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Dubai, United Arab Emirates — Container shipping through the Red Sea has dropped by nearly one-third this year as attacks by Yemen’s Houthi rebels continue, the International Monetary Fund said Wednesday.

“Container shipping … has declined by almost 30%,” said Jihad Azour, director of the IMF’s Middle East and Central Asia department, adding that “the drop in trade accelerated in the beginning of this year.”

The Iran-backed Houthis have launched more than 30 attacks on commercial shipping and naval vessels since November 19, the Pentagon said on Tuesday.

The rebels say the attacks are in solidarity with the Palestinians and in protest of the Israel-Hamas war that has been raging in the Gaza Strip since October.

The IMF’s PortWatch platform indicates that the total transit volume through the Suez Canal was down 37% this year through January 16 compared with the same period a year earlier.

The canal connects the Red Sea to the Mediterranean Sea.

Houthi attacks have prompted some shipping companies to detour around southern Africa to avoid the Red Sea, a vital route that normally carries about 12% of global trade, according to the International Chamber of Shipping.

“The level of uncertainty is extremely high, and the developments will determine the extent of change and shift in trade patterns in terms of volume but also in terms of sustainability,” Azour told reporters in an online briefing.

“Are we on the verge of major change in trade routes,” he said, “or is it temporary because of the increase in costs and the deterioration of the security costs?”

Revised regional outlook

The United States heads a coalition to protect Red Sea shipping and is seeking to apply diplomatic and financial pressure by redesignating the Houthis as a “terrorist” group.

The Red Sea is particularly vital for European trade.

Last week the European Union’s trade commissioner said maritime traffic through the Red Sea shipping route had fallen by 22% in a month because of the rebel attacks.

The European Union is pushing to launch its own naval mission in the Red Sea to help protect international shipping.

EU countries have given initial backing to the plan and are aiming to finalize it by a meeting of the bloc’s foreign ministers on February 19.

The United States and Britain have launched repeated strikes against Houthi capabilities in Yemen, but the Iran-backed movement is still able to hit vessels.

Wednesday’s IMF briefing came as the Washington-based fund released a revised economic outlook for countries in the Middle East and North Africa due to the Israel-Hamas war.

The IMF now sees the economies of the region expanding 2.9% this year, a decrease of half a percentage point from its October forecast.

The economic downturn in the occupied West Bank and the war-ravaged Gaza Strip was “immense,” said Azour.

In 2023, real GDP growth in Gaza and the West Bank was estimated to have dropped to about minus 6%, the IMF said, adding that it reflected a 9-percentage point downgrade from its October outlook.

“We project that the economy will keep on contracting in 2024 if there is no fast and quick cessation of hostilities and reconstruction,” Azour said.

For emerging market and middle-income economies in the region, total funding requirements over 2024 were projected to $186 billion, the IMF said, up from $156 billion in 2023.
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Brussels — European Union nations have decided to approve an outline deal that would keep in reserve the profits from hundreds of billions of dollars in Russian central bank assets that have been frozen in retaliation for Moscow’s war in Ukraine, an EU official said.

The tentative agreement, reached late Monday, still needs formal approval but is seen as a first step toward using some of the 200 billion euros ($216 billion) in Russian central bank assets in the EU to help Ukraine rebuild from Russian destruction.

The official, who asked not to be identified since the agreement was not yet legally ratified, said the bloc “would allow to start collecting the extraordinary revenues generated from the frozen assets … to support the reconstruction of Ukraine.”

How the proceeds will be used will be decided later, as the issue remains mired in legal and practical considerations.

There is urgency since Ukraine is struggling to make ends meet, and aid plans in the EU and the United States are being held back over political considerations including whether allies will continue helping Ukraine at the same pace as they did in the first two years of the war.

EU leaders will meet on Thursday hoping to approve a 50 billion euro ($54 billion) support package for Ukraine over the solitary opposition of Hungarian Prime Minister Viktor Orban.

Even if using the unfrozen assets, which now go untapped, seems like a practical step to take, many fear that financial weaponization could harm the standing of the EU in global financial markets.

Early this month, Ukrainian President Volodymyr Zelenskyy called for a “strong” decision this year for the frozen assets in Western banks to “be directed towards defense against the Russian war and for reconstruction” of Ukraine.

The EU step late Monday paves the way if EU nations ever want to impose such measures. Group of Seven allies of Ukraine are still looking for an adequate legal framework to pursue the plan.

The U.S. announced at the start of Russia’s invasion that America and its allies had blocked access to more than $600 billion that Russia held outside its borders — including roughly $300 billion in funds belonging to Russia’s central bank. Since then, the U.S and its allies have continued to impose rounds of targeted sanctions against companies and wealthy elites with ties to Russian President Vladimir Putin.

The World Bank’s latest damage assessment of Ukraine, released in March 2023, estimates that costs for the nation’s reconstruction and recovery will be $411 billion over the next 10 years, which includes needs for public and private funds.

Belgium, which holds the rotating presidency of the European Union for the next six months, is now leading the talks on whether to seize Russia’s assets. Belgium is also the country where most frozen Russian assets under sanctions are being held.

