Overview
In early July, Yemen’s Iran-backed Houthi rebels resumed maritime strikes on vessels passing through the Red Sea, abandoning a US ceasefire that had held since May. The attacks—and the similar skirmishes that have followed in the intervening weeks—follow a familiar Houthi playbook: impose costs on international shipping to pressure Israel and its Western partners to end the conflict in Gaza. Their resumption was closely followed by reports of stepped-up Iranian efforts to rearm its various proxies and rebuild its proxy network that has been decimated by Israeli efforts and the fall of Syria’s Assad regime. The Houthis’ resurgence exemplifies the structural obstacles to meaningfully eliminating Iran’s various proxies and the likelihood of continued challenges to the stability of the Middle East, its economy, and global logistics.
The Problem Posed by the Houthis
The Houthis ended a months-long calm in the Red Sea in the second week of July with strikes on two commercial vessels traversing the waterway. The attacks, which targeted Greek- and Liberian-owned tankers, signaled the resumption of the Houthis campaign to disrupt maritime trade through the Red Sea, through which some 12-15% of global trade and 30% of container traffic passes annually, in a bid to impose costs on Israel and Western partners for the ongoing Israel-Hamas conflict in Gaza. In its earlier iterations, the strategy had dire effects on global trade: transits through the Suez Canal—through which vessels originating from Asia access European ports—fell by almost three-quarters year-over-year during the height of attacks last October. Container shipping rates nearly doubled, and delays rose by 70% as ships rerouted around Africa, adding time and extra costs. In the first weeks of the group’s renewed attacks, the trend appears to be returning—risk premiums for tanker insurance have almost doubled.
The attacks have been difficult for the US and its partners to curb: over the last year, the Biden and Trump administrations have bombarded Houthi targets in Yemen and stepped up efforts to interdict Iranian and Russian arms bound from Iran to Yemen. The US inaugurated Operation Prosperity Guardian, and Europe stood up Operation Aspides to safeguard navigation and trade flows through the Bab al Mandab chokepoint. Regardless, efforts to eliminate maritime harassment, like broader efforts to unseat the Houthis, have largely been unsuccessful. Maritime harassment is a low-cost, high-payoff strategy for the group, and it is hard to eliminate that capability. Moreover, the scrappy rebel group-turned-de facto government utilizes missiles and launchers that it has apparently learned to partially manufacture domestically, an immense benefit, and it appears well able to frustrate international intelligence efforts by hiding and dispersing launchers and stockpiles, reducing the impact of any one Western airstrike. Another Houthi strength is their relative disregard for civilian casualties; leaders in Houthi-controlled Sanaa have historically cared little to differentiate their military sites from civilian ones, an added layer of complexity for their rivals.
Perhaps most importantly, however, in executing these attacks, the Houthis value the symbolic gains (namely, legitimacy as an impactful actor on the global stage) over the strategic ones (clearly limited, given that Israel’s behavior has not changed). While the Houthis agreed to a ceasefire as peace negotiations in Gaza were ongoing, they likely felt they had the upper hand in retaining their maritime harassment capabilities—essentially maintaining full control over whether, and when, conflict restarted. Efforts to subdue the Houthis are frustrated not only by the relative strengths of their chosen strategy and rebel group status but also by the fact that the US and other potential negotiators cannot offer a deal more attractive than the ability to unilaterally terrorize the global economy.
Iran’s Resilient Proxy Network?
Despite the Houthis’ resurgence, there is no question that Iran’s proxy network—made up of the Houthis as well as Hamas in Gaza, Hizballah in Lebanon, and various armed groups in Iraq and Syria—has been decimated by recent conflicts with Israel and the fall of the Assad regime in Syria late last year. There are clearly limits to what this tattered system of armed groups is currently able, or willing, to do for Tehran: Middle East observers were struck by a near-universal lack of response during Israel’s aerial bombardment of Iran’s nuclear program. Proxies were either unable to respond or unwilling to enter Israel’s and, later, the US’ line of fire.
Nonetheless, the regional proxy network (as exemplified by the Houthis’ renewed maritime disruption) is clearly not entirely down for the count. In recent weeks, international media have repeatedly reported that Iran is moving to rearm its regional partners. In early June, US media reported that Iran had ordered “large quantities” of ammonium perchlorate (a crucial accelerant for solid-fuel missiles) from China, enough to manufacture as many as 800 missiles. In mid-July, Yemen’s internationally recognized government announced that it had intercepted a record shipment of missiles, drone components, and other military gear sent to the Houthis by Iran via Djibouti. Ground route shipments through Syria, though forced to scale down by Assad’s ouster, are still underway; Syria’s HTS-led government has regularly reported interdictions of weapons, including ground-to-air rockets, along their borders with Iraq and Lebanon. The Lebanese army, too, has seized shipments of Russian antitank missiles often used by Hizballah on its border with Syria.
Iran’s decisive moves to rearm its proxies and the Houthis’ renewed operations illuminate shortcomings in Israel’s new regional Iran strategy. After decades of “mowing the grass”—periodically cutting down significant proxy threats, but not expending the effort to attempt their full elimination—Israel has moved far more decisively in the last two years to permanently disempower the ragtag coalition of anti-Israel armed groups supported by Iran. However, it appears more difficult than expected to both sever Iran’s regional ties and to eliminate Tehran’s ability to funnel arms and intelligence to its partners. Enduring shared anti-Israel sentiment (likely inflamed by recent events), ideological alignment, and Iran’s utility as a regional arms exporter mean that the proxy network, while tattered, is still very much in existence.
This could, of course, change—Israel demonstrated over the last two years that it can decimate some of its rivals when it wants (see the routing of Hizballah in Lebanon that left the group down most of its leaders, out of government, and with a much-depleted arsenal). However, this success is clearly not evenly replicable across various proxies—Hizballah, which shares a border with Israel and has been the subject of decades of Israeli intelligence gathering and strategic testing, is a more accessible target than the far-away Houthis. Further, more decisively attempting to stamp out proxies may do the opposite by stoking regional instability, ultimately reopening a weakened Syria, Lebanon, or Iraq to even freer movement by Iran and its partners. The resilience of Iran’s proxies and Israel’s strategic dilemma mean that disruptions from Iranian proxy activity will continue, and potentially rise—bringing with it disruptions for global business. Renewed Houthi attacks in particular will drive up logistics costs and increase delays, driving up prices for commodities traders as well as end-consumers, and further adding to global economic uncertainty amid the US’ tariff push.
