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Conflict Weekly
The Red Sea Crisis and Hungary's blockade of EU's Ukraine aid

  IPRI Team

Conflict Weekly #207, 21 December 2023, Vol.4, No.51
An initiative by NIAS-IPRI and the India Office of the KAS

Nuha Aamina and Manoranjan Kumar

The Crisis in the Red Sea: The Houthis, the Gaza War and the Economic Fallouts
Nuha Aamina

In the news
On 18 December, two ships, the Swan Atlantic and the MSC Clara, were attacked by Yemeni Houthi rebels. Following the incident, the British Petroleum Company (BP), a London-based oil and gas corporation, temporarily stopped its shipping operations in the Red Sea due to the deteriorating security situation.

On the same day, the US Department of Defence announced Operation Prosperity Guardian, involving the UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain. According to US Defence Secretary Lloyd Austin, the coalition would address the Houthi threat. The US alleged that Iran's Islamic Revolutionary Guard Corps (IRGC) is involved in planning and executing Houthi missile and drone attacks. Austin stated: "Iran's support for Houthi attacks on commercial vessels must stop." However, Iran and the Houthis deny any involvement with one another. Austin also spoke of the need for a "collective action" among like-minded countries. He stated: "Countries that seek to uphold the foundational principle of freedom of navigation must come together to tackle the challenge posed by this non-state actor. This is an international challenge that demands collective action."

On 19 December, a Houthi member expressed solidarity with Palestine, stating: "Our position will not change in the direction of the Palestinian issue, whether a naval alliance is established or not...Our position in support of Palestine and the Gaza Strip will remain until the end of the siege, the entry of food and medicine, and our support for the oppressed Palestinian people will remain continuous."

Issues at large
First, the Houthi attacks in the Red Sea and Iran's support as a response to the War in Gaza. On 31 October, the Houthi started drone and missile attacks, vowing to continue until Israeli aggression ends. On 19 November, the Houthis seized the Galaxy Leader cargo ship linked to Israel, launching subsequent attacks in the Bab al-Mandeb Strait. With Iranian support, the Houthis now possess a significant arsenal, including long-range drones and missiles. The Houthi narrative emphasizes support for the Palestinian cause and opposition to Israel, reflecting their slogan "Death to America, death to Israel." Iran incorporated Houthi rebels into its militia network during Yemen's civil war that began in 2014 to threaten Saudi Arabia. 

Second, the economic significance of the Red Sea. Bab el Mandab, a narrow passage, handles ten per cent of global trade, including 30 per cent of container traffic. This vital waterway linking Yemen and the Horn of Africa to the Red Sea and the Suez Canal sees about ten per cent of maritime oil trade. As a crucial route for quick sea travel between Asia and Europe, it is one of seven geographic chokepoints vital to global oil trade. Although vulnerable to blockages and pirate attacks, it transports essential energy supplies and goods, including palm oil, grain and most of the world's manufactured products.

Third, the strategic significance of the Red Sea. Strategically situated between Egypt, Eritrea, Saudi Arabia, and Yemen, the Red Sea is a geopolitical hotspot. All actors vie for dominance. In 2015, the UAE established a port in Eritrea, and Saudi Arabia expanded its influence in Yemen. Iran faces challenges in establishing a naval presence. Global players like France, Italy, the US, China and Japan are active in the region. Egypt countered the foreign presence with a military base at Berenice in 2020. Israel and Jordan closely monitor the struggle with naval bases at the Strait of Tiran. Saudi Arabia's control of Tiran and Sanafir islands adds complexity, and Israel's exclusion from Riyadh's council deepens the geopolitical dynamics.

In perspective
First, the rising consumer and environmental costs. Ships circumventing the Cape of Good Hope may need over ten days to voyage, costing up to USD one million more per ship. In turn, it raises import prices and consumer costs. To mitigate disruptions, companies may deploy more ships or increase fuel consumption. Major banks have been lowering interest rates to counter inflation and reduce consumer prices. However, this could hurt the economy in the long term. The global trade route disturbance could impact prices of goods, energy and inflation rates, potentially leading to higher inflation with increased oil prices.

