The Government should be keeping a close eye on the prevailing situation in the Red Sea, as Sri Lanka is largely dependent on maritime trade and commerce to uphold her economy. A spate of attack on civilian shipping in the Red Sea, particularly in and around the Bab el-Mandeb strait off Yemen's western coast, over the last few weeks, have had serious implications on merchant shipping, with several major shipping lines opting to reroute their fleets to avoid the narrow choke point in the Bab el-Mandeb strait, where Houthi rebels, widely believed to be backed by Iran, have launched a spate of attacks on commercial vessels. 

The attacks have forced merchant liner operators to speed up vessels, or to reroute for longer voyages, costing shipping more in fuel and transit time. They will also have to add additional capacity to maintain services that typically use the Red Sea route, which will also be a costly matter. Such costs, and a spike in insurance risk premiums will be passed on to those who export and import goods via sea freight.  

The Hourtis began to target ships linked to Israel in the Bab el-Mandeb strait, first with a spectacular heli-borne air assault on to a moving vehicle carrier vessels, which would be made the LTTE envious, and took hostages, forcing the vessel to move close to the Hourti-controlled coastline in Yemen. Since then, there have been close to 20 attacks on merchant shipping and on military vessels which were escorting them in the straits. According to security analysts nearly a dozen of the attacks were made using Kamikaze drones filled with explosives, anti-ship missiles and rockets. It is widely reported and documented how Iran has helped the Houthi rebels to advance their goals by providing them with advanced technology and weapons.    

Sri Lanka, as a trans-shipment hub, with designs and ambitions to become a bigger regional hub, can suffer significantly if the current situation is left unaddressed. The safety and security of maritime lines of communication, the sea routes which cargo vessels ply, is a vital component of Sri Lanka’s national interest. Sadly, few talk about such matters, even in the policymaking realm. Many Sri Lankan policy makers, and politicians, and a wide cross section of the public seem to prefer dealing with “what’s under your nose” rather than looming threats on the horizon. Given the complex geo-political dynamics of what’s happening in the Middle East, there is little Sri Lanka can do to influence the actors and proxy actors at play in and around the Bab el-Mandeb strait.

With the island nation struggling to find its feet following an unprecedented economic crisis which caused it to declare bankruptcy last year, any disruptions to maritime trade will have an impact on Sri Lanka. Already the price of crude oil has been impacted, and will likely be reflected in the next round of fuel tariff revisions. The ensuing trickle down effect on cost of living and doing business will likely make the first quarter of 2024 less bearable for an already strained community. It is learnt that some Sri Lankan freight services have already begun to levy $ 1000 plus risk surcharge on goods being shipped via the Red Sea. This will undoubtedly make imports and exports more costly, adding to the cost of living woes, and challenging exporters to remain competitive in Sri Lanka’s primary exports markets of Europe and North America.

Last year, according to the Central Bank of Sri Lanka the earnings from exports surpassed United States Dollars 13 billion. Sri Lanka, given its commitments to the International Monetary Fund (IMF), needs to improve its exports and state revenue. As such, any disruptions to Sri Lanka’s exports and status of being a transshipment hub needs to be taken seriously. While Sri Lanka lacks clout to influence the geopolitical tensions in the Middle East, Sri Lankan leaders should understand the risk posed to Sri Lanka and other nations in the Indian Ocean and seek to address the matter in a collaborative manner. Perhaps, platforms like the Indian Ocean Rim Association (IORA), with which Sri Lanka is now holding the Chairship, and other forums like BRICS are spaces where Sri Lanka can rally support to bring pressure on such matters.