Entering 2024, President Joe Biden faces headwinds he never envisioned. Economic indicators remain robust. But the ill effects of nearly two years of inflationary pressures persist. Higher prices endure, especially for food, energy, and housing. The Russia-Ukraine war is entering its third year. Biden continues to get grief over his support for Israel from the far-left wing of the Democratic Party and the United Nations. His job approval rating hovers around 40%.
Now, Biden has a Houthi problem.
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The Houthis are a rebel Shiite group that controls much of northern Yemen. They started as a mere tribal group but grew over time, storming Sanaa in 2014 and taking control of the government in a successful coup d’etat. Financially backed by Iran, another complication for Biden, who still wants to return to the nuclear deal with Tehran despite provisions of the original agreement beginning to expire, they were little more than a local and regional troublemaker. However, with the attacks, they have perpetrated against shipping companies entering the Red Sea from the Gulf of Aden and headed to the Suez Canal. The Houthi attacks have also caused a spike in oil prices in recent weeks as fears of Middle East instability tend to cause investors to get jittery.
Three weeks after the Hamas attacks against Israel, the military began its ground invasion of Gaza. Soon after, in a show of solidarity with Palestinians, the Houthi rebels attacked cargo ships in the Red Sea. As of Christmas, the group had attacked 15 commercial vessels in the region it claimed were headed for Israel or owned by the country. In one brazen attack that looks like something out of a Call of Duty video game, the Houthis recorded the takeover of a commercial shipping vessel with armed men after landing a military helicopter atop the ship. The rebels then raised Yemen and Palestinian flags on the deck.
The Suez Canal opened on Nov. 17, 1869. Construction took only 10 years, in part because the Mediterranean Sea and the Red Sea were at the same level and builders took advantage of the corvee (forced labor) to build. The waterway runs north-south across the Isthmus of Suez in Egypt to connect the Mediterranean and Red seas. The canal separates the African continent from Asia, and it provides the shortest maritime route between Europe and the lands around the Indian and western Pacific oceans.
The canal is critical to supply chain operations because of the shipping time it saves. For example, a ship traveling from a port in India to Italy takes approximately nine days, covering around 4,500 nautical miles. If that route is not available, the fastest way would be via the Cape of Good Hope and around Africa. That trip would take at least three weeks to complete, which is 10,500 nautical miles long.
The canal is a key maritime choke point connecting Europe with Asia, which makes it one of the more critical shipping lanes around the world. It’s the fourth busiest shipping lane in the world and is a passageway for over 20,000 ships a year. These ships carry about 12% of global trade, 9% of oil demand, 6% of liquefied natural gas imports, and 30% of container shipments.
The attacks forced some shipping companies to reroute their voyages, taking the longer route around Africa, and are having ill effects on business operations for some companies. One of them, Netherlands-based furniture retailer Ikea, said in a statement, “The situation in the Suez Canal will result in delays and may cause availability constraints for certain IKEA products. We are in close dialogue with our transportation partners to ensure the safety of people working in the IKEA value chain and to take all the necessary precautions to keep them safe. This is our main priority. In the meantime, we are evaluating other supply options to secure the availability of our products, and we continue to monitor the situation closely going forward.”
The financial burden affects many sectors. Shipping companies will impose additional fees on companies as the vessels will have to use more fuel and take more time to travel around Africa. Customers will absorb those costs in the form of higher prices. Oil prices have spiked, but it could get worse as additional costs, which include increased insurance rates and shipping times, get factored in. BP and tanker group Frontline have diverted their ships from the Red Sea and rerouted around Africa. The longer the attacks go on, the more deleterious the impact is on oil prices and, ultimately, gas prices.
Egypt also has a financial stake in this. The country owns and operates the Suez Canal Authority, which runs the canal, owns all the buildings, creates all the rules, and sets the toll price. The fees collected reach hundreds of thousands of dollars for a one-way trip. With shipping companies reaping record profits, the SCA hasn’t been shy about increasing toll rates. The revenue is in the billions. The SCA reported a record of $8 billion in revenues for 2022.
The Biden administration knew the situation was untenable. On Dec. 18, Defense Secretary Lloyd Austin announced the formation of a United States-led security operation focusing on the Red Sea and the Gulf of Aden. In a statement, Austin said, “This is an international challenge that demands collective action. Therefore, today I am announcing the establishment of Operation Prosperity Guardian, an important new multinational security initiative under the umbrella of the Combined Maritime Forces and the leadership of its Task Force 153, which focuses on security in the Red Sea.
“Operation Prosperity Guardian is bringing together multiple countries to include the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles, and Spain, to jointly address security challenges in the southern Red Sea and the Gulf of Aden, with the goal of ensuring freedom of navigation for all countries and bolstering regional security and prosperity.”
The security initiative formation’s impact remains to be seen. Maersk announced it is suspending all Red Sea operations until further notice, which will undoubtedly create additional headaches for the Biden administration.
Houthi attacks continue, and the creation of a security force puts U.S. service members in the line of fire. Any possibility of American service personnel deaths, along with naval assets on high alert following drone attacks, and the situation could deteriorate, especially as the Israel and Hamas war continues.
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The Biden administration is walking a fine line in the message it is sending to Israel. While Biden won’t use the word “ceasefire” and the U.S. recently abstained from a U.N. Security Council resolution calling for a “pause” in the war, in the last several weeks, the administration asked Israel to “scale back” its ground invasion. Israeli Chief of the General Staff Herzi Halevi said, “The war will go on for many months, and we will employ different methods to maintain our achievements for a long time.” Israeli Prime Minister Benjamin Netanyahu echoed that strategy, so any hope the Biden administration has of a scaled-back war anytime soon is not likely.
It all spells trouble for Biden’s reelection chances. Despite Donald Trump’s negatives, the former president still leads in several national and battleground polls. Trump is adept at sniffing out weakness. If the situation in the Middle East deteriorates, along with Ukraine getting bogged down in its efforts against Russia, Trump will jump all over that, and Biden may not have a satisfactory response.
Jay Caruso is a writer and editor residing in West Virginia.
