Red Sea Blockade

Seth Cropsey

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On 6 March, a Houthi missile attack on a merchant ship off the coast of Yemen, killed three crewmen and forced evacuation of the burning ship. The fatalities were the first in the Houthis’ ongoing attack on shipping in the international waters of the Red Sea.

Houthi disruption to maritime traffic in the region has continued nearly unabated for months, despite multiple rounds of U.S. and allied strikes to degrade Houthi capacity. The result should be a shift in policy from the Biden administration to one of blockade that cuts off the Houthis from their Iranian masters, and thereby erodes the threat. This would impose costs on both Iran and its proxy neither of which will stand down once the war in Gaza ends. But successful blockades require naval combatants: the U.S. continues to experience its decades long decline in naval capacity. And this, in turn, demands a more fundamental reassessment of the Anglo-American strategic construct.

The Houthis, an Iranian proxy organization that has fought a near decade-long war against the internationally recognized, Saudi-Emirati-backed Yemeni government, have demonstrated their geopolitical value since the Hamas-executed, Iranian-assisted 7 October 2023 attacks on Israel. Like Kataib Hezbollah in Iraq, various militia groups in Syria, and Hezbollah in Lebanon, the Houthis have turned to Iran’s best-known tool, a missile and drone arsenal, to squeeze Israel and the United States.

Yet the Houthis play a specific role in Iranian strategy, distinct from the other members of the Axis of Resistance. The Lebanese, Syrian, and Iraqi elements of Iran’s proxy alliance pressure Israel directly or stress the U.S.’ remaining, and critical, forward defense network in the Middle East. By driving the U.S. from its Syrian al-Tanf complex in particular, Iran hopes to shorten its supply lines, use the Baghdad-Damascus highway directly, and apply greater pressure to Jordan in tandem with the West Bank.

The Houthis, by contrast, have an international mission. Since 7 October, the Houthis have employed loitering munitions and ballistic missiles to attack civilian shipping transiting the Mediterranean-Indian Ocean route, the beating heart of the Eurasian trade system, while also launching sporadic ballistic missile raids on Israel. While initially claiming to target only Israeli-affiliated and Israeli-bound shipping, the Houthis, and their Iranian masters, lack such discrimination, with the partial exception of limiting attacks on Chinese shipping.

The objective of these attacks is threefold. First, while Iranian propaganda, in tandem with the standard left-of-center social justice activism complex – and undoubtedly with help from Russian and Chinese actors – has turned the Israeli campaign against Hamas in Gaza into an international public opinion disaster for Jerusalem, Iran and the Axis have only limited means to demonstrate a Middle Eastern war’s political costs internationally.

If, or more accurately when, Israel and Iran engage in Lebanon, and likely in Syria, the results will have a global impact. Energy prices will rise, even if briefly, the Levantine Basin’s shipping will be disrupted, and another wave of refugees will pour out of the Middle East toward Europe, just as the European far-right is gaining political traction. Yet even this war can be contained, if Israeli-Iranian reprisals do not draw Saudi Arabia and the UAE into a broader conflict, jeopardizing their oil production capacity. Hence while a Middle Eastern war would have telling geopolitical and macroeconomic effects, financial markets, and the public, can ignore the prospects of conflict until the explosion occurs.

The Houthi threat, however, demonstrates Iran’s international reach. As Houthi disruption has persisted, shipping prices have increased in light of higher insurance premiums and rerouting around Africa’s Cape of Good Hope. British firms have already reported a 300% container cost increase, while JP Morgan estimates the disruption will add 0.7% to core goods inflation, and 0.3% to overall inflation. Egypt’s state-owned Suez Canal Authority has lost 40% of its revenue compared to last year, the equivalent to a $300 million shortfall, a serious and possibly consequential loss to Egypt’s fragile economy. Although inflation is decreasing in North America and Europe, persistent disruptions will prevent it from dropping off altogether, just as the U.S. and Europe face a potential political crisis between June and November 2024.

Iran’s point, implicitly at least, is to demonstrate the costs of Western support for Israel. The longer the U.S. provides political cover for Israeli operations in Gaza, the longer Red Sea disruption is likely to continue. Moreover, Iran can prolong or re-activate this choking operation at will even when the Gaza War ends.

A Western coalition with a marginally greater acceptance of risk would execute a much broader strike campaign against Yemen, concentrating air-naval strike and aerospace ISR assets to degrade the Houthis rapidly. This is well within U.S. and allied capacity – indeed, the responsiveness of a limited strike campaign demonstrates the degree to which the U.S. can execute a coherent strike effort.

Yet the U.S. and its allies have selected a much feebler option, a series of strikes against the Houthis, and an escort mission that has limited the damage to merchant shipping, but that has not dissuaded major carriers from rerouting shipping. Additionally, as much as the Biden administration’s escalation aversion undermines its policy, so too do the demands from the Gulf States to limit conflict: Riyadh and Abu Dhabi have no desire to scrap their detente with Tehran, and both are clearly concerned that any significant pressure on the Houthis will place them in the line of fire.

The natural solution to this predicament stems from the flexibility of naval power – a blockade on the Houthi-controlled areas of Yemen that prevents Iranian weapons from flowing in. The Houthis control much of northern and western Yemen, but the internationally-recognized government and Gulf Arab-backed forces still hold much of the rest of the country, along with Yemen’s major Indian Ocean ports. A partial blockade can therefore be executed around the Bab-al-Mandeb, leveraging naval forces and assets from Camp Lemonnier in Djibouti, and potentially Coast Guard assets forward-deployed to Central Command for this purpose. The U.S. has executed some interdiction missions.

The difficulty is, the U.S. lacks the surface combatants to execute an effective blockade. Numerically speaking, while the fleet is overstressed, with maintenance and personnel issues already well-known, the U.S. lacks the ships to execute a blockade unless it moves large combatants away from their current tasks. As FDR put it before Pearl Harbor, “I simply have not got enough Navy to go round.”

We are in a similar position today. The Navy’s Constellation-class frigates, the service’s new small warship, remain several years away from service, while its Littoral Combat Ships are vulnerable to Houthi missiles, lacking the sophisticated air defense radars and large missile magazines of top-line surface combatants like the Arleigh Burke-class destroyers. The Burke destroyers, however, must be reserved for other missions, namely carrier escort and ballistic missile defense. The result is a trade between low-end presence and merchant protection missions and high-end defensive capacity.

The most reasonable response today is an international blockade mission that leverages the smaller surface combatants in European navies to conduct it. Yet this would demand a coherent alliance management policy vis-a-vis the Middle East, the first step of which would be a shift from focus on the Gaza War to the totality of the threat from Iran.

The only long-term solution, of course, is the revitalization of U.S. naval power, underpinned by a defense budget that invests in long-term shipyard expansion and, even more drastically from a bureaucratic viewpoint, direct contracts with foreign yards that are simply more capable than their U.S. counterparts at producing small and medium surface combatants quickly.