Second, the Arab world's response to the crisis in the Red Sea. The coalition formed to ensure secure ship passage may include more than just Bahrain. Egypt, Saudi Arabia and Jordan, with a shared interest in this goal, are potential members. Saudi Arabia is close to reaching an agreement with Houthi rebels, while Egypt is hesitant to oppose the Houthis' message calling for an end to the conflict with Hamas. Egypt is currently struggling with economic challenges and would face significant consequences if trade were disrupted. 


Ukraine: Hungary blocks EU financial aid to Kyiv
Manoranjan Kumar

In the news
On 15 December, during the EU summit in Brussels, Hungary blocked the EU's financial aid to Ukraine. Hungarian Prime Minister Viktor Orban vetoed a EUR 50 billion package of financial aid (non-military) for Ukraine. On the same day, Reuters quoted the EU officials that 26 EU members, except Hungarian Prime Minister Viktor Orban, agreed on the financial aid to Ukraine. However, to approve the grant, all members are required to agree. Ukrainian President Volodymyr Zelensky responded: "This is a victory for Ukraine. A victory for all of Europe. A victory that motivates, inspires, and strengthens."      

On 15 December, at the same meeting, the EU leaders agreed to begin talks on Ukraine's membership in the bloc. Hungary resisted this move and abstained during voting; other EU leaders favoured Ukrainian membership. Orban stated: "Hungary's stance is clear, Ukraine is not prepared for us to start talks on EU membership. And the decision to start talks with Ukraine is irrational and inappropriate."

Issues at large
First, Hungary's opposition. Budapest has opposed the new financial aid to Ukraine and talks regarding Ukraine's membership in the EU, citing that Kyiv is not ready yet. For Hungary, the concerns cited are:  corruption, the state of the rights of ethnic minorities and the interests of farmers. Additionally, Hungary's resistance points to the demand to release its EU's monetary shares, which the bloc freezes for violating EU norms. The EU had released EUR ten billion from frozen funds before the summit.     

Second, the Copenhagen Criteria for the EU membership. To gain EU membership, one has to fulfil conditions, which include the following: a stable democracy; the rule of law; institutions to preserve democratic values and human rights; a functioning market economy; capacity to cope with the competition and market forces; and acceptance of obligations and intent of the EU. During the summit, Hungary objected to the opening of accession talks with Ukraine as it believed that Ukraine was not ready and its entry into the bloc would be disadvantageous for other members and Hungary.          

Third, the EU financial assistance for Ukraine. The EU has assisted Ukraine through various initiatives, including economic sanctions on Russia. Due to the ongoing war with Russia, the EU for Ukraine Initiative allows the European Investment Bank to scale up financing to repair and reconstruct damaged energy, transport networks, health and social services. In October, the European Commission paid EUR 1.5 billion to Ukraine under the microfinance assistance package. Since the beginning of the crisis, EUR 85 billion has been provided by the EU to Ukraine as military, financial, humanitarian and emergency assistance, with individual members giving billions more. Ukraine has critically relied on the EU and the US funding as it continues to fight Russia. Russian President Vladimir Putin claimed that Western "freebies" are running out.

Fourth, Hungary-Russia equations. Budapest has closer bilateral ties with Moscow than other EU countries, as it considers Russia a key partner in energy security and economic cooperation. In October, Hungarian Prime Minister Orban and Russian President Putin met in Beijing, China. They discussed various issues, including gas and oil shipments and nuclear energy. During the meeting, Putin told Orban that in the current geopolitical scenario, "it is tough to maintain contacts and develop relations and that it is very satisfactory that Russia's relations with many EU countries are maintained and developed. Hungary is one of them." Besides, Hungary has been questioned internationally, including by the EU, over its democratic standards, media freedom and minority rights; the reasons why the EU froze its funds.

In perspective
First, Orban's Putin links and its fallouts on Ukraine. Viktor Orban is the closest ally to Russian President Vladimir Putin, and the former delayed some EU sanctions in the past. The halting of the financial aid would imply that Hungary is indirectly helping Russia. Hungary's opposition to Ukraine's formal membership in the EU is likely to be an attempt by Orban to secure frozen EU funds. 

