Wednesday, February 21, 2024
In DepthRough waters threaten international trade as Ethiopia scrambles for sea access

Rough waters threaten international trade as Ethiopia scrambles for sea access

The last few months have plunged the Horn of Africa into an unprecedented depth of chaos as waves of conflict and tensions in and around the Red Sea and the Gulf of Aden aggravate the region’s already tense political and economic climate.

The most recent wave of disruptions began on November 19, 2023, when members of Yemen’s Houthis – a Shia Islamist organization with political and military wings – launched a campaign of attacks on commercial vessels passing through the Red Sea as retribution for more than a month of brutality in the Gaza Strip.

Israel’s retributional military campaign following a Hamas attack in early October has thus far killed over 27,000, wounded over 66,000, and flattened infrastructure in Gaza, according to reports from Palestinian officials.

The Gaza conflict spurred the Houthis to threaten the safety of any vessels with connections to Israeli businesses or the Israeli government and passing through the Red Sea. The first vessel that incurred the wrath of the Houthis was a cargo ship that is reportedly partly owned by an Israeli businessman.

However, the Israeli government has since claimed the ship was operated by a Japanese entity under the flag of the Bahamas, and was sailing from Turkiye to India via the Red Sea with a crew of two-dozen that included no Israeli nationals.

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Nonetheless, the actions pushed the US and UK to place warships in the Red Sea to thwart Houthi attacks, which take the form of drone and missile strikes. Nearly three dozen commercial vessels have been struck since the Houthis took up the campaign in November.
The last few months have also seen a spike in piracy in the Gulf of Aden, with piracy seemingly making a comeback off the coast of Somalia after an extended absence. There were no incidents of piracy reported in the six years beginning 2017, but at least 14 new hijacking incidents had been registered along the Somali coastline by the end of January 2024.

Although there is no indication of a political motivation behind the recent spike in piracy, analysts observe the developments in an Ethiopia-Somaliland sea access deal could be aggravating the situation.

The deal, which proposes Ethiopia will recognize breakaway Somaliland in exchange for a lease on the coast, has drawn fierce criticism and blowback from the Somali government, Al-Shabaab, and ordinary Somali citizens.

The developments in the Red Sea and the Gulf of Aden closed 2023 with a slew of maritime challenges, while indicating 2024 will likely see more of the same. A report from the International Maritime Bureau, a maritime crime watchdog, reveals close to 120 incidents of piracy and armed robbery took place in 2023.

It was an auspicious year for maritime policy in the region, and it had been so even before Hamas’ October 7 attack. A clip of Prime Minister Abiy Ahmed (PhD) lecturing members of Parliament about Ethiopia’s need for sea access in October added momentum to months of rumors about the government’s desire for a seaport.

The PM repeatedly stated the question of sea access and the establishment of a base for the reinstated Ethiopian naval forces was a matter of life or death for the country. The clip, along with various productions from government-affiliated media, whipped up a public dialogue on sea access through negotiation or conflict.

On January 1, 2024, Abiy and his counterpart from Somaliland, Muse Bihi Abdi, announced a deal that would grant Ethiopia a lease on 20 kilometers of the Somaliland coast in exchange for recognition and possibly, according to senior government officials, stakes in Ethiopian Airlines.

“Remember what I said. We have shouted enough,” said the Prime Minister about sea access and recent developments on the Red Sea and the Gulf of Aden, during an address to Parliament earlier this week.

The developments are particularly consequential for Ethiopia, which depends on ports in Djibouti for over 90 percent of its international trade.

“I had raised concerns, asking what our fate would be if some entity launched attacks on Djibouti and it became difficult to operate its ports,” Abiy told lawmakers. “We see it now. When I brought up the Red Sea topic a few months ago, the Houthis hadn’t started fighting because the Gaza war wasn’t there yet.”

The Prime Minister called for cooperative efforts to include Ethiopia in negotiations on maritime peacekeeping, and asked neighboring governments to consider granting Ethiopia access to the sea.

“I think it would be better that our neighbors consider it. The

not only disturbed us, but also countries as far as India,” he said. “If we are dying in Mogadishu and Sudan [for peacekeeping], why would it be wrong for us to die in the Red Sea as well?” 
The Red Sea is a crucial channel for global trade, covering 12 percent. However, the recent violence has led to a decline in traffic of not less than 30 percent, as many of the world’s largest shipping firms opt to take the long route around the Cape of Good Hope rather than risk the safety of their vessels off the coasts of Yemen and Somalia.

It is a decision that has immediate and tangible consequences.

The journey for a vessel embarking from Taiwan and heading to ports in the UK would have taken an average of 34 days via the Red Sea route in more peaceful times. The journey takes an additional 11 days when vessels are forced to sail around Africa, adding to fuel costs and larger insurance premiums.

The price of shipping cargo has gone up as a result. Transporting a 40-foot container from Asia to Europe used to cost somewhere in the vicinity of USD 1,500 before the Houthi attacks. It is now more than USD 5,000. 

Over 90 percent of Ethiopia’s imports over the first five months of the fiscal year came via ports in Djibouti.

Melaku Alebel, minister of Industry, disclosed to MPs last week that Ethiopian manufacturers are being affected by the rising global shipping costs.
“Our targets for import and export volumes were hampered by the higher freight costs resulting from security reasons in the Red Sea,” Melaku told Parliament while presenting a half-year report.

A senior executive at the state-owned Ethiopian Shipping and Logistics Service Enterprise (ESLSE) told The Reporter the firm has plans to dock one of its vessels at Kenya’s Lamu port as a pilot program to test out the possibilities of using non-Djibouti ports.
Although docking in Lamu would lengthen the land-transportation route and necessitate the strengthening of road networks between Ethiopia and Kenya, the Ethiopian government seems to have little choice faced with Houthi attacks and Somali piracy.

“The government already has agreements in place to use the Lamu Port so it won’t be difficult to use it,” the executive told The Reporter on condition of anonymity. “The problem is the length of the route, but that won’t be as difficult as losing the commodities to pirates.”

The distance between Lamu and Modjo Dry Port, Ethiopia’s main logistics hub for imports, is a little over 1,600 kilometers. It is double the distance between Modjo and Djibouti.
“Here is the reason why it is important for Ethiopia to access the sea for a commercial port as well as its naval force,” said the exec. “It wouldn’t be easy for pirates to threaten our vessels if we had a military presence in the water.” 

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Video from Enat Bank Youtube Channel.

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