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Wednesday, June 26, 2024

Red Sea Crisis: Turbulence in the Trade Route

In the tapestry of global trade, the Red Sea is one of the few maritime corridors as crucial as the others. The corridor facilitates 2 major trade routes namely Suez Canal and Bab-El-Mandeb Strait. The Bab-El-Mandeb Strait, is a 32 km long channel between Yemen and Africa, a narrow stretch of water which is the busiest route bridging the connection between Europe to Asia and East Africa.

However, the Red Sea has now become the stage for a complex and escalating conflict that threatens geopolitical economic stability as it is bordered by some of the most politically volatile regions in the world, including Yemen, Sudan and Somalia. These geopolitical hotspots contribute to the ongoing instability and tension that define the Red Sea Crisis and hence the crisis is a mixture of geopolitical tensions, piracy, and environmental concerns, making it a focal point of worldwide attention.

Significance of the Red Sea in global trade
The Red Sea has been a significant maritime route for centuries, serving as a critical passage for merchants and explorers. It holds strategic importance in global trade due to its location and role in the transportation of essential resources. The Red Sea serves as a critical maritime choke point, connecting the Mediterranean Sea via the Suez Canal to the Indian Ocean through the Bab el-Mandeb Strait. Approximately 12% of the global trade passes through this corridor from oil and natural gases to food and drinks to electronics. It forms a vital path for the world’s maritime commerce. Also, its strategic position makes it a crucial transit route for ships travelling between Europe, Asia and Africa.

Geopolitical Tensions and Houthi Rebels
The present situation has its roots in the history of the evolution of the Houthis, who control significant portions of Yemen, their location repeatedly has disrupted maritime traffic through missile attacks and mining operations since November 2023. The leading global freight firms re-route via Africa’s cape to avoid the Suez Canal. There have been dozens of attacks, a British-owned cargo ship called MV Rubymar got struck by a missile on February 18, 2024, reportedly this missile came from the Houthis. Their ideology is not to see Jews survive in Arab, which is why they have been attacking Israel. This ideology prompts the Houthis to keep attacking Israel which they see as a so-called ‘Zionist country’ ‘destroying innocent Palestine’. Houthis grew cooperation with Iran, a Shia-majority country. These tensions grew because of the involvement of external powers.

Since the Israel-Hamas war began in October 2023, a lot of Muslim countries have been against Israel due to the unsettled tensions between the Jews and the Arabs. As Israel and Yemen are geographically distant, it is difficult for the Houthis from Yemen to directly attack Israel, so they focus on the Israeli ships or the ships heading to the Israeli ports to impart damage on Israel. By looking at recent scenarios and evaluating the tactical conditions that Iran’s involvement appears to be a key factor behind prompting the Houthis as well just like it is said to be the behind-the-scenes players for Hamas and Hezbollah, thereby intensifying the conflict and adding another layer of complexity to the crisis.

The presence of conflict in the regions, such as the Israel-Hamas conflict, worsens the tensions and instability. Regional powers and militant groups seek to exploit the Red Sea for their strategic advantages such as for arms smuggling, disrupting trade routes, and gaining geopolitical leverage. The huge interconnection of regional conflicts at the global trade routes highlights the broader implications of the Israel-Hamas conflict on the security of the Red Sea.

Economic Concerns
These attacks are bleeding economies among them one is India. Indian exports are delayed, shipments are being held up and the losses are being borne by the traders. As we see India is majorly reliant on the Red Sea because the route reaches to the four major regions namely North America, North Africa Europe and West Asia. The regions accounted for almost 50% of India’s exports amounting to 18 trillion rupees and about 30% of the imports amounting to 17 trillion rupees in the year ended 2023, according to the CRISIL ratings. Time taken to move goods from one place to another has increased substantially and almost all the ships are redirected to the Southern tip of Africa going around the Cape of Good Hope adding approximately 6500 kms to the journey. And it is believed all of it will have to continue in the foreseeable future because there is no resolution in sight.

Environmental Concerns and Food Security
The Red Sea is a crucial trade route and an ecological region home to distinctive coral and marine biodiversities. The region has witnessed long-term damage to the coral reefs and coastal habitats. Moreover, the increase in maritime traffic raises the risk of further oil spills and other forms of pollution, such as freight water discharge and plastic waste even due to the increased voyage duration leading to consumption of more fuel and emission of harmful greenhouse gases. Climate change adds another layer to the issue as rising temperatures lead to coral bleach, while sea-level rise threatens coastal communities & infrastructure. The combination of environmental degradation and geopolitical instability creates a vicious cycle, endangering the Red Sea’s ecological stability.

