Good morning, and welcome to the Global Situation Report for Friday, 09 February 2024.
- CHINESE DISCOUNT SHIPPING AND A NEW AGE OF PIRACY: Shipping insurance companies are giving Chinese ships transiting the Red Sea a severe discount on their War Insurance costs compared to other cargo carriers.
- Chinese ships are paying about 0.35% of their cargo value, while other carriers are paying 0.5–.75%, between a 40 and 50% discount on shipping. In monetary terms, a $100 million cargo paying 0.75% would pay $750,000 for insurance, while a Chinese carrier would pay $350,000.
- Some insurance companies have been looking to bar insuring vessels from the United Kingdom, United States, and Israel altogether due to the Houthis specifically targeting them.
Why It Matters: Chinese cargo carriers are now at the top of a two-tiered shipping scheme where they are the quickest, cheapest, and safest compared to the rest of the world. This will encourage companies to use Chinese shipping, particularly as they try to maintain the just-in-time economy. This also sets up the Houthis for a potential rehash of the 1700s Barbary Coast, whereby transiting ships simply pay them for safe passage instead of insurance companies. This could potentially save hundreds of thousands of dollars for the company and further fund the Houthi war machine. – J.V.
- MAERSK CEO: MILITARY CANNOT GUARANTEE SAFE PASSAGE: Maersk CEO Vincent Clerc said in a recent interview that the threat level of the Red Sea has yet to peak and he did not know when the “international community will be able to mobilize itself and guarantee safe passage for us.”
- Pentagon Press Secretary Major General Pat Ryder said in response, referencing Operation Prosperity Guardian, “It’s a defensive coalition that is conducting joint patrols and providing capability to help vessels that transit. At the end of the day, it’s up to commercial industry, whether they opt to go through that route. Obviously, I think it’s in international interest to ensure that it is safe and secure, and that’s why we’re working so hard toward that end.”
Why It Matters: Rather than guaranteeing safe passage via escorts, the General referenced a publicly failed operation with a promise that they’re trying to make it safe. International shipping now has cause to look elsewhere for security guarantees. This is most likely to take the form of non-American escorts, as we are seeing with the French and Germans but may also include using the perception of Chinese ownership, arming their own vessels, and simply bribing their way through contested areas. This loss of faith in American security will almost certainly lead to the multipolar world the United States’ adversaries and enemies seek. – J.V.
- U.S. ARMY MAY CUT INFO OPS FOR SPECIAL FORCES: The U.S. Army is considering cutting the Military Information Support Operations (MISO) mission to avoid cutting funding to the Green Berets and Rangers.
- MISO operators are in charge of disseminating information supporting Army special operations. Navy shipborne intelligence teams use repackaged Army knowledge and training procedures for a similar purpose.
Why It Matters: Information Operations, also referred to as “inform and influence,” is a critical component of irregular and unconventional warfare, so it may seem counterintuitive that the Army is looking at budget cuts here. All eyes, however, are on a conventional conflict with China, where, unlike the past 20+ years of the Global War on Terror, MISO is unlikely to play a featured role. The MISO mission is not going away, but it will be narrower in scope. – M.S.
THAT’S A WRAP: This does it for today’s edition. Thank you for reading. If you know folks who would also like to receive this email, would you please forward it to them? We appreciate you spreading the word. – M.S