Second, the EU's response to circumvent the Hungary challenge. The President of the European Council, Charles Michel, stated that the EU leaders will reconvene in January 2024 to reach a unanimous agreement regarding finances. The EU leaders will likely adopt other tools to fulfil their political commitments despite Hungary's opposition. Plans for individual assistance are also ongoing. Assistance by individual countries is crucial as the US Congress is divided on the issue of financial aid to Ukraine for defence purposes.


Issues in Peace and Conflict This Week:
Regional Roundups

Akriti Sharma, Rohini Reenum, Rishika Yadav, Anu Maria Joseph, Femy Francis, Padmashree Anandhan and Dhriti Mukherjee
 
East and Southeast Asia
China: Warning to the Philippines to make a "rational choice"
On 21 December, Chinese Ministry of Foreign Affairs spokesperson, Wang Wenbin, warned the Philippines to make rational choices in light of the recent confrontation in the South China Sea. The Philippines accused China of using water cannons at their coast guard ships. Wang stated: "We hope that the Philippines can make a rational choice, follow the effective way of getting along with neighbours, and work with China to properly handle and manage the current maritime situation." Wang expressed that China and the Philippines are facing bilateral issues owing to the Philippines not sticking to the longstanding policy of the South China Sea.

China: Export ban on rare earth extraction technology
On 22 December, the Straits Times reported on China banning the export of technology used to extract and separate rare earths. The ban, which covers production technology for rare earth metals and alloy materials and technology to prepare some rare earth magnets, is expected to significantly impact the 'heavy rare earth' where China currently has a monopoly on refining. The move is part of China's efforts to protect its dominance in critical minerals and follows similar export restrictions on chipmaking materials and graphite. China accounts for nearly 90 per cent of the global refined output of rare earths, a group of 17 metals used in various high-tech applications, including electric vehicles, wind turbines and electronics. While other countries have the separation technology, China has a cost and efficiency advantage. The ban will likely make it challenging for Western countries to establish their heavy rare earth processing capacity.

China: PLA Air Force focuses on fast equipment development for future air combat
On 18 December, Global Times reported on the Chinese People's Liberation Army (PLA) Air Force intensifying efforts in fast equipment development to adapt to future air combat scenarios. Colonel Tang Shaojun, an official at the PLA Air Force's equipment department, was quoted to have highlighted the need to balance and optimize the research and development system to pursue rapid iterations and upgrades. He emphasized the changing nature of air combat, which will involve expanded battlefield boundaries, highly dynamic games, enhanced unmanned combat and main battle elements characterised by high altitude and speed. The PLA Air Force envisions a focus on top-down equipment development based on strategic requirements, integrating air and space capabilities, coordinating offensive and defensive operations and incorporating innovative technologies. The aim is to transform the PLA Air Force into a strong and modernized force by 2027.

North Korea: Another ICBM test
On 18 December, after an earlier test in July, North Korea conducted its second Intercontinental Ballistic Missile (ICBM) test. According to South Korea's Joint Chief of Staff Admiral Yang Yong-mo, it is a solid-fueled missile, possibly the Hwasong-18 ICBM, known for its stealthier launch capabilities. According to Japan's Ministry of Defence, the missile flew about 1,000 kilometres, landing between the Korean Peninsula and Japan, rising as high as 6,000 kilometres. The US condemned the test as a violation, and South Korea vowed robust joint defence.

South Korea: Supreme Court upholds wartime labour damages order on Japanese firms'
On 21 December, South Korea's Supreme Court affirmed lower court decisions compelling Nippon Steel and Mitsubishi Heavy Industries to pay wartime labour damages. These are the first rulings since 2018 when similar orders were upheld. Despite South Korea's offer for compensation via a government-backed foundation, some plaintiffs seek apologies and direct compensation from Japanese firms. Japan claims that a 1965 agreement settled all colonial issues. Tokyo expressed disapproval, protesting with Seoul. The rulings upheld orders against the firms to pay KRW 150 million each to former workers. 

