreck the global economy from.
03:51They currently dominate the northwestern third of Yemen's territory,
03:54including most of Yemen's population and most of Yemen's coastline along the Red Sea,
03:58which gives them direct access to launching hijacking ships, missiles, and drones
04:02into one of the world's most critical arteries of globalized trade.
04:05The Red Sea itself can be thought of as the primary maritime passageway
04:09between Asia and Europe,
04:10and the passageway is bounded by two narrow gates on either side of it
04:13that regulate access through it,
04:15the Bab al-Mandeb Strait in the south between Yemen and Djibouti,
04:18and the Suez Canal in the north that runs across Egypt.
04:21The route between these gates across the Red Sea
04:24is a part of the shortest possible geographic route for merchant ships to take
04:27traveling between Asia and Europe,
04:29and so it's the preferred route of choice for container ships
04:31carrying manufactured goods and raw materials
04:33from places like China, Japan, South Korea, Taiwan, and India
04:36to take when transporting their goods to the huge European consumer market.
04:40And from another perspective,
04:41this trade route is also a major artery for the flow of global energy resources
04:45from origin to consumer,
04:47like oil and gas from places like Russia, Kazakhstan, and Azerbaijan
04:50towards Asia in one direction,
04:52and oil and gas around the Persian Gulf towards Europe in another direction.
04:56As a result, roughly 12% of the entire world's trade volume
04:59usually flows through the Red Sea on an annual basis,
05:02which includes nearly a third of the entire world's container ship traffic,
05:06roughly 10% of the world's seaborne oil,
05:08and roughly 8% of all the world's LNG.
05:11An average of 50 merchant vessels usually transit through the Suez Canal on a daily basis,
05:15and this overall makes the Suez Canal and the Bab al-Mandeb Strait
05:18the second most critical maritime chokepoint for globalized trade anywhere in the world,
05:22remaining only behind the Singapore Strait and Southeast Asia in overall importance.
05:27And all of this massive volume of trade and energy that usually flows through the Red Sea
05:31makes its overall security and stability an extremely important core interest
05:35for dozens of countries and actors from all around the world.
05:38To Russia, the Red Sea is still its most vital artery
05:41for exporting their own crude oil and LNG resources by sea
05:45towards their new primary consumers, China and India,
05:48while Kazakhstan and Azerbaijan rely on the route to a lesser extent
05:51for their own oil exports as well.
05:53From China's perspective, the Red Sea is its most vital artery
05:56to receive energy resources from Russia through,
05:58and to transport their own manufactured products to the European consumer market through,
06:03which is of similar concern to Japan,
06:05and largely why both China and Japan maintain overseas military bases in Djibouti nearby
06:10to help safeguard their own trade routes.
06:12To Qatar, the Red Sea is its primary trade route to export their LNG supplies to Europe,
06:17while to Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait and Iraq,
06:20the Red Sea is their primary trade route to export their crude oil to Europe through.
06:24To the European Union, the Red Sea is their primary trade route
06:27for receiving manufactured goods from Asia,
06:29and energy resources from the Persian Gulf through,
06:32while to the United States,
06:33Washington wants to ensure the continuous flow of maritime trade through the Red Sea
06:37to keep the global economy and globalized system that it champions and protects humming along.
06:42And Egypt, as the controller of the Suez Canal that regulates all of this trade,
06:46stands to arguably benefit the most when the trade is running smoothly,
06:49and lose out the most when the trade isn't running smoothly.
06:53Egypt's Suez Canal Authority is the guardian of the canal,
06:55and they charge various fees and tolls on every ship that passes through it,
06:59as ships usually have no other alternative.
07:01The only other possible geographic choice the ships can take to travel between Asia and Europe
07:06is the much, much, much longer way all the way around the entire African continent,
07:10around the Cape of Good Hope,
07:12a route that usually adds anywhere between 7 and 10 days of travel time,
07:15and significantly higher costs for ships to take.
07:17Under normal circumstances,
07:19the tolls and fees that Egypt charges on ships passing through the Suez Canal
07:22are still much cheaper than the alternative of sailing around the whole of Africa.
07:26And it's also usually one of the Egyptian government's largest sources of revenue.
07:30As the world began recovering from the logistical supply chain bottlenecks
07:33that were caused by the COVID-19 pandemic,
07:35an all-time high record number of ships passed through the Suez Canal
07:38during the fiscal year between June of 2022 and June of 2023.
