Israel-Gaza War, Houthis, Economy

The Costs of the Houthi Blockade of Israeli-affiliated Shipping

The declared Houthi blockade on ships coming in and out of Israel and passing through the Red Sea is underway. What does it mean for Israel?

Containers containing all sorts of goods delayed for weeks due to Houthi action. Containers at Haifa port. (Photo: Yaakov Naumi/Flash90)

Having failed to hit Israel with long range missiles and drones, the Iran-backed Houthi rebels have now declared an effective blockade of Israeli or Israeli-affiliated ships passing through the Red Sea. The long-term consequences of this costly move remain unclear.

Ever since the war against Hamas in Gaza began, all of Iran's proxies throughout the Middle East have tried to at least symbolically help out, whether it's Hezbollah's border skirmishes in southern Lebanon or Syrian and Iraqi proxies attacking American bases in the region.

The Iran-backed Houthi rebels in Yemen are at a great distance from Israel and have tried to launch multiple missiles and drones at the south of the country, all of which have landed before they reached Israel or were intercepted by Israeli or Saudi defenses.

The Houthis have also tried another tack which appears more successful: blockade. The Bab el-Mandeb straits through which ships pass to enter the Red Sea is just 30 kilometers long, and the Houthis have declared they would attack or hijack any Israel-affiliated ship passing through its waters.

Three such reported attempts have happened since the war started, all involving ships partially owned by Israeli businessmen or companies, according to an in-depth analysis done by Israeli economic paper Calcalist.

According to the former Naval Chief Maj.-Gen. (res.) Eli Sharvit, who spoke to Calcalist, there's no such thing as purely Israeli ships carrying purely Israeli goods. Ships today are multinational, visiting several ports in a row, with partial ownerships and multinational crews. Houthi attacks on shipping in this area is thus an act of international piracy that should concern the whole free world, and the US appears to agree given its help in defeating one such effort.

Despite this, the erratic blockade is taking its toll. The Israeli shipping company ZIM announced that it would be bypassing the more direct route from the east to the Red Sea to the Mediterranean via the Suez Canal for the longer and more expensive route of circumnavigating the entire African continent. This decision means lots of needed and ordered goods around the world, not just in Israel, could take weeks longer to arrive. The danger also exists of companies deciding to not take Israeli goods with them to reduce risk.

The increased risk to shipping in this vital lane also means higher insurance premiums, though a source speaking to Calcalist said that such increases would be tolerable and absorbed into the cost of the goods they carry.

Sharvit stated that the Houthis have significant naval warfare capabilities including ground to ship missiles, but that Israel also has military tools at its disposal to fight back. "They only need to decide" to use them, Sharvit said.

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