South Asia
Afghanistan: Nearly 40 TTP members arrested in 2023, claims Ministry of Interior 
On 16 December, TOLO News reported that the Ministry of Interior of the Islamic Emirate revealed that nearly 40 members of the Tehreek-e-Taliban Pakistan (TTP) were arrested across Afghanistan in 2023. According to a spokesperson for the ministry, this was carried out because the Taliban regime in Afghanistan wants to maintain good relations with its neighbours and will not allow terrorists to use Afghanistan's soil. He further stated: "Today, there is no group operating in Afghanistan. There are a large number of Daesh captives with us, and around 35 to 40 TTP are imprisoned by us." He promised future action against an individual or group that would try to disturb the peace and security in the country.

Pakistan: Investigation into source of TTP weapons
On 17 December, Dawn reported that during a UN Security Council open debate, Pakistan's Deputy Permanent Representative, Usman Jadoon, urged for an investigation into the procurement process of modern weaponry by the TTP. Jadoon argued that terror groups do not manufacture arms; instead, they acquire them "from illicit arms markets or receive them from entities that want to destabilize a particular region or country." He added that it is the UN's responsibility and other member countries' responsibility to address this issue by taking measures to prevent illicit trade, transfer and diversion of arms.

Bangladesh: Anti-government protesters set a train on fire
On 19 December, anti-government protesters in Bangladesh set a train ablaze, killing four people. The countrywide protests led by the opposition Bangladesh Nationalist Party (BNP) are demanding the government to resign ahead of the general elections. Apart from setting the train on fire, protesters also removed railway lines. The government has been targeting opposition leaders; several of them were jailed or exiled. The opposition demands a neutral authority to oversee the elections next year.

India:140 plus members of the parliament suspended
On 19 December, Members of Parliament (MPs) who demanded a debate on a recent security breach in the Parliament were suspended from the Lok Sabha. Ninety-eight from Lok Sabha and 46 from Rajya Sabha are suspended so far. The Parliament has been discussing and tabling key legislation, with most MPs suspended. The opposition has been accusing the government of "mockery of democracy" and being unable to ensure the security of Parliament.

Central Asia, the Middle East and Africa
Iran: Defence ministry reacts to the maritime task force proposed by the US in the Red Sea
On 14 December, Al Jazeera reported on Iran's Minister of Defence, Mohammad Reza Ashtiani, reacting to a plan by the US to deploy a multinational task force in the Red Sea, warning that it would face "extraordinary problems." Referring to the Red Sea, Reza stated: "Nobody can make a move in a region where we have predominance." The previous week, the US revealed that it was in consultations with other countries to form a twelve-nation maritime task force to secure the lines of communication in the Red Sea in the aftermath of attacks on several ships by Yemen's Houthi rebels. The Houthis have been increasingly targeting ships passing through the Bab el-Mandeb Strait in response to Israel's bombardment of Gaza.

Iran: Police station attacked in Sistan-Baluchestan province
On 15 December, Al Jazeera reported on an attack on an Iranian police station in Rask, a town in the south-eastern border province of Sistan-Baluchestan. At least 11 security personnel and several assailants were killed. The Jaish al-Adl (Army of Justice) claimed responsibility for the attack. It is a Sunni armed group formed in 2012 and has been designated a "terror" group by Iran. Siastan-Baluchestan region in Iran has been plagued by poverty and unrest due to the presence of drugs-smuggling gangs, rebels from the Baluchi minority and Sunni Muslim hardliners.

Iran: Cyberattack disrupts fuel services
On 18 December, Al Jazeera reported on a cyberattack on Iran's fuel stations. The attack impacted 70 per cent of fuel stations with disruptions extreme in Tehran. Predatory Sparrow, a group linked to Israel, has claimed responsibility for the attack. The group stated: "This cyberattack was carried out in a controlled manner to avoid potential damage to emergency services." Iran's civil defence agency, which oversees the country's cybersecurity, claimed they are investigating all possible causes for the disruptions. Previously, the same group had claimed cyberattacks against Iranian petrol stations, rail networks and steel factories. A major cyberattack in 2021 disrupted the sale of fuel, and Iran blamed the US and Israel for the incident.

Sudan: The RSF seizes a military base and a city
On 20 December, the Rapid Support Forces (RSF), the paramilitary group fighting the Sudanese Armed Forces (SAF), claimed that they had seized a military base in the state of Gezira. The RSF stated that it "liberated the second infantry division" of the SAF in the town of al-Hasaheisa. The development came days after the group claimed to have seized the city of Wad Madani, the state's capital of Gezira. According to the Preliminary Committee of Sudan Doctors' Union, at least 300 people were killed during the clashes in Wad Madani. The UN International Organisation for Migration (IOM) stated that more than 300,000 people have fled the city following the clashes. 

