Why the Houthis' Red Sea power play makes Iran even stronger

Hello, and welcome back to Independent Thinking from Chatham House, where every week we take a deep dive into the forces shaping world affairs. I'm Bronwyn Maddox. This week we are in the Middle East again, specifically in the Gulf and the Red Sea, after four years of uneasy peace, the simmering conflict in Yemen between Iran-backed Houthi rebels and a Saudi-led coalition that supports the country's fragile government. It's taken a dramatic turn. In a surprise attack, the Houthi took control of Yemen's Red Sea coastline at the end of September, and that meant they took effective control of the Bab al-Mandab Strait, a vital corridor connecting Europe and Asia, right up to the Suez Canal. And with Iran turning on and off, the Houthi rebels have taken control of Yemen's Red Sea coastline on and off the traffic through the Strait of Hormuz. It means that there's a second source of instability, a second choke point. As one of our guests today, Faria al-Muslimi, put it, Iran now controls two of the most strategic choke points in the Middle East. This is as much leverage as having a nuclear bomb. I'm just back from Washington, where this was much on everyone's mind ahead of the midterm elections because of the effect on gasoline and diesel prices, and the question of whether Donald Trump can ever get a resolution for the U.S. from this, never mind for the region. So, we're going to talk about all that, whether Iran really controls two waterways, and when, if ever, this is going to end. And I'm joined by the beating heart of the Middle East and North Africa program here at Chatham House. Dr. Sanam Vakil is the director of that program, and she specializes in Iranian and Gulf politics and U.S. foreign policy as it relates to the Middle East. Hi, Sanam. Hi, Bronwyn. Great to have you here. Ahmed Soleiman, is an expert on the politics of Somalia, the Sudans, Ethiopia, and Eritrea, and one of our senior research fellows within the program. Nice to be back. Very, very good to have you here. And Varya, who I mentioned, is in Amman, in Jordan at the moment. He focuses on Yemen and the Gulf at the same program. He also co-founded Yemen's premier think tank, the Sana'a Center for Strategic Studies. Hello, Varya. Hello. Good to be with you again. Let's start off with where we are. Farah, maybe I can start with you. Who are the Houthis? The Houthis are a combination of an illicit group, an armed actor, that's Yemeni, that's totally domestic growing in Yemen, but has been regional and international power with a lot of Iranian support throughout the years. Domestically, they are a group that's religiously radical, like Taliban, except in the other sect. But they live on a lot of illicit trade, almost like Fargo. Within Yemen, there are probably four to five constituencies that make up the Houthis, that all report to Abdulmalik al-Houthi, who juggles quite a diverse, sometimes almost schizophrenic constituencies in the ground, which he sits on the top of it as an ultimate leader that believes of himself even more than Khamenei did in the past. Why has the conflict sparked up again? I think this was not as surprising, the conflict, the Yemen conflict over the last 10 years, has been mostly managed or avoided or forgotten about more than resolved. But we're also witnessing a spillover of further Middle East wars that are happening at the moment. And Yemen is paying the price for that. The Houthis has been preparing for this. We had quite a few years of a ceasefire that was much of a late Yemen wait. And I think we're having right now the consequences of avoiding the Yemen conflict for so many years and forgetting about it just because it did not send refugees to the West. You've been writing for some months that this was going to happen, that people weren't paying enough attention to what the Houthis were doing on the coast. But is there a link, you think, to what is happening around the Gulf itself? Is it related to what Iran is doing there? I can't speak better about that than me, but I would be very naive if I think this is no more connected. I think in the past, the Houthis have had some sort of a domestic independence compared to other Iran's proxies. But right now, it's not. Right now, we look at the Middle East, and I think we have a chess match in which the Houthis are currently the most active of it. The lack of a solution when it comes to the Gulf crisis has obviously spilled over in Yemen, but not just between the Iranians and the Gulfs, but also within the Gulf itself. Let's not forget, we have had a recent clash between UAE and Saudi over Yemen just earlier this year. So, yes, in a way, it's connected to the Gulf-Iran dynamics, but it's also connected to the current U.S.