The Red Sea Disaster — and Beyond

The Red Sea Disaster — and Beyond

As the Red Sea becomes a no-go zone for many of the world’s largest shipping and container companies, and as the United States seeks allies in halting the Yemen-based Houthi attacks on global shipping, we thought it might be worth reminding everyone of a few things.

First, these attacks are not taking place in a proverbial vacuum.  The Houthis claim that their attacks are retribution for American and other Western support for Israel.  This is undoubtedly true, but it is also, undoubtedly, only half the story.

The Houthis are Shi’ite Muslims, but not just Shi’ite Muslims.  They are “revivalist” Shi’ites, which places them in league (both figuratively and literally) with the Iranian mullahs, who arm and support the rebels financially.  One might reasonably argue that the Houthis’ war against the government of Yemen (which began in 2004) and their war with Saudi Arabia (2015-2023) constitute the most successful global rebellion movement of the 21st century.  Yemen has long been a divided nation (and two nations for some time), plagued by internal conflict, with the Houthi uprising being but the latest in a long line of rebellions and civil wars since the end of World War I and the collapse of the Ottoman Empire.  Although Yemen is officially governed by the Presidential Council, with Rasha al-Amini as its chairman, much of its land and resources are solidly under Houthi control.

Second, because of the Houthis ties to Iran and because of Saudi Arabia’s disdain for the mullahs, the Saudis did everything they could for the better part of a decade to destroy the Houthi movement.  They failed.  And then, last spring, when the Saudis, the Houthis, and the Iranians agreed to a ceasefire, Peter Baker, the chief White House correspondent for The New York Times, wrote the following:

Finally, there is a peace deal of sorts in the Middle East. Not between Israel and the Arabs, but between Saudi Arabia and Iran, which have been at each other’s throats for decades. And brokered not by the United States but by China.

This is among the topsiest and turviest of developments anyone could have imagined, a shift that left heads spinning in capitals around the globe. Alliances and rivalries that have governed diplomacy for generations have, for the moment at least, been upended….

“There is no way around it — this is a big deal,” said Amy Hawthorne, deputy director for research at the Project on Middle East Democracy, a nonprofit group in Washington. “Yes, the United States could not have brokered such a deal right now with Iran specifically, since we have no relations. But in a larger sense, China’s prestigious accomplishment vaults it into a new league diplomatically and outshines anything the U.S. has been able to achieve in the region since Biden came to office.”

In response, we wrote this:

Look, we love “peace” as much as the next guy, but that’s NOT what this deal is about.  This deal is about China, Iran, and Saudi Arabia shoving their thumbs in Joe Biden’s eye.  It’s about making the Saudis’ frustration and anger with the United States clear and costly….

Team Biden has revived the truism that dominated global affairs during the Obama Administration: there is no country so betrayed and abused as an American ally.  Biden bragged about how he was going to bring Saudi Arabia to heel, and Israel is getting screwed over as a result.

In short, Team Biden ended decades of civil war on the Arabian Peninsula by ensuring that all parties hate the United States and love China.

Third, within days of the Chinese-brokered peace in Yemen, the Saudis conceded that they were “in active talks with Beijing to price some of its oil sales to China in yuan… a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.”  Because of course they were.  And just a few short weeks after that, reported this timely tale:

The Houthi-led government in Yemen this weekend signed a deal with Chinese officials and a Chinese company that will invest in oil exploration in Yemen.  

China’s Anton Oilfield Services Group (AntonOil) and a representative of the Chinese government signed on Saturday the memorandum of understanding (MoU) for investment in Yemen’s upstream sector, Middle East Monitor reported, citing a report by the Sanaa-based Saba News agency.

Again, of course they did.

All of this, in turn, brings us to our final reminder, of something we noted just a couple of weeks ago:

Just four years ago, the People’s Republic of China – and its fascistic, aggressively secretive government, in particular – unleashed a plague upon the earth that killed upwards of 3 million people.  Today, the PRC’s favorables are nevertheless rising quickly, in large part because that same aggressively fascistic, secretive government is willing to invest in economic growth in the developing world.  While the grand poohbahs of climate change gather in Dubai to eat, drink, be merry, and condescend to the “lesser” people, the Chinese COMMUNIST Party is out spreading capital around, trying to turn poor people into rich capitalists.

Joe Biden is a lucky man.  When all is said and done and his presidency is over, he will be most remembered for the disaster that has been American policy regarding Ukraine and Russia.  History will also remember – although most people will forget – that he lost Central Asia, lost the Arabian Peninsula, lost the greater Middle East, and encouraged all of the world’s global bad actors, most notably the Chinese Communist Party.

As we also noted just two weeks ago, “this will not end well.”

Stephen Soukup
Stephen Soukup
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Steve Soukup is the Vice President and Publisher of The Political Forum, an “independent research provider” that delivers research and consulting services to the institutional investment community, with an emphasis on economic, social, political, and geopolitical events that are likely to have an impact on the financial markets in the United States and abroad.