07:4225,887 ships took the journey,
07:46which also netted Egypt an all-time high annual revenue from the Suez Canal,
07:50about 9.4 billion U.S. dollars,
07:53about enough to help fund 10% of the entire Egyptian government's operating budget.
07:58And this is all in addition to the fact
08:00that many countries can only import their goods from abroad through the Red Sea.
08:04The only maritime ports that Jordan, Sudan, and Eritrea have
08:07are all just located on the Red Sea,
08:09while Djibouti's port nearby to the Red Sea on the Gulf of Aden
08:13currently supports roughly 95% of landlocked Ethiopia's trade volume.
08:17And so, the safe, secure, and reliable flow of trade
08:20continuing through the Red Sea is extremely, extremely important
08:24to all of these dozens of countries from all around the world,
08:27both near and far from it.
08:29But, unfortunately, the Red Sea has always existed
08:32within one of the most geopolitically turbulent regions in the world,
08:35and ships are also at their most vulnerable
08:37when transiting through either side of the narrow gates on either end of it.
08:41Both the Suez Canal in the north and the Bab el-Mendeb Strait in the south
08:44can be blockaded intentionally or even accidentally,
08:47and when they are, the Red Sea passageway for global trade comes to a complete halt.
08:51This has happened twice before in fairly recent history,
08:54once for a long period of eight years,
08:56when the entire Suez Canal in the north was shut down between 1967 and 1975.
09:01During the Arab-Israeli Wars, after Israel secured control
09:04over the entire Sinai Peninsula and, in the process,
09:07the Suez Canal itself became an active front-line war zone,
09:10dividing Egyptian and Israeli zones of control for those eight years
09:14until Israel agreed to return the Sinai Peninsula back to Egypt.
09:17And another, much shorter time, when the canal became closed once again,
09:20much more recently, and much more memed about in 2021,
09:24when a container ship known as the Ever Given
09:26got blinded during a sandstorm when transiting through the Suez Canal
09:29and crashed, blocking the canal's entire width.
09:32For six days and seven hours,
09:34the ship blocked all passage through the Suez Canal like a cork stuck in a bottle,
09:38and dramatically slowed down trade between Europe, Asia, and the Middle East.
09:42Hundreds of trade ships carrying nearly $10 billion worth of goods became bottlenecked.
09:47Many ships decided to give up and rerouted the long way around Africa,
09:50and once it was freed, the Egyptian government initially demanded
09:53more than $1 billion in compensation from the Ever Given's owners.
09:57And then, on the other side of the Red Sea,
09:59the Bab el-Mandeb Strait is merely 23 kilometers wide at its narrowest point,
10:03and so it basically functions more like a two-lane highway for merchant ships,
10:07with one highway running south and the other running north.
10:11A single ship can't really get stuck and block the strait
10:13in the same kind of way that it can in the Suez Canal,
10:16but the Bab el-Mandeb Strait is located in a far more precarious neighborhood.
10:20Right now in 2024,
10:22there are still ongoing violent civil wars raging all around the strait
10:26in Yemen, Sudan, Somalia, and Ethiopia
10:29that just over the last few years have likely resulted in the deaths of more than 1 million people,
10:34while Eritrea is ruled by a ruthless dictatorship
10:37that is often considered to be on the same scale of totalitarianism as North Korea.
10:41Djibouti alone exists as arguably an island of stability within this maelstrom of chaos,
10:46and that's why foreign countries from all around the world
10:49maintain significant military bases in the country to protect their own national interests,
10:53from China and Japan to the United States, France and Italy,
10:56and probably shortly Saudi Arabia as well,
10:58while the United Arab Emirates maintains another base nearby
11:01in the self-declared state of Somaliland,
11:03and Russia is attempting to acquire a former United Arab Emirates military base in Eritrea,
11:08here at Assab, directly adjacent to the strait.
11:11For years, the biggest threat that was facing shipping going through the Bab el-Mandeb Strait
11:15were the Somali pirates, who raided merchant vessels mostly for money,
11:18hostages, and ransoms in the Gulf of Aden and in the Arabian Sea,
11:22a problem that lasted well into the 2010s until it finally began dying down after 2017,
11:27as maritime patrols from the American, UK, French, Russian, Chinese, and other international navies
11:32began conducting better patrols and better escort missions of merchant shipping through the region,
11:36that dissuaded the pirates from launching any further attacks that could disrupt the global economy.
