Insurance companies have a profound impact on strategic outcomes, as Houthi attacks in the Red and Arabian Seas in November and December demonstrated.
The attacks on ships entering and exiting the Red Sea have already been extensive enough to affect the global economy and supply chain for the coming year, at least.
This is an “insurance war,” designed not so much to inflict direct physical damage on the ships as to drive up shipping insurance. This was achieved within a week of the first attacks, increasing insurance costs by 200 percent for starters.
This meant that, first, costs were passed on to consumers, and then, as the attacks were sustained, shipping companies were forced to defer to their insurers by stopping traffic through the Red Sea and Suez Canal. This forces shipping to go around the Cape of Good Hope, around the foot of Africa, causing longer sea voyages, which are not only more expensive in terms of shipping costs but also mean that shipped inventory is at sea for perhaps an additional two weeks.
The Houthi (or, more correctly, the Ansarullah movement) strategy, possibly backed by Iran, mirrors the 1984 Libyan minelaying incident in which the Libyan naval minelayer Ghat dropped three floating sea mines in the Red Sea. All shipping was forced, by insurance company demands, to reroute around Africa, causing major international economic damage.
The indirect attacks by Libya’s Muammar al-Qadhafi almost bankrupted Egypt at the time. The situation is far worse now, with globalization meaning that the Red Sea–Suez chokepoint sees massively more trade than it did in 1984.
Yemeni armed forces assets—now under the control of the Houthi militia—used a combination of air, sea, and ground-based forces to implement the attacks, including the seizure of the Japanese-operated, British-owned freighter Galaxy Leader in November, utilizing sea-based monitoring and an insertion of combatants from a Yemeni Mi-17 multi-mission helicopter. The Houthi attacks now include the use of sea mines.
Yemen’s “internationally recognized” government now controls only a rump state in the southern region around Aden.
Meanwhile, all the Houthis need to do is keep up the occasional inaccurate cruise missile or drone attack to help deepen the economic crisis in which Europe, in particular, is engrossed. And the Houthi approach is as much aimed at Egypt as anyone, despite the claims of a solely anti-Israeli, pro-Palestinian purpose. As much as half of Egypt’s foreign exchange earnings have been derived from Suez Canal traffic. The attacks also targeted Saudi Arabia, which has been at war with the Houthis for some years. If it can damage Saudi Arabia’s normalization with Israel, it will have achieved one of its objectives.
Either the West will accept the minimal risk of shipping damage—which is what insurance companies are supposed to do—or the damage to the global economy will continue.
It’s militarily not viable at present for the West to attempt a military solution in Yemen, any more than it was possible for Saudi Arabia and the United Arab Emirates. So the answers must include living with the minor threat, mitigating the threat through anti-missile capabilities (as is already happening), and seeking a negotiated end to the threat.
The Houthis aren’t the Iranians, nor a proxy for them (despite possible Iranian government intentions). They may benefit from Iranian (and Qatari and Chinese) weapons supplies. Still, the Houthis are a different type of Shia Muslim people, and—as the Saudis and Egyptians found in the 20th century—take orders from no one.
This ignores the fundamental issue of the insurance aspect of the operations, which gives the Yemenis a strategic capability that the force of arms does not. Increasingly evident in Western strategic and social thinking is a risk-aversion, which means that insurance company tolerance for war risk—as evidenced in the Russian blockade of Ukrainian grain ships exiting Black Sea ports—is almost nonexistent.
What are the major Western governments doing to address this?
Apparently, very little. And yet insurance risk has played a considerable role in conflicts over the past few centuries, particularly during the two world wars of the 20th century. Lessons from World Wars I and II would need to be revisited.
Part of the Western—and even Israeli—response would need to include an actual suppression of Yemeni air, sea, ground force, and missile or unmanned aerial vehicle capabilities at a tactical level as they arise.
So far, the attacks have been militarily ineffective, albeit psychologically critical. This is, in fact, primarily a psychological war gambit.
