[Salon] Economic Implications of the Houthi Seizure of the Galaxy Leader

[Chas Freeman <cwfresidence@gmail.com>]

https://sputnikglobe.com/20231121/economic-implications-of-the-houthi-seizure-of-the-galaxy-leader-1115096767.html

November 21, 2023

Economic Implications of the Houthi Seizure of the Galaxy Leader

The ship was en route from the Turkish port of Korfez to the Indian port of Pipavav with 25 crew members, including Bulgarians, Filipinos, Mexicans and Ukrainians, but no Israelis on board.

According to Reuters, Netanyahu's office described the ship as " British-owned and Japanese-operated", adding that, "There were no Israelis on the ship," and "Israel was not involved in its ownership or operation." However, Yemen's official news agency, SABA, states that multiple Israeli news media have reported that "The ship controlled by the "Houthis" belongs to the Israeli billionaire Rami Unger, who is close to the Mossad." Unger is, indeed, a veteran of the Intelligence Corp of the IDF, and has had a decades long close personal and business relationship with Yossi Cohen, the former Director of Mossad, and National Security Advisor to Netanyahu.

In 2019, the personal net worth of Rami Unger and his wife was estimated at $2.1 billion. In 2004, it was reported that Unger owned between 12 and 14 vehicle transport ships, worth about $50 million each, a reasonable estimate of the value of the Galaxy Leader, which was built in 2002. The political and economic impact of this operation goes far beyond the mere value of the ship.

In spite of the estimated $50 million cost/value of the ship, from an economic point of view, it is actually of little worth to the Houthis. They can't sell it, they can't use it, Unger and his insurance companies probably won't ransom it. The ship was sailing without cargo, which if it had been, would have been approximately 1,500 new cars, worth between $20 and $30 million in total. So, clearly, there was no economic benefit from the seizure of the vessel for the Houthis, but the full political and economic ramifications remain to be seen.

It should be understood that the Houthis have not just seized the Galaxy Leader, they have put all Israeli shipping in the Red Sea under threat. The value of that shipping can be roughly estimated by the fact that out of Israel's $165 billion in total exports in 2022, 24% went to Asian markets. The shortest shipping route from the Mediterranean to Asia is the Suez Canal. Everything that goes through the Suez Canal goes through the Red Sea, and 12% of all global trade passes through the Suez Canal. With these calculations, the economic impact on the Israeli economy by the seizure of this single ship can be estimated in the billions of dollars. The Houthi area of military operations in the southern Red Sea is more than 1,000 miles from Israel, and beyond the reach of timely Israeli military response.

Economic warfare and military warfare are two sides of the same coin. The Houthis, with one helicopter and less than a dozen commandos, have hit the Israeli economy as hard as the entire Israeli military is hitting the people of Gaza. All in all, it must be admitted, it was a successful gambit. Especially considering that it was a bloodless operation in which, unlike the Israeli operation in Gaza, no one was harmed.

Of course, like the October 7th Hamas attack, Netanyahu could very well try to exploit this incident to “justify” another Israeli attack, this time on Iran. War is by nature, always full of dangers and deception. However, the Houthis are likely to find broad and real support for their raid across the Arab and Muslim world.

In an announcement by Yemeni Armed Forces, " the Armed Forces renewed their warning to all ships belonging to the Israeli enemy or dealing with it that they will become a legitimate target. It called on all countries whose nationals work in the Red Sea to refrain from any work or activity with Israeli ships or ships owned by Israelis." The statement pointed out that the operations of the armed forces only threaten the ships of Israel and those owned by Israelis, as was previously indicated.