Faezeh Ghasemi

Once a vibrant artery of trade, the Red Sea now throbs with a feverish tension. Houthi attacks, fueled by a dim situation of regional conflicts, have cast a significant role, chilling the waters and raising the specter of a wider conflagration. But beneath the choppy surface, deeper currents churn, carrying the crisis towards an uncertain destination.

Who are the Houthis and what are they doing?

The Houthis are a group of Zaydi Shia Muslims who have recently developed closer ties with Iran and are considered part of the “Axis of Resistance.” In response to the escalating tensions in Gaza and in support of the Palestinians, the Houthis threatened to target all ships linked to Israel in the Red Sea. Their attacks have so far had a significant impact on global trade and have dragged the United States, which is eager to withdraw from the troubled Middle East, back into the swamp of war. As a result, the United States has become, albeit semi-officially, involved in a war with this militia group, which wields swords and daggers in one hand and drones and missiles in the other.

What scenarios do the Houthis pose for international trade?

The Red Sea route, through which about 12% of global trade passes, is the swiftest corridor from Asia to Europe via the Suez Canal. The total value of assets passing through the Suez Canal and the Red Sea is estimated at over $1 trillion per year. This is in addition to the oil and petrochemical products that connect China, the Middle East and India to the West. Forcing ships to divert from this route around the Cape of Good Hope in Africa could result in an additional two weeks in international shipping plan, reduce global container capacity, disrupt supply chains and increase ship turnaround times.

Based on data compiled as of December 2023, more than half of the container ship fleet that normally transits the Red Sea and the Suez Canal has avoided this route. The diversion of shipping routes from the Suez Canal, which is the shortcut between Asia and Europe, to Africa could increase travel time by 25%. These transferring are also more costly and had pottentioal to increase prices for costumers on all goods. If the diversion of container ships to Africa continues, the prices of everything from shoes to food and oil could rise. There are also concerns about disruptions to energy carrier shipments, especially at a time when Europe is increasingly relying on liquefied natural gas (LNG) transported by tankers to compensate for Russia’s gas cuts to Europe. So far, the impact has been minimal.

It is therefore not surprising to expect further efforts by world powers and even multinational companies to change the situation. But what are the possible scenarios for the future of the Red Sea?

A Long-Term Shift in Trade Away from the Red Sea: A Possible Scenario

Continual shift in trade away from the Red Sea is a possible scenario sometime. If the crisis in the Red Sea carry on and Western countries are not able to restrain these strikes, insecurity will prompt capital away from the Red Sea. The Houthis may remain a spoiler, and even if they are weakened to some extent, there is always the possibility that they will find ways to acquire relatively new weapons such as drones and create insecurity. In fact, it is always easier to create insecurity than to establish security. All it takes is a few missiles to be fired in an area in a year to put capital, which is sensitive to security, at risk. If this situation persists, land routes or other, albeit longer, sea routes may become substitutes.

The background to this scenario is that the Biden administration in the United States and the possible future administration in that country may put aside their historical responsibility as the international hegemonic power to protect free trade routes in order to focus more on resolving domestic crises in the United States or larger crises such as complex competitions with China and Russia. At least in the case of the Biden administration, it can be analyzed that it is trying to abandon the confusion of the past few decades of the US military between different countries and scattered military movements, especially in the Middle East, in order to use the US military and security capabilities in the competition with new superpowers and challengers of the international system, including China.

This scenario also requires that China and other regional and global who have stake in upholding security in Bab-al-Mandeb, remain inactive and silent about the ongoing insecurity in this region of the world.

Scenario 2: China Steps In

This scenario builds on the previous sentences of last scenario. If the United State airstrikes are not able to lessen the Houthis attacks, could China be expected to take on a role higher than any time in the Middle East?

Historically, China has been reluctant to get involved in unsettled and challenging regions. Unlike the US, they are not sensitive to human rights or protecting their own ideology in other regions. But would it be amazing if the Chinese lose patience and take action to protect their position of trading in the Red Sea?

Due to its significant influence over key actors involved in the Gaza conflict, China possesses a distinct advantage over the United States when it comes to engaging in the process of resolving the crisis. China can leverage its relationships with actors on both sides, allowing it to exert pressure and facilitate diplomatic efforts in order to bring about a resolution. The key question is whether the Chinese will entry into the crisis at all. Like any aspiring superpower, will they try to influence international equations by pressuring for control wars, or will they continue the Chinese tradition in this regard?

The reality is that China has already suffered significant losses due to the recent unrest in the Red Sea. Some Western companies are replacing China with countries like Turkey or Vietnam to get out of this crisis. The serious danger for Chinese manufacturers and traders now is that other Western companies will follow suit and decide to choose other countries (instead of China) as the source of their needed goods.

Scenario 3: The Houthis are Severely Weakened

The Houthis could lose much of their operational capacity as a result of US strikes. These US military operations and the possible weakening of the Houthis could open the door to another civil war in Yemen, and the Houthis could once again be attacked from within by the de jure government of Yemen.

Such a war, with proxy forces from other countries including the UAE, could delve into this weak and fragile country into even greater violence, or, conversely, with the end of the Houthis militarily, return Yemen to a unified country.

How much motivation do the Americans have now to enter an escalating conflict with Houthis? Certainly very little. To what extent will the flood of developments drag America into this battle? The answer to this question must be found in light of multiple factors. Even now, President Biden and the Democrats claim that they do not desire war or an escalation of tensions in the region, their actions suggest involvement in an asymmetrical, proxy, and possibly even postmodern form of warfare.

Scenario 4: A Diplomatic Solution

The fourth scenario, which is somewhat optimistic, envisions a diplomatic and equitable resolution to the crisis. Will the conflict in Gaza come to an end? Will a ceasefire agreement be achieved with Hamas? Will Israel acknowledge some of the rights of the Palestinian people, and will Hamas release the Israeli hostages? If, as the Houthis have claimed, their actions in the Red Sea are a response to the war in Gaza, what will happen?

Let’s temper the optimism of this scenario. The reality is that when a Meddler in the international environment prosper in achieving its goals by putting the world on the edge of war, it is highly likely to employ the same tactic in the future.

Irrespective of the choices made by the United States, China, or international coalitions, trade will eventually find its own way: either by seeking a secure route or by developing means to bypass potential future riskiness.

As a result, in the long term, the Red Sea will either become a relatively secure place for trade or join the ranks of numerous trade corridors consigned to history.

Faezeh Ghasemi is PhD in International Relations and Middle East expert, senior researcher with over 10 years of experience in Identity and Non-State Actors in MENA Studies.

GSPI does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of GSPI, its staff, or its trustees.