As the Biden regime continues to play its no-win game of "whack-a-mole" with Houthi terrorists, many marine insurance underwriters are refusing to cover US or UK-flagged or owned ships in the Red Sea. This adds as much as two weeks onto delivery times, disrupting supply chains and adding over a million dollars per round trip in extra fuel and crew costs.
The Red Sea is one of the world's critical sea routes. Most maritime traffic between Asia and Europe and over 10 percent of the world's commercial traffic travels through the Red Sea, and the revenue from the Suez Canal makes up between 10 and 12 percent of Egypt's budget.
Though the Biden strategy doesn't seem to deter the Houthis, it is working like gangbusters on the marine insurance industry.
Some insurers have begun to decline to offer war risk to US and UK merchant ships when they navigate the southern Red Sea, broker Marsh has said. The “not at any price” stance by much of the London market indicates the extent to which the situation is perceived to have worsened over the past seven days. Rates had already more than doubled from the (already elevated) 0.5% that had been seen at the beginning of the year. But the cover had always been available at a price.
Marcus Baker, global head of marine and cargo at Marsh, said that underwriters were seeking exclusions for vessels with links to the US, UK and Israel when issuing cover for trips through the southern Red Sea, which effectively means that they were unwilling to provide insurance.
Baker said that “underwriters are adding clauses saying no US, UK or Israeli involvement. Just about everybody is putting something like that in, and many include the words ‘ownership’ or ‘interest’.
This is heading toward a disaster for European supply chains, a nasty increase in prices in the US, a budget crisis that will make Egypt more unstable than it already is, and an unprecedented diminution in American prestige and our ability to prevent wars.
While I've pointed out that the Biden strategy of firing a few missiles at a few Houthi targets will not work, Joe Biden and his brain trust refuse to take the matter seriously.
Quite honestly, I've never been sure what the strategy was here, but we've created a situation where the Houthis are not cowed, and our naval power is not sufficient to soothe maritime insurance syndicates.
Biden's Plan to Safeguard Red Sea Trade May Match Afghanistan in Incompetence
What Biden has accomplished is to reduce the use of the Suez Canal and the Bab el-Maneb Strait to levels only occasionally reached during the so-called pandemic in 2020-2021.
CREDIT: IMF | PORTWATCH portwatch.imf.org
This drop in traffic is playing hell with Egypt's already fragile economy.
A sharp downturn in revenue after sea attacks by Yemen's Houthis diverted away shipping away from the Suez Canal has struck a painful new blow to Egypt's already deteriorating economy, adding urgency to the need for reforms and help from abroad.
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The chairman of the Suez Canal Authority said last week that canal revenue had fallen by 40% in the first 11 days of January.
In the year to June 30, the canal earned Egypt a record $8.76 billion and in the third quarter another $2.40 billion.
The CEO of Maersk said on Wednesday he expected the disruption to shipping caused by the attacks on vessels to probably continue for at least a few months.
Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending vessels on the longer route around Africa.
Between Biden's cavalier attitude and the observable results, this is starting to look like a tabletop exercise in how to create regional instability and a global economic downturn.
Perhaps most important is US prestige. American diplomatic, economic, and military influence has kept the peace since 1945. Biden's timidity and the collection of third-string midwits that he's moved into critical positions are shattering that hard-won credibility.
Early on, our NATO allies balked at participating in Operation Prosperity Guardian, the toothless and worthless plan conjured up by the White House. The consensus is that no one wanted to participate because it is perceived that the operation is managed out of the National Security Council as an opportunity for Jake Sullivan to play admiral.
Red Sea Security Coalition Melts Down As Nations Refuse to Accept US Leadership
As if to add insult to injury, the French have started to escort French ships.
Final thoughts on the subject. International maritime commerce is America's concern. Most American imports and exports travel on foreign-flagged ships. The US Navy was founded to protect US commerce. Signed by President George Washington, the Naval Act of 1794: "WHEREAS the depredations committed by the Algerine corsairs on the commerce of the United States render it necessary that a naval force should be provided for its protection." The chorus of the Marine's Hymn honors America's history of suppressing piracy for the common good. Instead of trying to micromanage possible "escalation" and worrying about making Iran angry, we should be laying down a marker that says interfering with international trade is a terrible evolutionary strategy.
We can't complain about broken supply chains, high prices, inflation, unemployment, and regional instability if we won't take even a baby step toward teaching rogue actors that there are limits on acceptable behavior. Most of all, we can't let ourselves become a laughingstock. Without American power lurking on the horizon, other areas of the world could take a page from the Houthi lesson and interfere with global trade to get attention.
A few days ago, I posted on predictions that "extreme weather" would disrupt supply chains. (See They Are Gaslighting Us About 'Extreme Weather' Disruption, What Do They Have Up Their Sleeve?) The weather hasn't done crap, but the Houthis are kicking butt. Don't be shocked when Biden starts attributing his actions to the weather.