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Navies must ensure trade flows in the Red Sea

Merchant vessels and seafarers who serve on them are increasingly coming under Houthi attack. They need protection

Let gunboat diplomacy be confined to the past. But there are legitimate uses of gunboats in the 21st century; the continued flow of world trade is one of them

IN 1839, the East India Company decided it needed a coaling station for vessels serving its rule in southeast Asia. Aden, perfectly situated and one of the world’s great natural harbours to boot, was the obvious choice.

The tenure of then-foreign secretary Lord Palmerston was the pinnacle of gunboat diplomacy, and Britain accordingly dispatched a warship to the port, where it proceeded to blow much of the surrounding town to kingdom come.

The Sultan of Lahej was thereafter “offered British protection”, as the early Victorian euphemism had it. Naturally, that entailed annexing his territories to the Bombay Presidency.

Aden’s importance as a bunkering facility, for the Royal Navy as well as commercial vessels, grew further still after the opening of the Suez Canal in 1869.

For better, but usually for worse, then, two centuries of history have left the destiny of what is now Yemen intertwined with shipping security.

The attacks on merchant ships launched from that country since last month, which numbered at least seven and possibly 10 at the time of writing, are only the latest iteration of this reality.

The effect of outside military intervention in that country has been so baleful that one hesitates to demand more of it. But trading nations have a duty to ensure the trade flows.

The situation recalls the Somali piracy crisis, and the expedient of multilateral naval collaboration must surely now be on the agenda.

The British empire held on to what became the crown colony of South Yemen as long as it was able, fighting one of its last but perhaps most brutal colonial wars before granting independence in 1967.

Unification with North Yemen, which remained nominally autonomous all along, followed in 1990. But the lash-up was never a happy one. Civil wars broke out in 1994 and again since 2015.

The more recent fighting, essentially a proxy conflict between Saudi Arabia and Iran, has left the Tehran-aligned Houthis as the de facto government of much of the country.

Part of the faction’s official slogan runs: “Death to America, Death to Israel, Cursed be the Jews.” In furtherance of this programme, Houthi armed forces announced in November they would target Israeli vessels transiting the Red Sea, in solidarity with the Palestinian side in the Gaza conflict.

The most spectacular incident to date has been the hijack of Galaxy Leader on November 19, which saw a helicopter land on the deck of the Ungar family-owned car carrier, which now sits alongside at Hodeidah.

The industry has initially reacted with sangfroid. Additional premiums for the Red Sea have doubled from 0.1% to 0.2% of hull value, which given the degree of risk involved is not too big an ask.

That said, some London underwriters will not write Israeli owners for the trip, and the ones that will have been asking for an uplift of 250%. Many of the owners in question have understandably chosen to reroute round the Cape of Good Hope. 

Most prominently, on Friday, Maersk and Hapag-Lloyd said they would halt Red Sea passages after a spate of attacks.

While holding the predominantly Filipino crew of Galaxy Leader (IMO: 9237307) against their will is an unconscionable outrage, so far no seafarers have been killed or injured by Houthi belligerence.

Owners have hardly relished having to pay tens of thousands of dollars more — and for more expensive ships, hundreds of thousands of dollars more — in insurance costs.

But precisely because the Suez Canal is unavoidable to many, it has made sense to stump up, especially when the bill can be passed on. Liner companies, including Zim, Hapag-Lloyd and Maersk, are levying war risk surcharges of $50-$100 a box.

However, war risk underwriters, who got their fingers burned with an estimated $400m payout on total losses on the anniversary date of the Russian incursion into Ukraine last February, are understandably jittery.

Maersk Gibraltar (IMO: 9739692) — which was hit by a missile on Thursday — is beneficially owned by Greater China Intermodal, managed by Vancouver-based Seaspan Ship Management and operated by Denmark’s Maersk.

In other words, it has no discernible links to Israel whatsoever. If it can be assailed, so can any other ship. The expectation is that premiums will rise to the point where they become a significant burden.

The obvious precedent would be the 5% of hull value seen in the Iran-Iraq war of the 1980s, which could start putting millions of dollars on the cost of a single trip, rendering many voyages unviable.

US and French warships have reacted swiftly and effectively so far, shooting down drones and escorting ships to safety. We thank them for doing a great job and ask that they continue to do it.

There has been media speculation that Washington is ready to act to ensure continued freedom of navigation. If that happens, other countries should join the operation.

BIMCO has argued more Western military resources would help, perhaps to mount convoys or so-called area operations.

On Friday, the International Chamber of Shipping issued a statement lauding naval efforts so far, adding that it “hopes [for] and expects further commitments of the same nature in the very near future”.

Hubris alone dictates that nobody in their right mind should lightly demand military involvement in the Arab world. The consequences — as Libya and Syria remind us to this day — are wont to be unpredictable.

Lloyd’s List is acutely aware that it is a publication based in Yemen’s former colonial power. It is highly likely to have covered the annexation of Aden and the implications for marine insurance in its print editions of the time.

Let gunboat diplomacy be confined to the past. But there are legitimate uses of gunboats in the 21st century; the continued flow of world trade is one of them.

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