The country is collecting taxes on the assets. Belgian Prime Minister Alexander De Croo said in October that 1.7 billion euros ($1.8 billion) in tax collections were already available and that the money would be used to pay for military equipment, humanitarian aid and helping rebuild the war-torn country.
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PARIS — French farmers vowed Saturday to continue protesting, maintaining traffic barricades on some of the country’s major roads a day after the government announced a series of measures that they say do not fully address their demands.

The farmers’ movement, seeking better payment for their produce, less red tape and protection against cheap imports has spread in recent days across the country, with protesters using their tractors to shut down long stretches of road and slow traffic.

They’ve also dumped stinky agricultural waste at the gates of government offices.

While some of the barricades were gradually being lifted Saturday, highway operator Vinci Autoroutes said the A7, a major highway heading through southern France and into Spain, was still closed. Some other roads were also partially closed, mostly in southern France.

Vinci Autoroutes noted that the blockades on two highways leading to Paris have been removed. The highway from Lyon, in eastern France, to Bordeaux, in the southwest, also reopened Saturday, the company said in a statement.

Some angry protesters were planning to give a new boost to the mobilization next week, threatening to block traffic around Paris for several days, starting from Sunday evening.

President Emmanuel Macron’s new prime minister, Gabriel Attal, announced a series of measures Friday during a visit to a cattle farm in southern France. They include “drastically simplifying” certain technical procedures and the progressive end to diesel fuel taxes for farm vehicles, he said.

Attal also confirmed that France would remain opposed to the European Union signing a free-trade deal with the Mercosur trade group, as French farmers denounce what they see as unfair competition from Latin American countries. The agreement has been under negotiation for years.

In response to Attal’s announcement, France’s two major farmers’ unions quickly announced their decision to continue the protests, saying the government’s plan doesn’t go far enough.

The protests in France are also symptomatic of discontent in agricultural heartlands across the European Union. The influential and heavily subsidized sector is becoming a hot-button issue ahead of European Parliament elections in June, with populist and far-right parties hoping to benefit from rural disgruntlement against free trade agreements, burdensome costs worsened by Russia’s war in Ukraine and other complaints.

In recent weeks, farmers have staged protests in Germany, the Netherlands, Poland and Romania.
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UNITED NATIONS — The U.N. trade body said Thursday that global trade is being disrupted by attacks in the Red Sea, the war in Ukraine, and low water levels in the Panama Canal.

Jan Hoffmann, a trade expert at the United Nations Conference on Trade and Development, known as UNCTAD, warned that shipping costs have surged, and energy and food costs are being affected, raising inflation risks.

Since attacks by Yemen’s Houthi rebels on ships in the Red Sea began in November, he said, major players in the shipping industry have temporarily stopped using Egypt’s Suez Canal, a critical waterway connecting the Mediterranean Sea to the Red Sea and a vital route for energy and cargo between Asia and Europe.

The Suez Canal handled 12% to 15% of global trade in 2023, but UNCTAD estimates that the trade volume going through the waterway dropped by 42% over the last two months, Hoffmann said.

Since November, the Iranian-backed Houthis have launched at least 34 attacks on shipping through the waterways leading to the Suez Canal. The Houthis, a Shiite rebel group that has been at war with a Saudi-led coalition backing Yemen’s exiled government since 2015, support the Palestinians and have vowed to keep attacking until the Israel-Hamas war ends.

The United States and Britain have responded with strikes against Houthi targets, but the rebels have kept up their attacks.

Hoffmann, who heads the trade logistics branch at Geneva-based UNCTAD, told a video press conference with U.N. reporters that the Houthi attacks are taking place at a time when other major trade routes are under strain.

The nearly two-year war since Russia’s February 24, 2022, invasion of Ukraine and other geopolitical tensions have reshaped oil and grain trade routes including through the Black Sea, he said.

Compounding difficulties for shipping companies, Hoffmann said, severe drought has dropped water levels in the Panama Canal to their lowest point in decades, significantly reducing the number and size of vessels that can transit through it.

Total transits through the Panama Canal in December were 36% lower than a year ago, and 62% lower than two years ago, Hoffmann said.

Ships carry around 80% of the goods in world trade, and the percentage is even higher for developing countries, he said.

As for costs, he said, average container shipping spot rates from Shanghai have gone up by 122% since early December, while rates from Shanghai to Europe went up by 256% and rates to the U.S. West Coast by 162%.

“Here you see the global impact of the crisis, as ships are seeking alternative routes, avoiding the Suez and the Panama Canal,” Hoffmann said.

But the Red Sea crisis is causing significant disruptions in the shipment of grains and other key commodities from Europe, Russia and Ukraine, leading to increased costs for consumers and posing serious risks to global food security, Hoffmann said.

This is especially true in regions like East Africa, South Asia, Southeast Asia and East Asia, which heavily rely on wheat imports from Europe and the Black Sea area, he said.

Hoffmann said early data from 2024 show that more than 300 container vessels, more than 20% of global container capacity, were diverting or planning alternatives to using the Suez Canal. Many are opting to go around the Cape of Good Hope in Africa, a longer and more costly trip.

Hoffmann said ships transporting liquefied natural gas have stopped transiting the Suez Canal altogether because of fears of an attack. 
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