In recent months, Yemen's Houthi rebel group has targeted global shipping in the Red Sea, raising concerns over Israel's economy. The attacks have already caused significant disruptions, leading to a sharp decline in shipping activity at the Port of Eilat, Israel's Red Sea entry point. If the attacks persist alongside U.S.-led airstrikes, the impact on Israel's economy could become even more severe.

The chief executive of the Port of Eilat revealed that shipping activity has plummeted by 85 percent, leaving the port's future uncertain. Without a reversal in the situation, there may be a need to furlough workers, further impacting the local economy.

The Red Sea serves as a crucial maritime route, with almost a fifth of freight bound for the U.S. east coast passing through this area en route to the Suez Canal. The attacks by the Houthis have led global shipping giants to reroute their ships around Africa instead, causing a reshaping of shipping flows.

While the Houthis claim that their primary goal is to pressure Israel for a ceasefire in the Gaza Strip, the attacks have already affected shipping to Israel. The Taiwan-based shipping giant, Evergreen, announced that it would no longer accept Israeli cargo due to safety concerns, while Danish shipping giant Maersk has diverted all vessels around Africa for the foreseeable future. Such disruptions in shipping and rising insurance costs may ultimately translate into higher prices for consumers.

The repercussions of these attacks extend beyond Israel's economic sphere. Delays in the supply chain, caused by Houthi strikes, can have life-threatening consequences for medical supplies during a time when the region is already dealing with an unprecedented number of casualties. Moshe Cohen, the CEO of Yad Sarah, the largest non-governmental medical supplies lender in Israel, warned that critical supplies may face dangerous delays.

Alongside the impact on Israel, the global economy could also suffer due to the Red Sea attacks. The escalating tension in the region raises concerns that the entire area may descend into violence. The Biden administration recognizes the risks involved, and increased pressure on the U.S. economy due to the attacks could prompt President Biden to call for a de-escalation of the conflict in Gaza.

In response to the attacks, U.S. naval forces launched three strikes against Houthi forces in Yemen, specifically targeting anti-ship missiles. The conflict has also led to a week-long outage of internet and cellphone communications in the Gaza Strip, exacerbating the existing war and humanitarian crisis.

It remains to be seen how the situation in the Red Sea will develop and its long-term impact on the global shipping industry and Israel's economy. As tensions continue to rise, efforts to stabilize the region and ensure safe passage for ships remain a pressing concern.

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