The Next Suez Crisis: China and Iran

For just over a week, the worlds trade networks faced mass disruption as a cargo ship managed to wedge itself between the two banks of the Suez Canal in Egypt. The incident involving the Ever Given container ship, run by the Taiwanese Evergreen Shipping company, provided a timely reminder for just how important the Suez Canal continues to be as global supply route.

 

The stricken ship managed to cost the global economy $9 billion a day for every day that it was lodged across the width of the canal. This in itself is unsurprising given that 15% of global trade passes through the Suez Canal.

 

In reality, the whole incident should serve as a warning for just how vulnerable our globalised markets have become. That is not to say that we should abandon our approach to global trade, but rather that we must do more to protect it, and keep supply lines clear.

 

However, this means more than just preventing oversized ships from blowing across the length of the canal, but also ensuring that the access to these vital shipping routes remain open. If you thought that a single ship clogging the canal could cause so much damage to the global economy, then imagine what could be inflicted by hostile states or terror groups.

 

The most immediate threat to the canal comes not from the Mediterranean entrance, as was the case in the 1950’s, nor from Islamist groups that are currently waging an insurgency in the Sinai Peninsula, but from Iran and China. The unlikely pair have been growing ever closer, whilst at the same time setting themselves up in strategic points near the entrance to the Canal from the Red Sea.

 

In March 2016 the Chinese began building a Naval Base in Djibouti, and opened the bureaucratically named Chinese People's Liberation Army Base in Djibouti in 2017. The base was built under the auspicious of fighting piracy along the East African coast, joining the United States, NATO, Japan, and the EU in policing the coastlines around Somalia and Eritrea. The base however has grown exponentially over the years.

 

The base is situated in such a position that it has a commanding reach across the Bab-el-Mandeb Strait through which all ships travelling along Suez must travel. It is also strategically placed for easy access to the Red Sea and Gulf of Aden – both historically key stopping off points for trade ships on the way through.

 

On the other side of the Straights, sits the city of Aden – which from 1839-1967 was one of the main coaling stations for the British Empire, precisely because it sat at the point at which the Indian Ocean meets the Red Sea. Today Aden is part of the state of Yemen.

 

Yemen has since 2014 been embroiled in a violent and long lasting civil war between the Houthi revolutionary movement in the northwest of the country, and the governing internationally recognised Hadi-led government in the South.

 

Throughout the length of the civil war, Iran’s Islamic Revolutionary Guard Corps have been supporting the Houthi rebels – arming them with new state of the art weapons, and supplying them with fuel and resources to keep the fight going as long as possible. For a period, the Houthi rebels managed to take control of the city of Aden, allowing Iran access to the port. It was at this point that Saudi Arabia intervened on the side of the Hadi government.

 

The conflict in Yemen has at several points risked giving the Iranians control over the Eastern point of access to the Red Sea. It has only been thanks to Saudi Arabia and its Arab allies that Iran has so far been unable to gain a sizeable foothold. However, with public support turning sharply against Saudi intervention in the conflict, it is only a matter of time before Iran is able to establish itself firmly in the country.

 

These two examples of hostile powers establishing themselves on rival sides of the entrance to Suez are alarming enough on their own, but when added to the fact that both Iran and China signed a new Economic and Security Agreement in Tehran on 25 March 2021, the results are terrifying. It opens up the prospect that both nations, should they so choose, could undercut Egyptian control over access to Suez from the Indian Ocean.

 

It is conceivable that China could force priority for Chinese flagged ships over others, prevent vessels from Taiwan, Europe or America from passing through, or even close access to the cut altogether in favour of forcing a monopoly on the Belt and Road system instead.

 

The alternatives for western shipping companies are at best unappealing – from adding 11 days to the journey by travelling around the Cape of Good Hope in South Africa and through the Straights of Gibraltar to get to Europe, or by forcing ships from China to tack the treacherous route across the Pacific and through Panama, to then cross the Atlantic as well.

 

The West therefore needs to ensure that both powers are checked in the region. Firstly by preventing Iran from establishing a foothold in Yemen, and secondly by ensuring that China does not expand further in the Horn of Africa. Otherwise, the damage will be far greater than that caused by the lowly Ever Given tanker.

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30 March 2021