If you feel like the bad guys are winning lately, you’re not alone.
China is vacuuming up cheap Russian and Iranian oil as the Houthis attack Red Sea shipping. Iran is happy to have Houthi help against Saudi Arabia and America.
Who are these Houthis anyway, and how did they end up being a pawn to global forces?
Back Story
The movement was founded by Hussein al-Houthi, a Yemeni politician from the Zaydi region who opposed Yemen’s pro-American strongman President, Ali Abdullah Saleh. In the 1990s, Al-Houthi’s slogan on mosques and schools in the Zaydi region was: “God is the greatest; death to America; death to Israel; a curse upon the Jews; victory to Islam.”
In 2004, Al-Houthi led a rebellion against President Saleh. Government forces soon killed (or, as his supporters saw it, martyred) Al-Houthi. Afterwards, Al-Houthi’s father, Badreddin al-Houthi, took over the movement and continued fighting.
President Saleh launched Operation Scorched Earth against the Houthis in 2010, deploying 40,000 soldiers, tribal auxiliaries and a massive aerial bombardment. Badreddin al-Houthi died that year – ironically, not from Operation Scorched Earth, but from asthma.
Fast forward: The Houthi movement passed into the hands of Abdul-Malik al-Houthi, brother of Hussein al-Houthi, who runs the family business to this day; President Saleh was killed by the Houthis; the Saudis and other Arab states began bombarding and attacking Houthi-controlled strongholds and, most recently, in December 2023, the Houthis started their violent harassment of Red Sea commercial shipping.
So far, they have damaged dozens of ships, sinking one. They hold 25 hostages in the port of Hodeida from the British-owned Galaxy Leader. And, last but not least, using a ballistic missile, the Houthis killed three civilian crew of the Greek-owned True Confidence.
It takes true confidence to be a terrorist galaxy leader, but the Houthis are on their way.
Unholy Alliance
Iran deals weapons to the Houthis. Both are Shiite Muslim. Saudi Arabia, like many of its regional allies, is Sunni Muslim. Aside from that natural fault line, Iran and the Houthis are drawn together by commonalities in their worldview as it pertains to Jews and Westerners, whom a top Iranian Revolutionary Guard officer once called “decadent” while postulating that Europeans “live with animals” and would soon “become extinct.”
Since Yemen’s Houthi-controlled areas abut one of the world’s most important shipping lanes, asymmetric warfare has been highly effective. The Suez Canal used to generate 15 percent of Egypt’s “hard currency” income. Now it’s moving half a million fewer TEUs per day. Red Sea trade volume is down 80 percent overall, according to the Kiel Institute for the World Economy. Bremerhaven and Hamburg report 25 percent fewer inbound vessels.
No doubt, after years of suffering sanctions, Iran takes pleasure in this economic chaos. “The selective strategy employed by the Houthis is imposing economic penalties resembling economic sanctions that disproportionately affect E.U.-based firms as well as Egypt,” noted the Arab Center in Washington, D.C., a think tank.
Most Suez trade is now bound for South Africa’s Cape of Good Hope, but that way from Shanghai to Rotterdam takes 43 days instead of 33 days through the canal. Ships are en route longer and can’t be turned around as quickly, so there are fewer transits and, consequently, fewer boxes available to cater to shippers. The British Chambers of Commerce say freight rates to and from China are up 300 percent.
Insurers are incentivizing other routes. Lloyd’s declared the Red Sea a “listed area,” so any transit through it must be notified to one’s protection and indemnity club. Prior to the Houthi terrorism outbreak, vessel insurance for a Red Sea voyage was 0.05 percent of its value. In mid-December 2023, that had risen to 0.7 percent, which is a 1,400 percent spike.
But America and its European allies would never let the terrorists win, right?
Response from the West
To that end, two naval deployments are supposed to restore order to the Red Sea.
Operation Prosperity Guardian is led by the USS Dwight D. Eisenhower, a carrier, and supported by multiple destroyers, two British warships and one Danish frigate. Ike has been deployed at sea for over 200 days. It has intercepted Shahed drones and blasted Houthi installations, but it has unfortunately fallen short of its strategic goal. [Since publication, the Eisenhower CSG has returned to port - ed.]
Italian destroyer Caio Duilio, the flagship of Europe’s Operation Aspides, is heading up frigates from Germany, France, Belgium, Holland and Greece, as well as a Dutch supply ship. This group has intercepted many Houthi drones, but the mission is strictly defensive. Unlike Ike, the Europeans haven’t counter-attacked.
Given that a Shahed drone costs $20,000 and the French Aster missiles being used to shoot them down cost $4.3 million each, both the Iranians and the Houthis can be pleased with this outcome. Bad aim hardly matters when the Europeans are willing to hit themselves in the face.
Word on the street is that, since February, the cost of insurance per Red Sea voyage has escalated to fully one percent of the vessel’s value. That extra 42 percent spike in premiums means that Suez Canal trips are still financially unfeasible. If marine insurance reflects real risk, the military response orchestrated by the Western powers is not working.
Shipowners know this because they’re still steering clear of the Red Sea. At least Western shipowners are.
An analysis by maritime data consultancy Spire Global revealed in February that the top tag now used on automatic information systems (AIS) of vessels going through the Red Sea is “allchinesecrew,” followed by “allchinese” and “chineseownercrew.” The idea behind this is that Houthis will consult AIS data before deciding whether to attack a ship.
This idea was ratified in a March 2024 agreement between the Houthis, China and Russia. The Houthis would spare Chinese and Russian vessels in exchange for cover against anti-Houthi resolutions in the U.N. Security Council among other, undisclosed considerations.
Isn’t it wonderful to see everybody finally getting along?
Red Sea Express
Lucretius, the Roman poet, argued that “nature permits nothing to be born without the aid of another thing’s death.”
What is being born here is dominance over Red Sea shipping by “opportunistic newcomers” like China, who are “charging lucrative rates to compensate for the risks,” according to Taiwan-based analyst Martina Li.
If there are any profits left in the Red Sea, China will seize them.
In January 2024, China United Lines launched a “Red Sea Express” service between Chinese ports and Jeddah. China-owned, Singapore-based Sea Legend Shipping has begun similar services, using People’s Liberation Navy warships as escorts. The Chinese don’t plan to exclusively rely on those AIS tags for safe passage, it seems.
And that is wise. On May 18, 2024, a Russian “shadow” tanker carrying oil from Novorossiysk to China was – probably accidentally – hit by a Houthi ballistic missile, causing it to temporarily lose steering and propulsion before it could limp away. Will it be long before such “shadow” tankers are convoying with the Chinese navy?
China is said to buy 90 percent of Iranian oil – with the proceeds going to train and fund the Houthis. Russia has been China’s largest oil supplier since 2023.
Who’s Winning?
Although foreseeable, it can be surprising when dusk turns to night. So it is with Russia and China making common cause with Iran and its terrorist proxies. The Red Sea will remain off limits until Europe and the U.S. can figure out how to respond.
"Sweet it is, when on the great sea the winds are buffeting the waters, to gaze from the land on another's great struggles,” Lucretius wrote. The Houthis must surely agree.