11:40But now, the Houthis in Yemen are the ones launching dozens of attacks on this critical global trade artery,
11:46and it's already been severely affecting the worldwide economy.
11:49The Houthi movement, which is officially known as Ansar Allah,
11:52which translates to Defenders of God,
11:54arose out of Yemen's Zaidi Shia Muslim community,
11:57who make up about one-fourth of Yemen's overall population,
12:00and are native to the hills and mountains of Yemen's northwest,
12:03immediately opposite of Saudi Arabia's own largely Shia Muslim community,
12:07immediately across the border.
12:08Formed with militant opposition to the United States, Israel, and the Saudi monarchy's influence in the Middle East in mind,
12:14the Houthis sought closer relations with Iran,
12:16while their official motto and flag have never left any doubt as to where they stand politically and ideologically.
12:22It reads from line to line, translated into English,
12:25as,
12:25God is the greatest, death to America, death to Israel, a curse upon the Jews, victory to Islam.
12:32A decade ago in 2014, during the midst of the Arab Spring Riffles that were sweeping all across the Middle East,
12:37the Houthis managed to organize themselves with support and funding from Iran,
12:40and stormed out from their hills to capture the Yemeni capital from the Yemeni government, Sana'a.
12:46From there, the Houthis managed to expand their territorial control even further across northwestern Yemen,
12:51while the president of Yemen at the time fled the country towards Saudi Arabia.
12:55At his own request for a foreign intervention to restore his own authority and crush the Houthi rebellion,
13:00Saudi Arabia decided to militarily intervene in Yemen's civil war beginning in 2015.
13:05The Saudis, along with many other Arab states, all supplied with arms and finances from the United States,
13:10then launched Operation Decisive Storm into Yemen.
13:13The Saudis were terrified that if the Shia Houthis were victorious in Yemen,
13:17they could exploit their geographic position to blockade the Bab el-Mandeb Strait
13:21in unison with their Shia supporter Iran's ability to blockade the Strait of Hormuz,
13:25a situation that would immediately crash Saudi Arabia's entire economy.
13:29That's overwhelmingly reliant on exporting their crude oil to customers in Asia.
13:34If both choke points were shut down, the Saudis would be forced into a situation
13:38where they could only continue selling their oil to their biggest customers
13:41by exporting their oil the long way to the north through the Suez Canal,
13:45and then all the way around Africa,
13:48which would make their oil significantly more expensive for Asian consumers to buy
13:52and would make Saudi oil far less competitive,
13:55which would mean that they would sell a lot less of their oil
13:58and Saudi Arabia's finances and government would each become devastated.
14:02So the Saudis wanted to crush the Houthis and restore the authority of the friendly Yemeni government
14:06before that could ever happen, as did the United States and all the other Arab states opposed to Iran.
14:11Over the next few years, the Saudi-led air campaign would drop around 25,000 airstrikes
14:16all across Houthi-controlled territory in Yemen
14:18that's estimated to have killed more than 19,000 civilians,
14:22while the Saudi-led coalition navy initiated a maritime blockade of the Houthi-controlled coastline.
14:27That intervention ultimately produced an apocalypse in Yemen,
14:30with the UN saying as recently as 2023
14:33that the situation within Yemen remained the worst ongoing humanitarian crisis in the world,
14:38with more than 380,000 total deaths in the country happening since the civil war began in 2014,
14:43resulting from violence, famine, and disease all attributable to the war.
14:47But the Houthis, continually funded and armed by Iran,
14:50continued hanging on to power in the territory they controlled.
14:53They resisted the Saudis and the coalition,
14:56and even began firing missiles and drones into Saudi and UAE population centers
15:00in retaliation that killed hundreds of Saudi citizens.
15:03When Donald Trump assumed the American presidency in 2017,
15:06he chose to dramatically expand Washington's support for the Saudi war effort in Yemen,
15:10as a part of his overall policy of maximum pressure applied on Iran and its proxy forces across the Middle East,
15:17adding the Houthis to America's list of designated terrorist organizations,
15:20and authorizing a deal for more than $27 billion worth of additional U.S. arms sales to Saudi Arabia,
15:26including fighter jets and precision-guided bombs all meant to be used in Yemen against the Houthis.
