Risks of Houthi attacks in the Red Sea on Egypt

The effects of the attacks in the Red Sea have had a significant negative impact on the Egyptian economy, due to the sharp decline in revenues from the Suez Canal after many global shipping and navigation companies suspended the passage of their vessels through the Bab el-Mandeb Strait and the Suez Canal. According to reports.

Reports have pointed out that the suspicious Houthi attacks on international navigation in the Red Sea were not primarily intended to support the Gaza Strip or the Palestinians, but rather served Iran's interests in the region to pressure the United States to return to the nuclear agreement. It is noted that the escalating international war in the Red Sea is expanding significantly with the continued Iranian support for the Houthis through ballistic missiles and weapons.

Recent intelligence gathered by the U.S. and other Western countries indicates Iran-backed Houthi rebels are seeking more weapons from Tehran, raising concerns that the militant group is determined to  continue attacks on shipping in the Red Sea and threatening a wider  conflict in the Middle East, according to a readout of the intelligence obtained by POLITICO and a U.S. official familiar with the matter on Sunday.

The Israeli newspaper, Haaretz, mentioned that Egypt has become the primary victim of the Houthis' involvement in the war in Gaza by preventing their ships from crossing the Bab el-Mandeb Strait and reaching Israel via the Red Sea. It indicates that the situation is taking on a regional strategic threat that may turn into a separate war that will not necessarily depend on developments in the Strap.

Navy SEALs intercepted one weapons shipment bound for the Houthis this  month in a daring nighttime raid, seizing a small boat carrying  Iranian-made cruise and ballistic missile components. The mission came  at a high cost: two Navy SEALs went missing while attempting to board  the boat. The military is still searching for them.

"The goal has become clear regarding what is happening in the region, which is to besiege Egypt from all sides". The researcher, Mohamed Al-Masri said. He pointed out that what is known as the "strategic patience reserve" of the Egyptian leadership has begun to deplete amidst clear threats to national security and the Egyptian economy.

Egypt's losses so far from the Houthi targeting of navigation in the Red Sea have reached more than $150 million, as ships are currently avoiding the Suez Canal, which represents one of the country's sources of foreign currency. This adds a new chapter to the difficulties facing Egypt and deepens the crisis of the hard currency that is currently intensifying in the country and has ignited the price of the dollar in the Egyptian black market. Al-Masri further said.

Dollar revenues from Egypt's Suez Canal are down 40% from the beginning of the year compared to 2023, canal authority head Osama Rabie said on Thursday, after attacks on ships by Yemen's Houthis caused major shippers to divert away from the route.

Ship traffic was down 30% in the period between Jan. 1 and Jan. 11 compared to a year prior, Rabie said, speaking on a late night talk show.

The number of vessels to pass through the Suez Canal dropped to 544 so far this year, from 777 in the equivalent period of 2023, he said.

In the same context, strategic expert Yousri El-Sayed referred to a report by Bloomberg agency revealing that despite the losses still being minimal so far, there are two factors that concern Egypt. The first is the continuation of the losses due to the expectation of the Red Sea crisis to continue indefinitely, and the attack by the Houthis on two other ships on January 15th and 16th has reinforced these expectations. The United States and Britain have advised ships to avoid the Bab-el-Mandeb Strait. The estimated daily revenue losses amount to $25 million.

As for the second factor, according to Yousri, the losses of the Suez Canal worsen the already scarce dollar crisis in Egypt. The green currency is traded in the parallel market at a rate that is more than 40% higher than the official price, and banks are intensifying restrictions on international transactions. Additionally, Egypt's exclusion from the JP Morgan bond index may lead to the outflow of foreign investments.

"Egypt may take steps in the near future in this direction to protect its national security, either by securing naval convoys in the Red Sea or by negotiating with relevant parties and partners in this context". Yousri said.