January 2025
Since 2015 and the outbreak of the civil war in Yemen, numerous instances of Houthi attacks on vessels flying the flags of “regional enemies“ of this Yemeni Shia rebel group, predominantly the ones originating from Saudi Arabia and the United Arab Emirates, with a clear intensification of their activities at the end of 2023, and predominantly since November 2023. This coincides with a renewed escalation of conflict in Gaza. This is exactly what Houthis mention as the cause of their escalation of attacks, targeting usually international trade vessels flying the flags of Israel, the US, the United Kingdom, and other pro-Israeli oriented countries, and especially US army vessels, thus transforming the previously deemed as safest “naval artery of world trade” into a stage of an ongoing hybrid war. The Houthis are conducting the previously mentioned attacks using unmanned aircraft, cruise missiles, and naval drones, causing quite a global effect: from disruption of supply chains to the increase in energy and insurance prices within maritime trade.
The Houthis, as a traditionally Shia rebel group, have long ago become an instrument of the Iranian strategy of “assymetric response“; initially focused on conducting attacks on Saudi oil plants, and controlling the northern part of Yemen and the coastal area around Hodeidah port, since the beginning of the intensification of the conflict in Gaza, Iran is projecting its power into the Red Sea as well throuh the Houthis, symbolically moving the front line between Israel and Iran thousands of kilometers away from Tehran, but maintaining it at the distance of a few hundreds – that is, around 300 kilemeters away from Tel Aviv by air, thus continuially pointing to Tel Aviv the fact that Tehran has capacites to act against Tel Aviv from numerous directions.
Since the end of 2023, and especially during 2024, the Houthis’ attacks on trade vessels have become regular, which made the biggest companies, such as Maersk and MSC, seek new transport routes, avoiding the Suez Canal by travelling around the Cape of Good Hope. This prolonged the projected transport delivery deadline for at least two weeks, which drastically affected the increase in transport costs. In such a setup, we can rightfully state that the “awakening” of the Houthis in the Red Sea is the biggest strike against the global trade since the coronavirus pandemic, causing the biggest players to conduct more detailed security assessments and finally, avoid the Gulf of Aden and Bab al-Mandab Strait completely.
Still, the response of the West to the said activities of the Houthis came soon, reflected in the launch of the Prosperity Guardian Operation; however, its efficiency remains limited. Namely, it is indicative that the military presence does not eliminate the Houthi danger but postpones new attacks, which was also the case with previous UN operations and missions active in the Red Sea.
Despite all attempts by the West to eliminate the threat, the consequences for the global economy and energy are already visible. Namely, disruptions in the Suez Canal, to which the Gulf of Aden and Bab al-Mandab Strait lead, impact over 12% of global trade, which is why, in Europe, there is an increase in container transport prices, as well as delays in electronics and oil derivatives supply, which are, in the majority of cases, transported via this route. Moreover, due to the existence of fear of instability and insecurity of supply of oil derivatives from the Persian Gulf countries, there is an increase in oil prices recorded at over 80 USD per barrel, making a direct impact on European gas and LNG markets. Finally, insurance premiums for the passage through the Suez Canal, projecting the path via Bab al-Mandar, have increased up to five times, thus additionally burdening the transport expenses and discouraging the companies from taking this path.
Like the rest of Europe, Balkan economies also depend on the main European supply chains and the stability of the energy market, which means that even the slightest disruption in the Red Sea can have secondary consequences for the Western Balkans region. Namely, the increase in oil and gas prices directly affects the countries that do not have developed reserve energy sources, among these, speaking of our region, besides Bosnia and Herzegovina and North Macedonia, Serbia is too. Also, increased transport expenses translate to the prices of imported goods and inflation pressure, making us closely monitor the Red Sea situation development, from the context of the Balkan economy.
On a geopolitical level, it is clear that the Houthis are an exquisite “Iranian periscope“ in the Red Sea, and that their attacks, besides evidently affecting the state of world economy, also have the goal to test the resilience of the West in Iran’s name, create leverage for putting pressure on Israel through categorically linking the attacks in the Gulf of Aden to Israeli activities against the Palestinians, and in the end – to stress the ability of Tehran to, at ease, “close” one of the most significant arteries of world economy, without entering into war.
All the previously stated represent, on a global level, a clear step towards fragmentation of the trade system, because the increasing instability of maritime routes accelerates all tendencies towards regionalization of production of diversification of trade corridors. We estimate that this is a trend that will, in the years to come, have the potential to additionally complicate and visibly change the architecture of the world economy.
The Red Sea has, thus, become a metaphor of the new era of instability: clear borders between a local conflict and global disruption have been removed, and the Houthi attacks represent a clear example of how non-state actors, with the support of regional forces such as Iran, can cause strong disruptions on a global level, without initiating a formal war. For Europe, and within Europe, for the Balkans as well, this is an exquisite warning that security and economy are not two separate spheres anymore, but must be examined in parallel and in continuum. Energy dependency, inflation, and the need for new maritime transport corridors show that the geopolitical waves of the Red Sea can easily hit the European land as well. In the world that is increasingly resembling a “global warzone”, there is no region that is truly out of range of the crisis.
Authors: Tanja Kazić, Miloš Talović