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The hijacking of a commercial vessel by the Houthis could lead to a dangerous crisis in the Red Sea, analysts have warned, as the Iran-backed group's attacks threaten to disrupt shipping in a waterway through which 10 per cent of global trade passes.
The Houthis, who support Hamas in the continuing Israel-Gaza war, seized the Israeli-linked Galaxy Leader commercial vessel and took 25 hostages of various nationalities in the Red Sea on Sunday. A spokesman for the group announced it had carried out a “military operation” and all Israeli ships in the Red Sea would be targeted in a “sea battle”.
“The detention of the Israeli ship is a practical step that proves the seriousness of the Yemeni armed forces in waging the sea battle, regardless of its costs,” said Mohammed Abdul-Salam.
The Houthis released footage reportedly showing the raid being carried out.
The video, which was tweeted by the Houthis but has not been independently verified, shows a helicopter painted with Yemeni and Palestinian flags approaching a ship that appears to be the Galaxy Leader. Armed men then drop on to the ship and travel from room to room, taking crew members hostage.
A US official at the State Department told The National that the seizure was “a flagrant violation of international law”.
“We demand the immediate release of the ship and its crew. We will consult with the our allies and UN partners as to appropriate next steps,” the official said.
The Houthis are known to possess a small number of helicopters, ageing Soviet-era MI-17s captured off the government during their rebellion, but they have rarely been used in operations.
Analysts say the attack could trigger a wider escalation in the Red Sea, an important international shipping route that ends in the Bab el Mandeb strait, through which about 6 million barrels of oil a day travels.
“This escalation by Houthis, who are in control of Yemen's capital and some regions amid a civil war, is mainly connected to the war in Gaza, yet it poses a threat to international shipping overall in one of the key maritime trading routes,” says Osamah Rawhani, a conflict analyst at the Sanaa Centre, a think tank.
Israel's military denied the ship was Israeli.
The Galaxy Leader is operated by the Japanese company NYK line. It belongs to Ray Car Carriers, registered in Britain's Isle of Man but owned by Israeli billionaire shipping mogul Abraham “Rami” Ungar.
Mr Ungar told the Associated Press that he knew of the hijacking incident but did not comment further. NYK said the ship's crew members were from the Philippines, Ukraine, Bulgaria, Romania and Mexico.
Houthi threat to Israel and US
The heavily armed Iran-backed militia group has emerged as a threat to Israel despite being 1,600km away.
Both the Houthis and the Hamas group that controls Gaza are supported by Iran.
Since the outbreak of the Israel-Gaza war on October 7, the Houthi movement has fired salvoes of missiles and drones towards Israel, with many being intercepted by the USS Carney last month.
While it is not the first time Houthis have attacked civilian vessels in the area, the seizure of a ship as large as the Galaxy Leader is a first for the group.
Analysts warned it might be the a prelude to many such attacks.
“Although this was a way to send political messages to the US and Israel, Houthis might repeat this behaviour with other shipping vessels as a means of pressure to achieve political gains of their own in the future, not only those connected to Gaza,” said Mr Rawhani.
“It is surprising that this behaviour was not immediately resisted despite the presence of the American fleet.”
Since October 7, the US has increased its naval forces in the Middle East, fearing a larger conflict. In the Red Sea, the US has sent the USS Bataan, which can carry troops and helicopters, and USS Carter Hall, which carries military equipment. The USS Thomas Hudner and USS Carney, both missile-armed warships, are also present.
The recent escalation comes after years of tension in the Red Sea.
The Houthis launched missiles at civilian aid ships as far back as 2016, leading to a stepped-up US naval presence and a brief clash between a US naval destroyer and the group, which resulted in American air strikes in Yemen. The Houthis then attacked Gulf-flagged shipping in 2017 and 2018.
In 2018, the US said the Houthis had “publicly threatened to attack international commercial maritime traffic in the Red Sea”.
Attacks continued in 2019, with the group seizing a South Korean drilling rig and two tug boats, although they were later released along with their crews following negotiations. More recent attacks include a 2022 drone attack on the Marshall Islands-flagged Nissos Kea near Yemen’s port of Ash Shihr.
