Conflict in the Red Sea – An Opportunity for Kazakhstan's Economy Development?

The Middle East has been in a state of hybrid wars for three months now. Analysts worldwide express serious concerns that the escalated conflict between Israel and HAMAS, against the tense situation on the border of Israel and Lebanon, as well as due to the provocations of the Houthis in Yemen and the Red Sea, could spread throughout the region. However, the world economy and geopolitics are very cynical things; while some countries are at war, others may improve their material situation. "Voice of the People" asked experts - how will the Middle Eastern conflicts affect Kazakhstan?

Who are the Houthis and What is Happening? The Houthis are a radical religious group that has controlled part of Yemen's territory since 2014. Since November 2023, in solidarity with the population of the Gaza Strip, they have periodically attacked ships passing through the Red Sea and the Suez Canal. The Houthis' point of attack was the Bab-el-Mandeb Strait. Primarily, it's commercial ships, not related to Israel, that come under fire.

Thus, many large shipowners in recent months have started to bypass Africa via the Cape of Good Hope instead of sending ships through the now unsafe Suez Canal.

The new route is longer and more expensive, which is already affecting the final price, for example, of oil.

In December 2023, 22 countries created a coalition to protect against the Houthis, and on January 10, 2024, the UN Security Council adopted an American resolution condemning the actions of the Houthis.

This gave the Coalition a basis for bombing Houthi bases in Yemen on January 12. But already on January 15, the Houthis again began shelling ships in the Red Sea.

The Middle East War is Unnecessary for the USA Orientalist Zhanat Momykulov emphasizes: the escalation of the conflict in the Middle East is currently absolutely disadvantageous for the USA, so they try to negotiate with all the countries in the region, but this is not going well.

"Washington has not been able to provide a clear strategy for getting out of the deadlock regarding the prospects for achieving peace between Israel and HAMAS. This puts America in an awkward position in front of Arab allies," he notes.

Furthermore, as the political scientist emphasizes, the far-right politicians of Israel want to change the status quo and end the war that began in 2006 in the south of Lebanon. Israeli military forces do everything to escalate relations with Hezbollah. Israel wants the USA to stay to protect its main ally – the largest base in the Middle East. But the actions of Israeli partners undermine the authority of the USA in the region and the world.

And against this background, Houthi attacks on ships in the Red Sea became the last straw, provoking the western coalition, however, the USA and Britain still try to prevent a full-scale war.

"According to NATO's statement, the allied military actions against the Houthis were defensive in nature with the aim of protecting the freedom of navigation in the region. Western allies are limited to air raids," says Zhanat Momykulov.

Will We Find or Lose in Not Our War? Nonetheless, if relations near the Suez Canal continue to heat up, then, as the orientalist suggests, it will be bad for everyone, including ordinary Kazakhstanis, as part of our everyday consumer goods are imports. And it could significantly increase in price due to the rise in transportation costs of the world's largest producers.

But there are also positive development options for our country.

"The exacerbation of the crisis around the Red Sea might change the directions of the main logistical routes and improve the prospects of the Trans-Caspian International Transport Route," predicts Momykulov.

Political scientist Gaziz Abishev shares a similar view.

"An alternative land route from Southeast Asia to Western Europe passes through the territory of Kazakhstan. If in some fantastical scenario the waters of the Indian Ocean suddenly became impassable for trade ships, transit through the territory of Kazakhstan could increase manifold, accordingly affecting international investments in the economy of the Republic of Kazakhstan. Such is the law of nature - to gain somewhere, it's necessary to lose somewhere else," he wrote in his Telegram channel.

Better Not Even to Think About It... But will this alternative, so beneficial for us, fantastical scenario fully materialize?

As economist, director of the "Talap" Center for Applied Research, Rakim Oshakbayev, suggests, it's unlikely.

"Judging by what we see in the media, there's more of a ritual exchange of strikes: Western countries had to respond somehow, they responded. And this suggests that neither the USA, Iran, Israel, nor other countries are now ready for a large-scale war in the Middle East. So, I personally do not predict a radical change in the historically established transport and logistics routes," he says.

As the expert emphasizes, the USA has learned from its own experience, first in Vietnam and then – in Afghanistan, that conducting any wars on foreign territory, especially with a hostile population, is futile.

"Israel is unlikely to be able to defeat HAMAS now. It can weaken its positions, maybe rout it, but over time new leaders of the movement will emerge, and they will join the fight. It's impossible to defeat the Houthis as well. Therefore, a large coalition led by the USA and Britain are very cautious; they understand the futility of escalation," notes Rakim Oshakbayev.

Moreover, as the expert reminds, radical groups have repeatedly demonstrated asymmetric use of force. Such was the attack by HAMAS on a music festival, but who guarantees that the Houthis won't apply other radical countermeasures?

"If they are heavily 'squeezed,' they might conduct an attack on Saudi Arabia's oil fields, which could incredibly spike oil prices and provoke an already possible global crisis," Oshakbayev suggests.

Moreover, the negative consequences from this theoretical act for Kazakhstan could be much stronger than the benefit from the increased oil prices.

Earlier, the Ministry of Foreign Affairs of the Republic of Kazakhstan reported that not a single Kazakhstani is registered in Yemen.

This text was translated with the help of the artificial intelligence ChatGPT