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Sun, 14 April 2024

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By BAE Systems Plc

Red Sea crisis is a warning that we must invest in our maritime capability

HMS Richmond | Image by: Stephen Barnes/Military / Alamy Stock Photo

4 min read

The current conflict highlights the vulnerability of the global economy to disruption of freedom of navigation

There has seldom been a clearer legal case for an international coalition taking action than there is for the current operations taking place in the Red Sea against the Iranian-backed Houthis. Led by the United States and the United Kingdom, and joined by the Netherlands, Bahrain, Canada, and Australia, the principle of freedom of navigation is rightly being defended. 

When this concept became part of the broader body of laws of the sea in 1982 in the United Nations Convention on the Law of the Sea, Article 87 clearly set out that “the high seas are open to all states, whether coastal or landlocked”. Article 24 supported this by stating that “the coastal state shall not hamper the innocent passage of foreign ships through the territorial sea”, provided that vessels do not threaten “peace, good order or security.”

The violent and indiscriminate attacks on unarmed shipping, putting human life at risk, are a clear violation of international law. With such a clear threat being posed to the international order, it is scandalous that more countries have not joined the international coalition, with many of the usual suspects expecting others to carry the burden of protection from which everyone will benefit.

The economic case for action is also clear. More than 80 per cent of international trade by volume is transported by sea, and around 15 per cent of the total moves through the Red Sea to and from the Suez Canal. About half of this trade is made up of containerised goods, and oil shipments from the Gulf to Europe and North America make up a considerable proportion of the rest. 

Disruption results in shipping having to sail around the southern tip of Africa, adding some 3,500 nautical miles to the journey and resulting in disruptions of 10 to 14 days. Some of the world’s biggest companies, including Maersk and Hapag-Lloyd, have already taken this journey, resulting in the delayed delivery of manufacturing components and goods to European markets. 

The violent and indiscriminate attacks on unarmed shipping, putting human life at risk, are a clear violation of international law

In the first week of January 2024, over 220 fewer vessels transited the Red Sea compared to the previous year, and figures suggest that the rerouting of vessels is still increasing. Higher costs in global shipping have already started with the chief executive of sports manufacturer Adidas complaining that “the spot rates are exploding again, so if you don’t have a long-term contract or you ship more than your contract there is an increased cost”. 

For exporting countries like India, the effect will be sharply felt. For a 20ft container to Europe, shipping costs have gone up to $2,100-2,500 from the previous $500-600. Shipping costs to the east coast of the US have doubled from $1,600 to $3,100, and another round of price hikes is expected.

There are other costs rising  which will eventually find their way to consumers. The price of Brent climbed to over $93 in the days following the mass attacks on Israel and is currently trading around $80, having fallen back to $73 before the Houthi attacks intensified. Disruption to global shipping – with backlogs in ports, diversions causing a decrease in ship availability, and rising insurance costs – will inevitably have a negative economic impact. 

The environment, too, will suffer. Having to sail around the Cape of Good Hope requires ships to burn significantly more fuel and the carbon footprint of the industry, which already contributes nearly three per cent of all global greenhouse gas emissions, will rise further.

The real questions are not around justification but about effectiveness, the availability of military assets, and the long-term costs of any operations which need to be sustained to deal with the Houthi threat. It will raise the issue in the UK as to whether the Royal Navy is suitably manned, funded and equipped for a nation where more than 90 per cent of our trade goes by sea. 

The current conflict is a clear warning about the vulnerability of the global economy to disruption of freedom of navigation – something that has been given too little consideration in national and international security planning.

Liam Fox is Conservative MP for North Somerset and former trade secretary 

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