15:31But as the intervention in Yemen became increasingly bloody,
15:34America's continued support of the Saudi war effort there became increasingly politically controversial in Washington,
15:40and increasingly linked to Donald Trump personally.
15:43Joe Biden vowed that after assuming the presidency in 2021,
15:47he would completely reverse Trump's course in Yemen,
15:50and end all of America's involvement in the country,
15:53which culminated quickly with Biden's declaration in February of 2021
15:57that the United States would be halting all of its support for Saudi Arabia in Yemen,
16:01and that the Houthis would be removed from America's list of designated terror organizations.
16:06This abrupt end of America's support for the war in Yemen under Biden,
16:10and the fact that the Saudis had blown through an estimated $265 billion before then,
16:16just on arms trying and failing to destroy the Houthis,
16:20kind of forced the Saudis' hand into beginning to search for an exit strategy from their war in Yemen.
16:25A ceasefire agreement between the Houthis and the Saudi-backed Yemeni government was agreed upon in April of 2022,
16:31but it's generally held ever since, with only minor flare-ups of violence as the Saudis and Houthis have continued on negotiations,
16:37trying to find a final peace settlement.
16:40This relative calm in Yemen ever since the April 2022 ceasefire
16:44has given the Houthis time to consolidate their control over the area they rule in northwestern Yemen,
16:49an area that represents only about a quarter of Yemen's total territory,
16:52but more than two-thirds of Yemen's total population, or about 24 million people,
16:57and Yemen's capital city.
16:59The Houthis therefore control more of what makes Yemen Yemen
17:03than the internationally recognized Yemeni government that's backed by Saudi Arabia does,
17:07and the relative peace for the past two years during the ceasefire
17:10has likely enabled them to covertly import huge volumes of additional missiles and drones from Iran.
17:16And so now, with a massive ongoing war between Israel and Hamas having exploded in Gaza,
17:22Iran has been seeking ways to assist Hamas by steadily increasing the pressure being applied on Israel
17:28without directly attacking them and starting an all-out war.
17:31And perhaps the best way that Iran has been able to do this
17:34has been by nudging the Houthis to begin launching their attacks on merchant shipping across the Red Sea.
17:39You see, as the Houthi missile and drone attacks on dozens of merchant ships in the Red Sea
17:43began really accelerating in December of 2023,
17:46and became increasingly indiscriminate after the Galaxy Leader hijacking incident,
17:51the wartime risk insurance premiums that maritime insurance companies charge for all ships sailing through the Red Sea
17:57began to skyrocket.
17:58Major shipping companies from all around the world
18:01then faced with these rapidly increasing insurance premiums
18:04to cover their ships and cargoes operating in the Red Sea,
18:07and the accompanying legitimate risks of seeing their expensive ships and their cargoes getting damaged or sunk,
18:13or their crew members getting killed,
18:15quickly began making announcements one after the other
18:17that they would begin suspending all of their maritime operations through the Red Sea
18:21and the Suez Canal until further notice.
18:24These announcements have by now come from most of the world's most significant container shipping companies
18:28like Maersk, MSC, Evergreen, CMA, CGM, Hapag-Lloyd, and Costco,
18:33which together represent more than 95% of all the container volume that usually travels through the Suez Canal.
18:39In addition, many major oil and gas companies have also announced their indefinite suspensions
18:43of sending oil and gas tankers through the Red Sea or the Suez Canal,
18:46including BP and the Norwegian state-owned oil company Equinor.
18:50As a result, the world is now facing a third Suez Crisis after the 1967 and 1975 one,
18:56and after the 2021 one.
18:58Just by the end of December in 2023,
19:01more than 300 container ships and many more tankers, car carriers, and other merchant vessels
19:06had already decided to divert away from the Red Sea and the Suez Canal
19:09and travel the much longer way around Africa,
19:11a route that adds, on average, 7 to 10 days more travel time for ships
19:16plying the trade route between Asia and Europe,
19:18and in many cases, significantly longer.
