Less than four months after Hamas’ aggressive assault on Israel, the conflict has dangerously spilt over into the Red Sea, posing serious economic and security challenges for India and the world.
The Houthis, allegedly backed by Iran, had already aligned with Hamas against Israel. Their attacks on Israel-bound commercial ships started on 19 October 2023. Soon, the US Navy became involved, playing an instrumental role in intercepting Houthi missiles launched against Israel.
Houthi spokesperson Yahya Saree publicly threw down the gauntlet, took responsibility for the attacks and said that they would continue. While he initially claimed to have only attacked Israeli ships, other ships were also targeted. Soon, Houthi attacks on commercial vessels in the Red Sea became prevalent.
Red Sea: A strategic chokepoint
The Red Sea is a crucial global maritime route. Technically, it is a seawater inlet of the Indian Ocean between Asia and Africa.
This sea passage is confined between two crucial points – the Suez Canal and the Sinai Peninsula in the north and the Bab el-Mandeb strait in the south toward the Gulf of Aden (old name for Yemen)
Houthi militants lately have been targeting merchant vessels from diverse nations in the Red Sea, particularly in the Bab el-Mandeb strait. This strategic chokepoint holds significant importance in the global economy.
These assaults have significantly impacted the commercial feasibility of the one of world’s busiest maritime routes, with India’s maritime trade also suffering considerable consequences.
Also read: Red Sea attacks a rent-seeking gesture not war cry. Bombing Yemen won’t fix the crisis
International response
The US and UK launched joint strikes on the Houthis on 11 and 22 January in response to these attacks. The US has also launched eight separate strikes.
India’s early response to the Red Sea Crisis was balanced and muted. External affairs minister S Jaishankar’s visit to Tehran on 15 January signalled India’s willingness to explore a diplomatic solution. It has steered clear of joining the US-led multinational naval coalition in the Red Sea while it remains critical of the Houthis’ violence.
However, things quickly changed when the spectrum of attacks against commercial vessels diversified to a return of pirates’ attacks in the region.
India, initially exploring a diplomatic solution to the problem, is now deploying unprecedented naval capabilities to solve it. The experience of attacked vessels – MV Chem Pluto, which had Indian crew on board and MV Sai Baba, which was registered in India – has been instrumental in New Delhi’s toughened stance. In its largest deployment in the region, India has stationed two frontline warships in the Gulf of Aden and at least 10 warships in the northern and western Arabian Sea, along with surveillance aircraft.
India’s commitment to duly respond to piracy is indeed a commendable feat. It shows New Delhi’s ability to rise to emergency maritime situations. The country has aced the diplomatic game by saving Pakistanis, Iranians, Israelis and others alike.
But does that solve India’s economic setbacks in the region? Not quite.
Despite India’s efforts, securing sea lanes remains an elusive endeavour. The crisis may escalate further, with the risk of a direct confrontation between Iran and the US becoming more real. This likelihood has increased after three American GIs were killed by Iraqi militants in Jordan on 28 January.
The pressing global concern now is to prevent the sabotage of trade in the Red Sea region.
Also read: Houthi attacks in Red Sea a Taliban moment for US. India must secure alternate sea routes
But whose trade is being disrupted?
The repercussions on India’s maritime trade are profound, as the economic fallout of Houthi attacks on commercial ships has taken a severe toll on the global economy. According to data from Xeneta, an ocean freight benchmarking firm, the surge in ocean freight rates has already exceeded the levels seen during the Covid-19 pandemic, when global supply chains were mercilessly disrupted. These shipping costs have skyrocketed by over 200 per cent in the first 50 days of the crisis, primarily due to the rerouting of ships along the Cape of Good Hope. There is also a hidden cost for the rerouting, which comes with 30 per cent more emissions.
For India, which relies on the Red Sea route through the Suez Canal for trade with Europe, North America, North Africa, and parts of the Middle East, the impact is substantial. In terms of exports and imports, this region represented approximately Rs 35 lakh crore; constituting 50 per cent of India’s exports (Rs 18 lakh crore) and 30 per cent of India’s imports (Rs 17 lakh crore); in the last fiscal year. The economic significance of the Red Sea for India cannot be overstated.
What merits more attention is the fact that the Houthis are not indiscriminate in their attacks. While the attacks themselves have been rampant, there is a tacit commitment to not attack Chinese or China-bound ships and Russian vessels. When compared with the data shared in other reports, this indeed seems true and confirms the statements made by Houthi official Mohammed al-Bukhaiti on protecting Chinese and Russian interests in the region.
There is perhaps more than what meets the eye that should worry New Delhi.
Also read: As Navy deploys missile destroyers to Red Sea, a look at why Houthi attacks on ships matter to India
The curious case of Marlin Luanda
The Houthis’ recent missile attack on the commercial vessel Marlin Luanda, owned by British company Trafigura, shows geoeconomics is not just about international trade.
Marlin Luanda was carrying about 91,000 metric tonnes of Russian naphtha (allegedly purchased below the price cap), loaded in the Greek bay of Laconia. Part of the cargo was discharged in Egypt and the rest was bound to Singapore.
India swiftly responded to the distress call after the Houthi attack, helping extinguish a fire that saved 22 Indian-origin and one Bangladeshi-origin crew.
Marlin Luanda’s case must prompt fresh strategic thinking on the situation. While containers carrying Russian fuel headed to other countries are attacked, those headed to China are not. This quite explains the unnerving silence of an unfazed China. Beijing’s absence from the Red Sea crisis shows it could be benefiting from the situation.
China doesn’t lose much, as long as its economic interests are not hurt and its adversaries’ are. If the crisis is resolved, Beijing stands to benefit from the restoration of freedom of navigation and security of sea lanes—in characteristic China fashion.
Russia has commented on closely watching the Red Sea situation. But by all markers, it is a rather low-risk situation for Moscow, with the country’s shipments sailing largely uninterrupted. Russia has not called out Hamas and Houthi violence from the beginning, instead vehemently condemning the Western air strikes on them. Amid the Red Sea crisis, the heavily sanctioned countries,Russia and Iran, have ended up strengthening ties.
Tehran has been supporting the Russian military – especially with its Shahed Drones – and has been a crucial pillar of military support for Moscow along with North Korea.
It must also be borne in mind that the prices of oil, which had been falling for months, have risen by 10 per cent after Houthis started attacking commercial ships.
India should indeed worry about the crisis in the Red Sea. With billions of dollars at stake and millions lost, it seems to be the writing on the wall.
Also read: Why Red Sea crisis could cost India—Modi govt sets energy goals but doesn’t follow through
The way forward
From New Delhi’s perspective, this geopolitical potpourri presents an opportunity despite economic problems stemming from re-routing.
Going by the recent commitments made by India and France, it is indeed time for the securitisation of strategic sea lanes of communications. If Donald Trump returns and the US turns inward, there will be a compelling economic logic for countries with the highest economic stakes to strategise the security of sea lanes in the Red Sea. That could synergise dividends from the potentially promising hostage deal led by the US and Saudi Arabia, if it works.
But that might also put in place new forms of nimble plurilaterals with a focused objective and an efficient division of labour between India, France and the UAE or India-France and the UK. Any such framework will have to be larger than merely the semantics, for it will require strengthening the securitisation of the maritime domain in a complexly bifurcated world.
The writer is an Associate Fellow, Europe and Eurasia Center, at the Manohar Parrikar Institute for Defence Studies and Analyses. She tweets @swasrao. Views are personal.
(Edited by Zoya Bhatti)