The impact of conflict on food security perhaps not limited to West Asia but to the global sphere as well has been slowly emerging, looking at the agricultural trade which has significantly decreased. The disruption has hit India’s rice trade. As we know India is a leading Rice exporter dominating 45% of the global market. Which is now being curbed, inflation has been high and the harvest has decreased to below the expectation. The potential disruption of trade routes through the Red Sea adversely affects global supply chains. The Suez Canal, which connects the Red Sea to the Mediterranean, is a critical point for international shipping. Any blockage or disruption in the Red Sea would directly impact the Suez Canal, causing delays and increased shipping costs. For industries reliant on just-in-time delivery systems, such as manufacturing and retail, delays can result in major operational challenges and financial losses.

Response of the International community to the situation
The conflict has caused one of the world’s worst humanitarian crises, just like any other geo-political conflict. Addressing the Red Sea Crisis requires a coordinated and multifaceted approach. Diplomatic efforts have been underway to address the tensions and foster cooperation among the Red Sea’s aggressive states of the moment. The Red Sea Forum, for instance, brings together countries from the region to discuss security, economic, diplomatic and environmental issues.

International naval coalitions, such as the Combined Maritime Forces (CMF), play a vital role in ensuring maritime security. These coalitions conduct patrols and undertake anti-piracy operations. However, to avoid the attacks and keep the region safe, U.S. Defence Secretary Lloyd Austin said, “We’ve launched Operation Prosperity Guardian under combined maritime forces and under the leadership of Task Force 153.” These countries are not the only solutions that can help bridge and resolve the conflict.

India is doing its bit to mitigate the crisis; our Indian Navy is on the job they have been manning the waters in and around the Red Sea trying to secure vital routes and rescuing sailors under threat. The Indian Navy almost conducted 9 operations saving the commercial ships. Similarly, environmental conservation efforts are essential to preserving the Red Sea and maintaining its sustainability. The war is an entangled chaotic interplay between the aggressive states which needs to be addressed and worked upon.

It cab be observed that the United States and China have significant strategic interests in the Red Sea. The U.S. maintains a military presence in Djibouti, while China has established its first overseas military base there, marking its strategic pivot to the region.

Moreover, the West has responded to the Houthis attack. They have announced “The 10 nations maritime coalition” portrayed as the “Red Sea Saviours”. Spain declared that it would not be joining the U.S.-led coalition giving no reason to it. The Spanish press says that the non-participation decision is driven by domestic politics. But the obvious question remains whether the Red Sea Force has failed. It seems like it is not a prompt resolution to form a coalition maybe as we barely see countries participating the reports say Australia has hardly sent 11 soldiers, the Netherlands sent 2 and Norway has sent 10. As observed there cannot be anyways a concrete settlement to the Red Sea crisis until the Israel – Hamas conflict ends.

What is clear from the entire turbulence in the Red Sea is the fact that prolonged disruption will hurt not only nations but also their economic growth and ecosystem. The entire region is at risk but being a bigger economy India is likely to suffer a more adverse and damaging impact. Maybe by adopting a comprehensive approach and overall cooperation of the countries, Bharat’s Prime Minister has recognized the interdependence and interconnectedness of the world by saying, ‘Vasudhaiva Kutumbakam’ at several global forums. The concept promotes global cooperation, international stability and the collective well-being of the nations. We can navigate to balance security, economic stability and environmental considerations, towards a more peaceful and sustainable solution and future for the Red Sea and beyond.

References

  • Simpson, Jack (2024). As the Red Sea crisis continues, pressure on consumer prices follows in its wake
  • Simhan, Raja Te (2024). Red Sea crisis: 100 days over with trade badly affected
  • Kamali Parisa & Koepke Robin (2024). Red Sea attacks disrupt global trade
  • Saha Dhruvaksh (2024). Red Sea crisis to cause 15-20% industry capacity loss
  • Scott David (2024). China’s Calculated Inaction in the Red Sea Crisis
  • Baraniuk Chris (2024). Red Sea crisis: What it takes to reroute the world’s biggest cargo ships
  • Thirumalai Vaageesh (2024). Red Sea crisis to hit agri commodities, marine foods: Crisil

 

Authored by Manya Sharma

RLA Research Intern

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