19:20Because this route is a much longer distance,
19:22the ships that travel it have to consume more fuel,
19:25while the crews that operate them must be rotated out more frequently
19:28and have to be paid longer hours,
19:30which contributes to the Cape of Good Hope route usually being about 15% more expensive to take
19:35when compared with the shorter Red Sea and Suez Canal route,
19:38even after considering the tolls and fees that Egypt charges.
19:41That means that with more and more ships diverting around the Red Sea,
19:45those 15% higher average shipping costs are going to be gradually getting passed on to consumers,
19:51which, if it continues getting worse and persists,
19:53will steadily begin piling on inflationary pressures on just about every product all around the world.
19:59And even worse, the extended length of time that these ships are going to have to spend
20:03out on the ocean traveling the longer routes between Europe and Asia
20:07is expected to absorb around 20% of the entire global merchant fleet's capacity,
20:11which, of course, is just going to lead to even more shipping delays
20:15and even higher costs and a worldwide cascading avalanche of inflation
20:19for pretty much every single product you can think of the longer the Red Sea route remains closed for.
20:25And there are many secondary, less thought of issues that can eventually spiral out of control
20:29the longer the Red Sea is shut down to international shipping for like this.
20:33In a sense, the Houthi attacks shutting down the Red Sea have hurt Israel,
20:37as they've effectively managed to completely shut down the southern Israeli port of Eilat.
20:41Which is Israel's only non-Mediterranean port that's on the Red Sea.
20:45But Eilat is tiny from Israel's perspective.
20:48It usually only handles a mere 5% of Israel's total maritime trade,
20:52while Israel's much larger Mediterranean ports of Ashdod and Haifa
20:56handle the overwhelming majority and remain open for business.
20:59The cost of Israeli imports are rising as a result,
21:02but the situation is hardly putting Israel under a blockade.
21:06The situation is very different for other third-party countries, however.
21:10As I mentioned previously,
21:12the only maritime ports that Jordan, Sudan, and Eritrea each have
21:16are all only located on the Red Sea.
21:19And so, for however long the Red Sea remains largely shut down for,
21:22all three of these countries will remain virtually landlocked.
21:26And all three of them are already in pretty unstable conditions,
21:29that are already either actively imploding as I speak, or on the precipice of it.
21:34Sudan is already locked in the middle of a devastating civil war
21:37that has likely killed tens of thousands of people
21:39and displaced millions more just since 2023.
21:42Jordan is facing the danger of increased instability
21:45in the neighboring Israeli-occupied West Bank,
21:47while Eritrea is facing two ongoing civil wars
21:50happening immediately across their borders in both Sudan and in Ethiopia.
21:54If these countries, and especially if Sudan,
21:56remain blocked off from most of their maritime imports of resources for long,
22:00their own instability levels could also increase.
22:03Overall, by attacking whatever merchant shipping they can find within the Red Sea,
22:07the Houthis are generating a worldwide level of pain
22:10that can maybe be tolerated for a few weeks to a few months,
22:14but it's a situation that likely cannot be tolerated for very much longer.
22:18As the Houthi attacks continue,
22:19worldwide shipping will continue diverting the long way
22:21away from the Red Sea and around Africa.
22:24Products, raw materials, and energy resources
22:26will continue to get more expensive as a result,
22:28and global inflation will begin ratcheting up again.
22:30Which means that Iran and the Houthis are probably both hoping
22:33that their attacks and the economic consequences they cause here
22:36will eventually begin increasing Western pressures on Israel
22:39to end its war in Gaza,
22:41and to keep Hamas still intact
22:43without them having to escalate all the way to full-blown war.
22:46The Houthis have claimed that if Israel withdraws from Gaza
22:49and makes peace with Hamas,
22:51then their attacks in the Red Sea will also stop immediately afterwards.
22:55But, the Israeli government of Benjamin Netanyahu here
22:58has repeatedly stressed
23:00that regardless of any international pressure,
23:02their war aims against Hamas remain unchanged.
23:04They will continue fighting until Hamas as an organization
23:07and government in Gaza is completely dismantled and destroyed.
23:11With Netanyahu himself saying in early January of 2024
23:14that Israelis and the world should expect the war to be a long one
23:18that will continue on for at least several more months to come.
23:21And, consequently, the world should expect the Houthis
23:24to continue launching their own attacks and raids
23:26and merchant shipping in the Red Sea for just as long.