The Democratic Republic of Congo: UN peacekeeping forces' withdrawal in three phases
On 20 December, the UN Security Council voted on withdrawing the UN peacekeeping forces from the conflict-hit eastern Democratic Republic of Congo. The council extended the mandate of the mission, United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) for a year and a three-phase withdrawal subsequently. The mission, which began in 2010, aimed to restore security in the eastern Democratic Republic of Congo; however, it failed to achieve the objectives with the challenge of fighting more than 200 rebel groups. The UNSC stated: "The drawdown will start by the end of 2023 amid the election cycle. The force will be withdrawn from South Kivu by the end of April 2024 and the mandate's implementation will be limited to provinces from May 2024." 

Uganda: Human Rights Group challenges anti-homosexuality act
On 18 December, BBC Africa reported on human rights groups challenging Uganda's Anti-Homosexuality Act at the constitutional court. The act, which was passed in May 2023, imposes the death penalty for having gay sex with someone below the age of 18 and infected with sexually transmitted diseases, including Human Immunodeficiency Viruses (HIV). The act was passed in the Parliament with an overwhelming majority. The act has brought global criticism, with the World Bank halting new loans and the US imposing visa transitions on prominent officials. The government defended the case, citing traditional family values. 

Libya: 60 migrants drowned off the coast 
On 17 December, BBC Africa quoted the International Organization for Migration (IOM) that more than 60 migrants drowned in a shipwreck off the coast of Libya. The vessel left the city of Zuwara with around 86 people on board. The boat carrying migrants was trying to cross the Mediterranean to enter Europe. According to the IOM, more than 2,200 people have died this year while trying to cross the Mediterranean, making it one of the most dangerous routes. 

Europe 
Turkey: Airstrikes hit Kurdish militant targets in Iraq
On 20 December, Turkey's warplanes conducted fresh airstrikes in northern Iraq against suspected Kurdistan Workers' Party (PKK) locations. Fourteen targets in the regions of Gara, Hakourk and Qandil were hit, destroying caves, shelters and warehouses allegedly used by militants. Ankara is aimed to combat the PKK presence in Iraq. The PKK, Baghdad and Kurdish authorities in Iraq have not responded. The PKK, labelled a terrorist group by the US and the EU, has long been a concern for Turkey. 

Russia: Putin addresses the challenges and goals in defence minister's meeting 
On 19 December, during a Ministry of Defence board meeting conducted by Russian President Vladimir Putin and Minister of Defence Sergey Shoigu, they discussed the results of the military operation in Ukraine, Russia's goals, and its challenges. Russia Today reported that Shoigu claimed close to 400,000 troops of Ukraine were being killed, and 14,000 tanks, along with armoured vehicles, were lost. Putin stated: "The West is not abandoning its strategy of containing Russia and its aggressive goals in Ukraine. Well, we are not going to give up our goals for the special military operation either." He added that the commander took "active defence" when needed and improved their positions. However, Putin highlighted that Russian forces required higher production and supply of munitions and drones. He noted restructuring the communication systems, modern surveillance and increased capabilities of the satellite constellation.

Ukraine: Severe damage reported in Avdiivka
On 18 December, the Centre for Information Resilience, an independent non-profit social enterprise of the UK, highlighted extensive destruction in Avdiivka after Russian strikes. The report observed severe damage in educational institutions, medical facilities, churches and supermarkets due to targeted strikes. Residential areas faced relentless shelling, with 25 of 26 apartment towers hit, obstructing Ukrainian army observation points. The city, pivotal since Russia's invasion in 2014, witnessed 154 casualties, with around 1200 residents enduring the ongoing conflict. Despite Russia's forces gaining some territory, Ukrainian troops retain control over the main urban centre, chemical factory to the northwest and a crucial supply road in Avdiivka amid ongoing fierce battles.

