Economist Podcasts
A tax or attacks: how the Houthis fund themselves
Jan 22, 2025
Corbyn Duncan, a Global correspondent for The Economist, shares insights on how Houthi rebels in Yemen fund their operations through extortion, impacting global trade dynamics. Ore Ogunbiyi, covering the rise of a Ghanaian rum distillery, showcases the revival of local spirits and culture. Meanwhile, Alex Hearn discusses China's rapid advancements in artificial intelligence, highlighting the competitive landscape against America's dominance. This session delves into the intertwining of geopolitics, innovation, and cultural heritage.
22:50
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Quick takeaways
- The Houthi rebels are significantly impacting global trade by charging around $2.1 billion annually in 'protection fees' for safe passage through the Bab al-Mandab Strait.
- China's aggressive advancements in AI, fueled by relaxed regulations, are enabling rapid innovation at lower costs, threatening the sustainability of U.S. dominance in the field.
Deep dives
Shipping Challenges in the Bab al-Mandab Strait
The Bab al-Mandab Strait is facing significant shipping challenges due to increased attacks by the Houthi rebels, which have altered the dynamics of trade between Asia and Europe. Since October 2023, approximately 12% of global trade that typically passes through this important route has become more dangerous, forcing many vessels to divert and drastically increasing shipping insurance prices. Reports indicate that about 200 vessels were attacked in a recent year, raising concerns for safety and leading to a dramatic 70% drop in shipping volumes through the Suez Canal. This situation not only heightens risks for seafarers but also affects shipping costs, likely resulting in consumers feeling the pinch without even realizing it.
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