A Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo released on November 20. Reuters
A Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo released on November 20. Reuters
A Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo released on November 20. Reuters
A Houthi military helicopter flies over the Galaxy Leader cargo ship in the Red Sea in this photo released on November 20. Reuters

Nations threaten 'consequences' for Houthi attacks in Red Sea


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The US, UK, Bahrain and other nations on Wednesday demanded that Houthi rebels in Yemen halt their attacks in the Red Sea and warned of “consequences” if they continued their “destabilising” actions.

“Let our message now be clear: we call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews,” a joint statement released by the White House read.

“The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy and free flow of commerce in the region’s critical waterways.”

A senior US official said that they “would not anticipate another warning” if the Houthis launched a further attack, but declined to answer if the coalition would launch a pre-emptive attack against the rebel group, or clarify any rules of engagement moving forward.

“The statement very much speaks for itself,” the official told reporters in a Wednesday phone call.

The joint statement was also signed by the governments of Australia, Belgium, Canada, Denmark, Germany and Italy, as well as Japan, the Netherlands and New Zealand.

Iranian-backed Houthi rebels in Yemen, who are allied with Palestinian militant group Hamas, have threatened to prevent any Israel-bound ships from sailing through the economically vital waterway.

In response, Houthi Information Minister Dhaifallah Al Shami called the joint statement a “moral failure” and a “miserable attempt to cover up crimes” perpetrated by Israel.

“The coalition of the 12 countries comes to protect Israeli ships and Israel's crimes and not, as the US and western nations claim, to protect navigation in the Red Sea and Bab Al Mandeb [strait],” Mr Al Shami said, according to the Houthi news agency Saba. He added that Yemeni forces are not targeting any ships “except Israeli ones or those headed towards the occupied ports”.

Muhammad Al Bukhaiti, a member of the Houthi's Ansar Allah Political Bureau, called on the UN Security Council to issue a resolution “obligating Israel to stop genocide” and another resolution to stop Yemen's operations in the Red Sea against Israeli navigation.

The US official said that Washington “will act very forcefully when it comes to any threats against our people or our interests,” but added “we're also going to do so in a very smart way that does not potentially … play into the hands of some of these proxy groups”.

Israel has been waging a war in Gaza after Hamas militants launched a deadly attack on Israeli soil in October. More than 22,000 Palestinians have been killed.

The UN Security Council met on Wednesday to discuss the Houthi attacks on ships in the Red Sea

“The threat to navigational rights and freedoms in the Red Sea is a global challenge and necessitates a global response,” US ambassador and deputy permanent representative Chris Lu said.

International Maritime Organisation chief Arsenio Dominguez told the global body that the Houthis were not limiting their attacks to ships connected to Israel.

“Attacks against international shipping in the Red Sea area are not acceptable,” he declared.

The joint statement said the “ongoing Houthi attacks in the Red Sea are illegal, unacceptable and profoundly destabilising” with “no lawful justification for intentionally targeting civilian shipping and naval vessels”.

“Attacks on vessels, including commercial vessels, using unmanned aerial vehicles, small boats and missiles, including the first use of anti-ship ballistic missiles against such vessels, are a direct threat to the freedom of navigation that serves as the bedrock of global trade in one of the world’s most critical waterways,” it said.

The statement came after US President Joe Biden huddled his national security team on New Year's Day, the senior US official added, aiming to convene “an effort to talk to allies and partners with a statement that would very clearly send a warning to the Houthis”.

Last month, the US formed Operation Prosperity Guardian to counter Houthi attacks in the Red Sea, which channels about 10 per cent of global trade.

Still, the Houthi threat has compelled shipping companies to divert vessels to other lengthier and more costly routes, like via South Africa's Cape of Good Hope.

Mr Dominguez told the UN body that 18 shipping companies were making that route change.

He added that de-escalation is necessary to “ensure safety of our seafarers, freedom of navigation and stability of supply chains”.

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.”

Updated: January 04, 2024, 1:49 PM