23:29In an attempt to try and restore worldwide faith
23:32in merchant shipping through the Red Sea,
23:34the United States announced the creation
23:35of a brand new international military coalition
23:38called Operation Prosperity Guardian on December the 18th
23:41that aims to defend all merchant ships in the Red Sea
23:44and Israeli ports from Houthi missile and drone attacks.
23:47The operation, at least so far, has been strictly limited
23:50to only intercepting Houthi missiles and drones flying over the Red Sea
23:54and safely escorting merchant ships through the Red Sea with warships
23:58without directly attacking the Houthis themselves in Yemen.
24:01The United States committed one of its own aircraft carriers
24:04to the Red Sea for this operation along with four of their own destroyers.
24:07While the British also committed one of their destroyers
24:10and both Denmark and Greece have agreed to each send a frigate.
24:12While the French and Italian navies have remained separate from the operation
24:15but have deployed their own frigates to the Red Sea to operate independently.
24:18Other countries have technically signed on to the operation
24:21but with extremely minimal commitments
24:23compared to the Americans, British, Danes and Greeks.
24:25Ten other countries have signed on to the operation anonymously
24:28and two of them are almost certainly Egypt and Saudi Arabia.
24:31Two countries whose national security both utterly depends on the Red Sea
24:35remaining open and accessible.
24:37Egypt so they can keep earning revenue on ships passing through the Suez Canal
24:40and Saudi Arabia so they can continue exporting oil quickly to Europe.
24:44But there are also two Muslim-majority countries
24:46who don't exactly want to be publicly viewed by their own people right now
24:49as assisting the United States fighting against an organization
24:52that proclaims it is fighting for the Palestinians against Israel.
24:55They don't want to be viewed in any way as assisting Israel
24:58even if it's in the name of their own national interests.
25:01Since going into operation, the warships of Prosperity Guardian
25:04operating within the Red Sea have already shot down
25:07dozens of Houthi drones and missiles fired at merchant vessels.
25:10And encouraged by the progress, both Maersk and Hapag-Lloyd
25:13cautiously announced on the 24th of December
25:16that they would begin resuming their shipping operations
25:18through the Red Sea and the Suez Canal again.
25:20But then, just nine days later, disaster struck again.
25:23On the 2nd of January, 2024, a Maersk container ship
25:26traveling through the Red Sea was struck by a Houthi missile
25:29before four small Houthi ships sailed towards them
25:32and attempted another hijacking.
25:34The Maersk ship radioed a distress call
25:36and the U.S. aircraft carrier in the region responded
25:38by dispatching helicopter gunships to intercept the Houthi pirates.
25:41Once they arrived, the American helicopters opened fire on the Houthi boats
25:45and sank three of them, killing ten of the Houthi pirates who were on board
25:49and marking the first time that the Americans and the Houthis
25:51engaged directly in combat.
25:53The same day, both Maersk and Hapag-Lloyd announced
25:56that they were once again suspending all of their travels
25:59through the Red Sea and the Suez Canal
26:01and they would begin only taking the longer
26:03and more expensive route around Africa.
26:05Furious, on the following day on the 3rd of January,
26:08the White House released an ominous joint statement
26:11with many other governments from all around the world
26:13that, at the end, reads, quote,
26:16Let our message now be clear.
26:18We call for the immediate end of these illegal attacks
26:20and release of unlawfully detained vessels and crews.
26:23The Houthis will bear the responsibility of the consequences
26:26should they continue to threaten lives, the global economy,
26:29and free flow of commerce in the region's critical waterways.
26:32We remain committed to the international rules-based order
26:35and are determined to hold malign actors accountable
26:37for unlawful seizures and attacks.
26:39End quote.
26:41As it stands now, America and the Biden administration
26:43arguably have only four possible options
26:46for how to proceed with this dangerous situation.
26:49One, America could choose to simply do nothing.
26:52Let the Houthi attacks on merchant shipping in the Red Sea
26:54continue as long as Israel's war in Gaza continues
26:57and suffer the worldwide negative economic consequences
27:00and pressures that will follow during a critical
27:02presidential election year.
27:04Two, the United States can begin applying tougher pressures
27:06on Israel to begin winding down its war in Gaza
27:09and hope that that ends the Houthi attacks
27:12on merchant shipping diplomatically.