-Iranian war. We'll get into all those points, but you've taken us right into the heart of it, a chess match, but with a dozen people playing. Sanam, let's pick up that point. To put to you explicitly, how much is Iran involved in what has happened with the Houthis? I think the Iranians are certainly very involved. As Farah said, the Houthis are not remote controlled by Iran. They have agency, they control a large swath of territory, and they've built a system of governance, whatever we think of it, that has a lot to do with the Houthis. And that has enabled them to stay in power for quite some time. And the vacuum of political discussions, I think, has afforded the Houthis further opportunity to build up military capacity that is indigenous and build its own economic relationships. But we would be missing the big picture if we didn't pay attention to the cycles and sequence of this war between the U.S., Iran, and Israel. And we would be missing the big picture if we didn't pay attention to the cycles Over the course of the past seven months, Iran has persistently messaged that the Bab al-Mandeb and the Red Sea could come into play at a strategic moment. I'm not sure Iran said go and the Houthis went. There were a number of issues, domestic forces at play in Yemen, opportunism against the Saudis, but it was sequenced to certainly benefit Iran. Now, the Strait of Hormuz and the Houthis, they're not currently both being destabilized simultaneously. And I think that's deliberate because we are not back in an active military regional conflict between Iran, Israel, and the United States. Should the war return, and there's many reasons to think it might return. Specifically between Iran, the U.S., and Israel. Yes. That's when we will see much more coordinated destabilizing attacks on both choke points and waterways. And that's when we will see much more coordinated destabilizing attacks on both choke points and waterways. Oil is going through, either because the U.S. is protecting ships, because ships are turning off their radars, or because countries and shipping companies might have coordinated backhand deals with the Iranians themselves. So oil is going through, and there is not any disruptive activity taking place in the Persian Gulf. Not to say that it won't return, but the U.S. and the Iranians are in indirect negotiations, and that could speak to the fact that there is a bit more calm in that domain. How important are both of these waterways? Well, they're extremely important when you look in economic terms. The Strait of Hormuz, that supplies 20% of global oil supply and 25% of its trade. And in terms of the Bab el-Mendab and the Red Sea, that accounts for 15% of global oil and shipping transit. I mean, that's equivalent to 12% of the global annual trade in total, worth over a trillion. What does this mean for the wider region? I'm picking up Farah's idea of this chess match, but with many, many players. And there are many countries immediately involved in both of these conflicts, aren't there? Yes, yes, there are. And I think, you know, Sanam has spoken a bit about the regional reordering that's taking place. You know, that is informed also by this U.S. withdrawal. And I think it's open. Explain what you mean by the withdrawal. Well. Because it doesn't. In terms of action, but what we're talking about is kind of formal support and protection for some of the governments within the region. And I think that's opening up space for this reordering and for, you know, quite ambitious powers within the Gulf and elsewhere to try and implement their own vision for regional transformation and for collective action to some degree. We're seeing that in the formation of certain alliances. Of course, we've seen the Mecca military pact and this kind of R4 regional grouping emerge with Saudi Arabia, Egypt, Turkey, and the United States. And Pakistan. Now, this is consequential in the Red Sea region. It's consequential in the Middle East and it's consequential in Africa because these alliances and the states who are also, to some extent, lining up behind them are really kind of emerging and being shaped on both sides of the Red Sea. Sanam, we're trying to almost put together a verbal map here. I wondered if you could make it a kind of uncertainty at the moment. I'm a little reluctant to put people in solid camps. There's a lot of fluidity, and we describe it as multi-alignment. There is a lot of cross-alignment on thematic and regional conflicts. Who's winning? It's hard to say. Right now, no one. It's a standoff. All right. Let's take a trio of Iran, Saudi, the Emirates, and then we'll come on to some of the others, including Qatar and Israel. But if you take those three, how does this position now look for them? Well, we'll start with Saudi Arabia. The expansion of the war in Yemen was very much a known. Everyone knew that this was going to happen. And it's rather embarrassing that the Saudis were not prepared for the Houthi military capabilities, the collapse of Yemeni forces that the Saudis tried to build up, and the fact that President. Trump has thus far rebuffed Crown Prince Mohammed bin Salman's request for military assistance in the conflict. There were reports that American bombs were being loaded onto jets and then stood down. And this, you know, makes the picture much more complicated because it's connected to the war with Iran, the fact that Mohammed bin Salman has played an effort in trying to tone down tensions, called President Trump, asked him not to escalate, and, of course, it's tied to Gaza, normalization, Israel. So it does show the larger chessboard of things. I think the Saudis will be engaged for the time being in a conflict with the Houthis, but then they'll be looking for an off-ramp to negotiate and hopefully get back to a political process. Very briefly, over the past few days, the Saudis and the Emiratis have had a high-level public meeting, perhaps to resolve some of the tensions and build confidence. This is classic