US President Donald Trump ordered extensive strikes on targets of the Houthi rebels in Yemen at the weekend, following the rebels’ declaration that they would resume their blockade of the Red Sea, in response to "the blockade on the Gaza Strip".
"Your time is up and your attacks must stop," Trump said, declaring that, if they did not, "Hell will rain down upon you."
The Houthis do not control all of Yemen, but they do control most of the east coast of the southern Red Sea. They are therefore able to attack any ship that enters the Red Sea from the south, through the Bab el-Mandeb strait. Their attacks have affected, and still affect, the countries of the region, and the entire world, since 14% of global maritime trade passes through the Red Sea, or it did until the Swords of Iron war in the Gaza Strip.
The greatest direct damage is to Egypt. Until the war, the northern gate of the Red Sea, the Suez Canal, was the source of 2% of Egypt’s GDP. In 2024, as a result of the Houthis’ attacks on shipping, which led the major shipping companies to divert their ships around the Cape of Good Hope, Egypt lost revenue of $7 billion. At a global level, data from Xeneta, which deals in freight costs and shipping market analysis, indicate that the cost of shipping from the Far East to Northern Europe shot up by 426% between the start of the crisis in the Red Sea and last July.
Since then, costs have fallen, as the market reorganized in accordance with the Cape of Good Hope route, but they remain relatively high. Throughout the period, Chinese and Russian ships have on the whole enjoyed safe passage in the Red Sea, apart from a few instances in which they too were attacked. What’s more, in February and May last year, Iran’s proxies in Yemen mistakenly attacked Iranian bulk carriers.
Yaki Dayan, a former Israeli consul general in Los Angeles, explains that the treatment of the Houthis was one of the outstanding weaknesses of the Biden administration. "With a feeble policy of a great deal of defense and little offense, he allowed the Houthis to run riot. By contrast, when we saw the Houthis declaring that they were going to revert to blockading ships, we saw a much larger US strike than in the past."
Trump’s order to attack various Houthi targets in Yemen was influenced not just by their declarations, but also by the insistence of the shipping companies that they would not return to the Red Sea until they saw a material improvement in the security situation in the area. Instead, they continue to use the Cape of Good Hope route, a route that is longer by at least two weeks, adding to the cost of products.
According to investment bank Jefferies, the proportion of shipping diverted from the Red Sea so far this year is 56% of bulk carriers, 48% of oil tankers, and 90% of container vessels, while another investment bank, Sundal Collier, found that the number of vessels entering the Gulf of Aden, south of Bab el-Mandeb, was down 72% on average in 2023. After the Houthis’ declarations about renewing their attacks, it can be presumed that these proportions are liable to rise further.
"Trump wields a big stick, and he understands that unless he uses it now, he will erode deterrence," says Dayan. "This is a message that the Trump doctrine is different, and has an offensive element by means of which he wants to deal with the Houthi problem. It’s also a message to the Iranians that ‘We don’t just threaten, we act.’"
Iran left behind
Iran is receiving the message of which Dayan speaks at a time when its economic position is worse than ever. This Thursday, Nowruz, the Persian New Year, begins, with a budget that, according to the Amwaj website, contains a deficit of 18,050 trillion rials, 487% larger than in 2024-2025. That money does not go to help the one-third of the Iranian population that lives below the poverty line, but to the priorities of the regime of the Ayatollahs. Iran has increased its defense budget by 20%%, from $10.3 billion to $30.9 billion, and the budget of the public broadcasting corporation IRIB by 50% to $36 million, this despite the fact that only 11.5% of the population watches the channel.
"Teheran suffers from water supply problems, and so the regime can’t leave everything and go to help the Houthis when there are such severe problems at home," explains Benny Sabati, an Iran researcher at the Institute for National Security Studies. "The Iranian budget will pass in the coming days, but it falls short, so how can they help the Houthis? The people are angry. Iran’s current state takes it back to the period after the Iran-Iraq war, but the Iranians know how to persuade themselves that everything will be alright."
The Houthis are in some ways the last arm of the axis of resistance that remains active. Hezbollah is weaker than it has ever been; Hamas and Islamic Jihad prefer to keep the Gaza Strip relatively quiet; and Syria has become a pro-Turkish country. It may be that this situation led the Islamic Republic to receive UAE president Mohammed bin Zayed’s diplomatic adviser Anwar Gargash on Wednesday, bearing a letter from President Trump concerning negotiations on a renewed nuclear agreement.
"Through the attack on the Houthis, Trump also sends a message to Iran in anticipation of the negotiations," says Dayan. "’We have a credible military threat, and if negotiations don’t take place, we’ll use it.’" Sabati for his part adds that intervention in Yemen is not in the Iranian toolbox, as we saw in the case of the jewel in the crown of the axis of resistance, Hezbollah. "Iran, like Russia, emerges as a treacherous friend that uses you day in day out and when it doesn’t need you, it throws you away. The test for Trump now is whether this will be a continuous policy. If there’s no continuity, it has no hope."
Published by Globes, Israel business news - en.globes.co.il - on March 16, 2025.
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