NewsRed Sea crises disrupts German economy, industries grapple with Houthi fighter attacks

Red Sea crises disrupts German economy, industries grapple with Houthi fighter attacks

Chancellor of Germany Olaf Scholz is receiving troubling signals from the most important sectors of the economy.
Chancellor of Germany Olaf Scholz is receiving troubling signals from the most important sectors of the economy.
Images source: © PAP | PAP/EPA/CLEMENS BILAN
9:13 AM EST, January 22, 2024

These Houthi fighter attacks on vessels ferrying goods across the Red Sea significantly disrupt this critical trade route—vital for the exchange of goods between Asia and Europe. We have been reporting on issues in different sectors on an almost daily basis for several weeks now.

On Monday, January 22, the Reuters agency reported that the crisis—which the USA and its allies have so far been unsuccessful in resolving—is now impacting the German chemical industry, the third largest in the country, boasting annual sales of approximately 260 billion euros.

As per Reuters, the problems faced by chemical producers stem from the fact that many shipowners have chosen to take a longer rout, bypassing the Red Sea, the Suez Canal, and the Bab al-Mandab strait in favor of the Cape of Good Hope.

For instance, the Gechem company has had to limit the production of dishwasher and toilet tablets. Evonik, a manufacturer of specialty chemicals, is exploring alternative delivery routes. However, the issue remains that some materials are not suitable for air freight transport. Discussions about potential price increases for products are also becoming more frequent.

Brussels grows increasingly critical of Israel

The delayed delivery of materials is also being felt in Germany's largest industry, the automotive sector. Tesla factories near Berlin have stopped operations on weekends due to the crisis in the Red Sea.

Initially, only container ships associated with Israel were attacked. However, vessels linked to the United States and Great Britain have also come under fire after their armies bombarded Ansar Allah (Houthi) positions in Yemen. Despite the escort provided by the United States and its allies to container ships, this has not discouraged the rebels receiving support from Iran.

We must remind that Yemeni fighters are attacking cargo ships in an attempt to pressure Israel into withdrawing their troops from the Gaza Strip, where they are currently combating Hamas which conducted a terrorist attack on October 7. The Palestinian-reported casualty count has surpassed 25,000, the vast majority of which are civilians—including mainly children and women.

- From now on, I will no longer talk about a peace process, but rather a process that involves the establishment of two states - said Borrell, referring to Israel and Palestine. Peace and stability cannot be achieved solely through military means. I say this with profound respect for the victims of the terrorist attacks orchestrated by Hamas - he emphasized.