tension building for years between the two. Yes, but particularly over Yemen, where the Emiratis dramatically withdrew last December and the rift between them that has been historical and economic really sedimented. So they're trying to solve things, and the optics were very important. But, you know, the Emiratis aren't really going to help the Saudis too much. I think the hope is that they don't destabilize the situation too much either. Ahmed, just coming on to this question of Saudi Arabia, they seem in a very difficult position. If you think a couple of years ago, they thought they might be heading for a deal with the U.S., which looked like normalization with Israel. They would get all kinds of, well, some years ago, several years ago before October 7th attacks by Hamas on Israel. But they thought it was heading for much better prospects. They would get all kinds of things from the U.S., including civil nuclear program. Their web of alliances seemed to be growing. Now, here they are, the Houthis causing them all kinds of trouble. They are having to get some of their oil out across the desert. The U.S. has refused them help at this point when explicitly asked. Yes, they've got a bit from Britain and maybe France. But perhaps they may be feeling a bit sore at this point. Perhaps. But, I mean, what I would say is kind of coming back to my previous point, which is, in some ways, this has reshaped their calculations. It has essentially meant that they've had to think about a broader set of alliances within the immediate region. And I think there isn't a sense that it's an either-or, that the relationship with the U.S. is becoming less important or one that they will discard. It's that they are understanding, you know, as a government and within the region where there is plenty of flux, that they need to protect their own interests more. And that means diversified partnerships with regional heavyweights, countries that can help to provide defense alternatives. And we've seen that with Pakistan and Turkey. And also contestations. They're contesting within the region their own regional security priorities. And the Red Sea certainly is that. And when we bring it back to the United Arab Emirates and Saudi relationship, part of this contestation is over this crucial waterway and who gets to set the rules and be the leader within the Red Sea. And the UAE has a front-foot advantage in this sense because it's built up the transshipments and logistics networks and companies over many, many years. It has ports on both sides. It has ports on both sides of the Red Sea that it controls. But Saudi Arabia is a Red Sea literal state, meaning that they border the Red Sea and the United Arab Emirates isn't. So, you know, building those alliances and ensuring that those networks stack in its favor is something that Saudi, I think, is catching up on, but realizes is crucial. Farah, perhaps you can take us in just a bit more detail into what is going on in the Red Sea at the moment. This crucial waterway goes through, obviously, up to the Mediterranean through the Suez Canal, out the top. And as Ahmed was just describing, a lot of presence of lots of countries are trying to get bases, the Chinese on one side as well. How important is Yemen in all this? Can the Houthis actually shut this off? What does all this conflict look like? I mean, you're right. Almost one thinks the Red Sea is called the Red Sea because how bloody it will become. But I think when we look back, we have to remember, at least according to some of my research, the first time Iran, the military unit focused on the Red Sea from Yemeni alliance was actually in 2009. So it has been on that making. The Houthis since October 7 were able to a huge point to interrupt international trade market when they wanted. They could have done that even from the further land they actually are in. The main difference, however, right now, I think is first is this has helped the Houthis to become not just a regional power, but also an international power. What this means going, going back also to the point of the horn Ahmed was making and multi-alignment that Sanam was also talking about and how fluid, knowing how the Houthis think, I think right now they will try to position themselves as a regional power. But also since they already have had the privilege over Bab al-Mandab, they're going to stretch themselves further to have two things. One, an economic and illicit relationship with different non-state actors in the Horn of Africa, including Shabab, including different groups. But also by now it's, it's 12 miles away from Turkish, Emirati, probably Israeli, Japanese, French bases in Djibouti. So it's allocating itself as not just an ability to abrupt maritime, but also to do business illicit one. And when you think about it in the long term, and I think that's why everyone continues to underestimate the Houthis, they're going to be economically in a way more powerful than Iran. And if you look to Yemen's geography, it allows it, with a little bit of imagination, to continue doing that. But I think what they have done, going back also to the point of no one is winning, is they have managed to, probably minus the Iranians, annoy everyone in the region. When you look to even countries like Egypt, Jordan, where I am at the moment, you talk to officials, they have been suffering from the Red Sea crisis. And