27:14Israel, however, will probably not accept this peace
27:17unless the pressures from Washington begin growing
27:19significantly tougher,
27:21which could strain Israel-U.S. relations.
27:24Three, America can increase the number of warships
27:26that it has deployed to the Red Sea
27:28as a part of Operation Prosperity Guardian
27:30in order to cover a larger area
27:32and escort more merchant vessels.
27:34Unfortunately, this option has a lot of cons
27:36from Washington's perspective.
27:38Many countries, for a variety of reasons,
27:40have refused to send warships to the Red Sea
27:42even after being requested to do so by Washington,
27:44like Australia.
27:46America itself has few surplus warships to spare
27:49right now here to the Red Sea
27:51while it's trying to maintain a permanently large
27:53naval presence in the Western Pacific around Taiwan
27:55to dissuade a potential Chinese amphibious invasion
27:57from ever happening.
27:59And the warships that America already has deployed
28:01to the Red Sea fire advanced guided missiles
28:03that cost millions of dollars each
28:05to intercept the clouds of cheap Iranian-manufactured drones
28:08that only cost a few thousand dollars to build.
28:11If the Iranians and the Houthis continue maintaining
28:13their heavy pace of cheaper drone and missile attacks
28:15on the merchant ships
28:17and the American Navy continues shooting them down
28:19with their much more expensive missiles,
28:21the cost that will be borne on the U.S. Defense Department
28:23will likely rise into the tens of billions of dollars
28:27within only a matter of months.
28:29A tough pill to swallow
28:31while Washington is simultaneously struggling
28:33to provide more funding and arms
28:35directly to both Israel's war against Hamas
28:37and Ukraine's war against Russia.
28:39And then there's option four.
28:41The most dangerous option of all
28:43but the one that's appearing increasingly likely
28:45to happen by the day.
28:47Ordering a direct U.S. air campaign
28:49to bomb the Houthi bases in Yemen
28:51to try and destroy, cripple, or deter their ability
28:53to continue launching attacks on merchant shipping
28:55in the future.
28:57But this option carries with it a series of extremely high risks
28:59that need to be considered beforehand.
29:01First of all,
29:03an American bombing campaign against the Houthis
29:05greatly risks shattering
29:07the fragile ceasefire across Yemen
29:09that's been in place ever since April of 2022.
29:11Would the Houthis' political enemies
29:13that are still on the ground in Yemen
29:15like the Saudi-backed government
29:17or the United Arab Emirates-backed
29:19separatist southern government
29:21really all be expected to just sit back and do nothing
29:23while the Houthis get blasted from the air
29:25by the United States?
29:27There would become an enormous incentive for them
29:29to renege on the ceasefire
29:31and begin launching renewed ground offensives
29:33If the situation got worse for the Houthis from there
29:35and they seemed like they were imminently about to collapse
29:37would their primary backer Iran
29:39then be expected to also
29:41just sit back and watch them collapse
29:43without doing anything?
29:45Iran could, and likely would,
29:47then choose to escalate the pressure on the United States
29:49and Israel even further
29:51by ordering their militias in Syria to attack Israel
29:53in the Golan Heights
29:55or even order Hezbollah in Lebanon
29:57to open up a massive second front line
29:59for the Israelis in the north of their country
30:01that the United States would be forced to divert attention
30:03away from Yemen and the Houthis to deal with
30:05and then, of course,
30:07bombing the Houthis without attacking the source
30:09of where they're actually getting their weapons from
30:11does nothing to prevent them from
30:13simply acquiring even more weapons
30:15over and over again
30:17that will keep having to be destroyed over and over again
30:19Iran can, and likely will,
30:21just choose to continue sending weapons
30:23to the Houthis even if the United States
30:25is bombing them
30:27But, if America decides to attack Iran's supply lines
30:29that are running to the Houthis
30:31then it risks escalating the U.S.