Latin America and the US
Haiti: MSF suspends medical work after patient shot dead by armed group 
On 15 December, Medecins Sans Frontieres (MSF) stated that it was suspending its work at an emergency medical centre in Port-au-Prince, Haiti, after an armed group attacked an ambulance convoy, pulling a critically ill patient from the vehicle and shooting him dead. MSF, one of the few international organizations providing medical care in the gang-controlled capital, cited the need for safety to carry out its mission amid escalating violence. The group stated: "We need a minimum of safety to carry out our medical mission. We can't work if our medical mission is threatened by violence." They added that it is unacceptable that the "ambulances are attacked" and "patients are beaten and killed" following the incident where the armed group "beat on the hood of the ambulance and fired shots in the air." Gangs in Port-au-Prince have forced nearly 200,000 people from their homes causing a humanitarian crisis.

Venezuela: US prisoners freed by Venezuela arrive back in the US
On 20 December, ten US prisoners, including six citizens whom the US considered wrongly imprisoned, arrived back in the US after being freed by Venezuela. The US National Security Adviser, Jake Sullivan, stated: "All the Americans who were wrongfully detained in Venezuela are now safely back in the United States." The release was part of a prisoner swap deal facilitated by Qatar and marked a further sign of improving relations between Washington and Caracas. In exchange for the release of the American prisoners, US President Joe Biden granted clemency to Alex Saab, a Colombian businessman and ally of Venezuelan President Nicolas Maduro. Saab, who was facing charges of money laundering in the US, was released and returned to Venezuela.

Argentina: Thousands protest in Buenos Aires against Milei's new economic policies
On 18 December, thousands of people in Buenos Aires protested against the economic policies introduced by Argentina's President Javier Milei. The measures include currency devaluation and an economic reform decree ending limits on exports. The protests were led by groups representing the unemployed expressing opposition to the new government's policies. Milei, who assumed office less than two weeks ago, has vowed tough action against disruptive protests. The government warned that those blocking streets could lose state benefits.

Colombia: ELN rebels pledge to halt kidnappings for ransom amidst ceasefire talks
On 17 December, the National Liberation Army (ELN) rebels in Colombia vowed to cease using kidnappings as a fundraising tactic, provided the current ceasefire with the government is extended. This commitment came in response to growing public anger over kidnappings, particularly the recent abduction of soccer star Luis Díaz's father. The pledge was made after peace talks in Mexico City. The government's head negotiator, Vera Grabe, stated: "After critical moments ... we have made firm progress toward peace with the ELN." However, uncertainties remain regarding the release of current captives and the success of the ceasefire extension.

The US: Sanctions imposed on network supplying Iran's drone programme with banned components
On 19 December, the US Treasury Department imposed sanctions on a network accused of evading trade restrictions to supply Iran with components for building drones. The department targeted ten entities and four individuals involved in procuring foreign components for the Islamic Revolutionary Guard Corps Aerospace Force Self-Sufficiency Jihad Organization (IRGC ASF SSJO). The organization is known for building cyber-warfare equipment and weaponry. According to the department, the sanctions aim to disrupt the network that has been sending sensitive equipment to Iran for its drone program, which includes supplying Unmanned Aerial Vehicle (UAVs) to "terrorist proxies in the Middle East and to Russia."

The US: Multinational force to safeguard Red Sea trade amid Houthi attacks 
On 18 December, the US initiated a "multinational security initiative" in the Red Sea involving Bahrain, Canada, France, Italy, Seychelles and the UK. The move comes in response to attacks by Yemen's Houthi rebels, prompting shipping lines to suspend operations. The coalition aims to protect freedom of navigation in the region and address the challenges posed by the Houthis. Houthi attacks have forced numerous shipping companies to avoid the Red Sea impacting global trade routes.


About the authors
Manoranjan Kumar is a PhD Scholar at the Jawaharlal Nehru University, Delhi. Akriti Sharma and Rohini Reenum are PhD Scholars at NIAS. Padmashree Anandhan is a Research Associate at NIAS. Anu Maria Joseph, Femy Francis, Rishika Yadav and  Dhriti Mukherjee are Research Assistants at NIAS. Nuha Aamina is a Postgraduate Scholar at St Joseph’s University, Bangalore.

(The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of any institutions or organisations.)

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