these are countries that the Red Sea was the pipeline of their life, not oil. It wasn't other things. And this applies to Egypt, this applies to Jordan, but again, they were going to have a much more regional power that influences much of conflicts all the way to Sudan, to Somalia, to Tyria, in a way of a Hezbollah projection of power, both before Hassan Nasrallah, but also with an Iranian-Persian ambition at the same moment. And it serves it, it serves Iran, and it freaks everyone. - Sanam, do you agree with what Farah has just said? This extraordinary statement of the Houthis potentially more economically powerful than Iran, and also this picture he's sketched out, which very much chimed with what people were saying to me in Washington about how much the Djiboutis were using this to trade away, but this frenetic economic network that is building up across the Red Sea. - I do agree that if there is no regional and multilateral effort to contain the Houthis, they will be a long time security challenge, not just for Saudi Arabia. And this is why this is such a serious crisis. It will metastasize. And the Houthis do have these economic and security links dating back to the Yemen war and before. So nobody got ahead of this. This was something that was known and it's problematic that there were no meaningful efforts to address this politically. And going back into active military conflict is dangerous 'cause it didn't work the first time. Whether the Houthis will be more powerful than Iran, I am not necessarily inclined to agree. I think Iran is certainly, certainly weakened going back to your first question. It is in a weaker state than the Iranians themselves would like to imagine. Obviously the economic blockade is serious and severe, but the leadership in Iran doesn't make security and political decisions and diplomatic concessions based on GDP per capita or growth rates or inflation. This is existential. So how this war ends will determine Iran's domestic security and stability, but also its regional projection of power. And I don't really see with clarity where we're going right now. - There is a lot of multi-alignment here. And I think one thing that I would say about the Houthis' level of impact on the other side of the Red Sea is that so far we've seen their ability to engage in these illicit networks and relationship building with non-state actors. To a degree that exists with some that are aligned with certain state actors. We've seen that perhaps on the Sudanese side as well and Eritrea at times, but Shabab is really there, strongest relationship in Somalia, really one which is based on providing illicit flows of weapons, training, increasingly drones, and other forms of smuggling. So the economic linkages are extremely important. But when you look at the state alignments within this region and across the water here, and we were talking about this contestation that was taking place, both on the kind of Saudi alliance side as well as the Emirati and Israeli alliance side, there is a convergence of interests against the Houthis. From a policy perspective, what's really interesting and not particularly positive about the countries, the littoral countries on the Red Sea right now is that there has been a grouping called the Red Sea Council on the table for quite some time. But they have not assumed responsibility for maritime traffic, piracy, all of the basics of maritime security. And if there is sort of a now or never moment for this grouping of countries to assume responsibility, this is it. And Donald Trump has been calling for burden sharing. It's time to put money where their mouth is and take responsibility for this flow, particularly because of the economic and security impacts from Egypt to Jordan and all of the countries that Farah mentioned. So now I'm out of these tantalizing words when this war ends. We've got this picture of not so much conflict at the moment around the Gulf and the U.S. and Iran trying to find some kind of solution. But what we've all been discussing is potentially, this worsening conflict right up what is now being called the Red Sea conflict corridor. Let's start with the Gulf. Sanam, is there an end in sight? I think we know from an analytical perspective how this war can end. And in fact, Qataris, Omanis, many Gulf countries are trying to facilitate indirect dialogue. There is a deal where the Strait of Hormuz can be opened as a confidence-building measure, followed by sanctions relief. And then the real crux of the matter is Iran. Iran's nuclear program. And if an agreement can be reached there, that is what we should all be focusing on. So if that can get off the ground and if President Trump can make meaningful concessions on sanctions relief towards Iran before the midterms, I'm skeptical of that. I don't think he can do that. And he's talked about a deal maybe after the midterms. Time is running out. But also the latest version I'd heard of between Iran and Oman talked about allowing the passage of innocent traffic, innocents to be determined by Tehran. Isn't that just another code for tolls? Perhaps, perhaps. But I think right now most of the Gulf states are looking for an arrangement where there is no fee collection and that there is no Iranian dominance. Nobody wants to go back to that July-June memorandum of understanding that very much favored Tehran. But in the vacuum and