U.S. and British forces shot down 21 missiles and drones fired by Yemen’s Houthis on Tuesday, intercepting one of the largest attacks by the rebel group yet.
The projectiles from the Iran-backed group targeted an area of the Red Sea where there were “dozens” of shipping vessels, U.S. officials said.
While no one was injured in the latest barrage, the attack could lead more companies to leave the trade-heavy shipping route through the Suez Canal for safer, but much longer and more expensive routes.
The U.S. has deployed warships to the Red Sea as part of an operation to deter the Houthi attacks and protect a key commercial shipping lane. However, many countries remain apprehensive about joining, fearing a beefed-up naval presence could exacerbate tensions in a Middle East already on-edge over a possible region-wide war.
Removing Houthis from terror list has only ‘emboldened’ them
After years of humanitarian crisis stemming from Yemen’s ongoing civil war, the Biden administration in 2021 delisted the Houthis as a Foreign Terrorist Organization to help get aid to impoverished Yemenis. But that decision has only “emboldened” the Houthis to attack both civilian targets and shipping vessels crossing the Red Sea, according to former Assistant Secretary of State R. Clarke Cooper. Re-designating the Houthis as a terror group would allow Biden to be “publicly steadfast” about protecting U.S. interests and help its partners defend their sovereign territory from Houthi attacks, he wrote, while also allowing the freezing of U.S.-held assets of the Houthis and their backers.
Egypt facing ‘most difficult’ economic challenge as shipping companies reroute
The decision by leading shipping companies to suspend sailing through the Suez Canal over the Houthi attacks has been extremely costly for Egypt, which previously received about $25 million a day in shipping and other fees, according to Israeli financial newspaper Calcalist. A columnist for Egyptian newspaper Al-Dostor said the Red Sea attacks posed perhaps the “most difficult challenge in a country facing one of the worst economic crises in its history,” compounded by tourists avoiding the Middle East over security concerns. Cairo has so far taken a “low-profile” stance in the Red Sea dispute, Calcalist reported, but the economic damage could force the government to reconsider.
A drought in the Panama Canal is adding to global trade chaos
The Panama Canal – another cornerstone of global trade – is running out of water, heightening the maritime crisis and contributing to higher prices of oil and imported goods around the world. Rainfall in the area has fallen by 20% in the past 5 years, according to financial news site Xataka, resulting in queues of more than a hundred boats at times after Panamanian authorities put limits on how many vessels can cross at once. While rail routes could ease some of the congestion, one analyst told The Economist that shipping companies are likely to choose longer routes — such as going around South America and Africa — rather than “deal with the hassle of unloading and reloading,” meaning goods will remain expensive.