The Houthis are now adept at “moving of weapons and units to Yemeni islands under their control, and setting up sea mines, missiles that hit ships, and rocket/missile stations atop the mountain ranges closer to the sea”, said Maged Al Madhaji, a regional analyst also at the Sanaa Centre.
“This will mean higher escalations in terms of targeting and hitting more military vessels, in addition to hijacking civilian ships,” he said.
Iran's role
Sunday’s attack also echoes Iranian actions against commercial shipping in Middle Eastern waters.
Iran has launched sporadic attacks against shipping since 2018 after US President Donald Trump launched his “maximum pressure” sanctions campaign against Tehran.
Despite the Biden administration easing some sanctions and trying to re-enter a nuclear deal that would ease pressure on Iran’s economy, attacks have continued as restrictions on Iranian oil exports remain.
In June 2021, the US blamed Iran for attacking Mercer Street, a ship also linked to an Israeli business. A British and a Romanian sailor were killed in the attack.
The lethal drone attack was one of five attacks on commercial ships linked to Israel, many using drones, in 2021 and 2022.
Around the same time, Iran seized several oil tankers belonging to companies it said were carrying fuel bound for America. Iran said it was retaliating for the US seizure of ships carrying oil from Iran, which the US said breached energy sanctions.
“One month into the conflict, pro-Iranian armed groups in the Middle East appear to be approaching the Gaza issue in a piecemeal fashion. The case of the Houthis raises questions. Is Tehran allowing its unpredictable Yemeni ally to act? Is it manipulating it? Or has Tehran lost control of this movement which, for the sake of expediency, seems to want to join the Gaza issue to remind the world of its existence?” says Pierre Boussel, associate fellow at France's Fondation pour la Recherche Strategique.
“Let's not forget that the Houthis have always been Iran's transactional allies. They are not puppets. They want to keep their freedom of initiative,” he says.
The US and allies, including the UK, stepped up naval task-force patrols to secure civilian shipping, and while incidents have occurred, such as the shining of a laser by an Islamic Revolutionary Guard Corps boat at a US helicopter last month, gunfire has not been exchanged.
Iran's actions against civilian shipping have nonetheless drawn strong condemnation.
In a similar raid to the Houthi hijacking on Sunday, IRGC commandos seized the Turkish-owned Advantage Sweet oil tanker in July, rappelling down from helicopters. A similar raid in 2019 seized the UK-flagged Stena Impero oil tanker.
“If the US wants to maintain its status as the world's leading naval power, it will have to increase its presence in the region,” Mr Boussel says.
“Now, let's be nuanced. While the Houthis pose an ongoing threat to maritime security in the Persian Gulf, there is no evidence that they have enough surface-to-surface missiles to mount a long-term campaign of 'swarm attacks' against Israel – the only kind that would be effective in breaking Iron Dome. It is more likely that they will quickly revert to what they really know how to do: naval gangsterism. Attacking merchant ships. Kidnapping crews. Hijacking ships.”
UAE currency: the story behind the money in your pockets
Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
The biog
Favourite Emirati dish: Fish machboos
Favourite spice: Cumin
Family: mother, three sisters, three brothers and a two-year-old daughter
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20myZoi%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Syed%20Ali%2C%20Christian%20Buchholz%2C%20Shanawaz%20Rouf%2C%20Arsalan%20Siddiqui%2C%20Nabid%20Hassan%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2037%3Cbr%3E%3Cstrong%3EInvestment%3A%3C%2Fstrong%3E%20Initial%20undisclosed%20funding%20from%20SC%20Ventures%3B%20second%20round%20of%20funding%20totalling%20%2414%20million%20from%20a%20consortium%20of%20SBI%2C%20a%20Japanese%20VC%20firm%2C%20and%20SC%20Venture%3C%2Fp%3E%0A
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
UAE currency: the story behind the money in your pockets
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
UAE currency: the story behind the money in your pockets
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