sort of the dragging of diplomacy, which makes us a bit uncomfortable, there is very much a risk that war returns. Both or all sides could be rearming and preparing for another round, not one that is necessarily going to achieve anything different, because Iran will certainly roll out everything that it has hidden away and rebuilt. And the Americans will continue to hit all of the same targets that it hit over the 40-day war. And that, I think, could very much also unfold in the next weeks or after the midterms as well. So we shouldn't exclude. We shouldn't exclude the fact that active military combat won't return. All right. But we had there, I'm reaching for optimism, you had there, as you described it, a way that the war could end. Ahmed, what about the Red Sea side? Well, on the African side of the Red Sea, there's much pessimism. There's a return to war in Ethiopia taking place over the last week. We see regional involvement and alignments in that war as well and a kind of a metastasization. And interconnection of conflicts with the war in Sudan, which is three and a half years old and nowhere near being resolved at the diplomatic or the military level. And the real worry is that leaders in the region are overlooking what stability and integration could bring, you know, what collective action could bring and prioritizing these zero-sum approaches. And I think that's unfortunately where we are on the other side of the whole thing. That is less good. The Red Sea. Farah, what do you make of this? You look so closely at Yemen. Are the Houthis just going to go for immediate advantage or is there any kind of resolution of this conflict and conflicts that you could see? I think the Houthis so far have said that they will not impose fees on Bab al-Mandab. And that's exactly how, you know, the Houthis will do something when they say we will not do it. I think it's a matter of time. They will try even under the table to cash cow that. I think they will. I think they will also move further into attacking cross-borders of Saudi Arabia, which will have also impacts on the different global economies, but also relationships of Saudi Arabia and the West and Asia also in many ways. But I think in the long term, when you compare Yemen to other conflicts in the region like Syria or Iraq, I still think because we do not have that strong state-structured violence, I think it can be managed. But that requires an internal GCC agreement, regional leadership. And I'm always pleased. We don't see that at the table at the moment. I have not seen that. And I don't think that whether the Europeans or the Americans have the appetite to own Yemen to a huge point since 2015. But even before that, in the UK, the US, the Europeans are equally guilty of that. They have offshored Yemen to Saudi Arabia. And that has not been necessarily the best decision. And I think that will continue to be a mistake that the P5 are conducting, but also the whole international approach to Yemen. And I think that's quite concerning because it's also dismantling the usual conflict resolution mechanisms we can talk about, such as the UN, such as other multilateral. Probably you look to that from where you sit. It's a grim place globally and a very weak infrastructure, not just in Yemen and the region. If we look at Yemen, that has been neglected diplomatically for well over a decade. It is a humanitarian. Economic, climate and security crisis rolled into one. And UN statistics say that there are 35 million people in Yemen today within the next number of decades. Yemen's population is expected to be as large, if not larger than that of all of the Gulf countries combined. So it's very obvious that Gulf states must cooperate and collaborate to support stabilization in Yemen. It is of utmost interest for their security. For their economies and this competition and this conflict management strategy that they've all employed in Yemen is really going to be deleterious over the next decade. Is there a plan B for countries if these two waterways remain very contested, partly blocked? What about getting out oil and gas and other products another way? Ahmed? Well, most of these routes would be going through the Middle East and going through northern countries where there is, you know, we're talking about Syria, Iraq, there is extensive conflict. And if we're looking at, you know, numbers and volumes and obviously the direction of travel of that oil supply, both to Asia and Europe and beyond, I'm not sure you can replicate that with overland routes. Certainly, again, without coming back to what Sanam was saying and understanding that really thinking about the long-term security and integration of these regions is absolutely vital. Without doing so, we're tactically planning for something else. And where are the resources to do so? And these resources can be targeted just as much on land as they have on sea, as we've seen with the East-West pipeline. That's the Saudi pipeline that runs across the desert and crucially comes out north of the Houthi control bit of coastline. So that is still working for them, but it can be attacked. As you said, what about other things, Sanam? Because I was hearing a lot in Washington about oil companies saying, well, look, maybe we bring it out over the old land. Maybe we can do it over the U.S. Maybe we can do it over the U.N. Maybe we can do it over the U.S.