30:33bombing campaign on the Houthis
30:35into a direct U.S.-Iran war
30:37that both sides almost assuredly
30:39truly want to avoid
30:41and partially for those reasons
30:43the United States might choose to carry on
30:45with the same cautious approach towards the Houthis
30:47that they've so far been maintaining
30:49a cautious approach that is no doubt
30:51being championed by Saudi Arabia
30:53Ever since the Biden administration
30:55ended America's support for the Saudi intervention
30:57in Yemen back in 2021
30:59the Saudis have been desperately trying to find a way
31:01to pull themselves out of their costly war
31:03Peace negotiations between
31:05the Saudis and the Houthis have been ongoing
31:07ever since, with the Saudis reportedly
31:09offering concessions, such as
31:11allowing more direct flights to open up to the Houthi-controlled
31:13capital, an easing or even ending
31:15of the still-ongoing Saudi naval
31:17blockade, and perhaps most critically
31:19an offer by the Saudis to help facilitate
31:21payments and salaries of Yemeni
31:23public sector employees working within
31:25the Houthis-controlled territory
31:27But as American officials in the U.S. Congress
31:29openly demand that the Houthis
31:31be re-added back to the list of designated
31:33terrorist organizations
31:35and as the U.S. and British militaries
31:37are each apparently considering launching
31:39airstrikes, the Saudis are worried
31:41that their peace negotiations will
31:43fall apart. How, after all,
31:45could the Saudis help to facilitate payments
31:47to the Houthis if they become a
31:49U.S.-recognized terrorist organization
31:51once again and become suffocated underneath
31:53American economic sanctions?
31:55And if the United States does end up deciding
31:57to militarily intervene more forcefully
31:59against the Houthis, there is fairly
32:01recent historical precedent for such an
32:03operation. Throughout the 1980s
32:05during the Iran-Iraq war, both the Iraqi
32:07and Iranian militaries began opening fire
32:09on merchant vessels operating across the Persian
32:11Gulf with missiles. Iran, in particular,
32:13began firing missiles at Kuwaiti oil
32:15tankers in retaliation for Kuwait's support
32:17and financing of Saddam Hussein's Iraq
32:19In 1986, the U.S.
32:21Navy decided to intervene in the conflict
32:23and began sending their warships to safely
32:25escort Kuwaiti oil tankers through the
32:27Gulf and out past the Strait of Hormuz.
32:29In 1988, one of these
32:31American warships impacted an Iranian
32:33naval mine within international waters
32:35that severely damaged and nearly sank it.
32:37In retaliation, the
32:39U.S. Navy decided to launch Operation
32:41Praying Mantis within Iran's own
32:43territorial waters. The American Navy
32:45attacked and sank five Iranian
32:47ships, including a frigate,
32:49severely damaged another frigate,
32:51and blew up two Iranian offshore oil
32:53platforms, killing dozens in the process.
32:55An action that, to date,
32:57represents the U.S. Navy's largest
32:59surface engagement since the Second World War.
33:01That American attack put pressure
33:03on Iran to sue for peace with Iraq
33:05just a few months later. But
33:07unlike then, an American attack
33:09on the Houthis now in 2024
33:11is fairly unpalatable
33:13for the Biden administration to consider
33:15for two very big reasons.
33:17One, the Biden
33:19administration doesn't want to be viewed as
33:21expanding the war between Israel and Hamas
33:23in Gaza into a regional Middle East
33:25wide war. And an American
33:27bombing campaign against the Houthis in Yemen
33:29would inevitably become widely
33:31viewed as an American declaration
33:33of war against the Houthis in
33:35support of Israel, which would carry
33:37further risks of the war escalating even
33:39further to potentially include Hezbollah
33:41in Lebanon or Iran itself.
33:43And second,
33:45Biden's entire foreign policy stance
33:47ever since taking over as president in
33:492021 has revolved around
33:51ending America's presence in forever
33:53wars in the Middle East in order
33:55to pivot towards facing the perceived greater
33:57threats of China in the Indo-Pacific
33:59and Russia in Europe. Almost
34:01immediately after Biden took office,
34:03he ended America's support for the Saudi war
34:05in Yemen. He removed the Houthis from
34:07the list of designated terrorist organizations.
34:09He finally withdrew all American
34:11forces from Afghanistan after
34:13And he's been continually attempting
34:15to mediate a normalization agreement
34:17between Israel and Saudi Arabia
34:19to make them begin cooperating together in the Middle
34:21East in America's absence.
34:23Deciding to open up another American war
34:25in the Middle East by bombing and attacking the Houthis
34:27in Yemen after all that previous
34:29effort would be a serious reversal
34:31of policy for the Biden administration to
34:33consider. And it has the risk
34:35of dragging the United States back into
34:37yet another war in the Middle East again
34:39with an uncertain