A Red Sea Geopolitics Primer

by Nathan Heath ’20, Fares Center Senior Research Associate and Political Risk Analyst*

One of the world’s oldest waterways is becoming increasingly relevant in geopolitics. The Red Sea is positioned between two continents, bordering six countries in Africa and four in the Middle East, and approximately 10% of all global trade passes through its waters. It also serves as a strategic zone for both regional and Great Powers projecting their military might or openly engaging in conflict. There is the potential for either reward or disaster in the Red Sea, as increasing economic and military competition in its waters raises the possibility of intense economic growth while simultaneously foreshadowing potential conflicts between rival powers. High levels of trade, energy production, and innovation forecast significant economic opportunity in the Red Sea, but this prosperity is threatened by regional rivalries and the ongoing Great Power competition between the U.S. and China.

The Red Sea’s global importance is rooted largely in its role as a key waterway for trade. By 2050, Red Sea GDP is projected to more than triple, increasing from $1.8 trillion to $6.1 trillion, and trade is expected to grow more than five times, from $881 billion to $4.7 trillion. This enormous wealth will be driven by trade agreements encouraging countries with substantial Red Sea interests to increase exports, particularly in key sectors such as energy, infrastructure, and technology. Moreover, the construction of new ports and military bases to protect trade and investment interests will lead to even higher levels of trade throughout the Red Sea.

The geographical positioning of the Red Sea, proximate to numerous top energy producers, both explains the area’s current wealth and forecasts continuing economic growth. On the African side, Egypt and Sudan alone produce a combined 500,000+ barrels per day (bpd) of oil. On the Middle East side, Saudi Arabia and Oman produce more than 12 million bpd of oil. In total, more than 50 million bpd of oil from producers as diverse as the U.S., Russia, China, Libya, and Iran pass through the Red Sea on a daily basis, along with approximately 3.5 billion cubic feet per day in liquid natural gas. In the future, renewable energy will add even more value to this waterway, given the current interest in hydro, wind, and solar initiatives in numerous bordering states.

In addition to serving as a leading trade route and home to multiple leading energy producers, the Red Sea is also becoming relevant as a hub of innovation. Saudi Arabia’s megacity projects such as Neom, The Red Sea Project, and the Amalaa Project present an opportunity for the region to participate in sustainable urbanization through massive, renewables-focused initiatives integrating robotics and smart services into new economies designed to thrive on innovation and tourism alike. Saudi Arabia’s megacities are projected to bring in hundreds of billions of dollars by 2050, but more importantly, Neom and its sister cities highlight the tremendous opportunity for innovation and economic diversification in a region where many countries have historically been dependent on homogenous or semi-homogenous revenue streams such as fossil fuels. The UAE, Bahrain, and Qatar, all of which heavily traffic their goods in the Red Sea, have unveiled similar visions for sustainable innovation to be completed in the next decade. In short, this crucial waterway may soon be home to innovation driving regional prosperity forward even faster.

These terrific opportunities for prosperity rooted in trade, energy, and innovation face risks posed by complex economic and military competition among both regional and global owners. For one, African rivalries stretching from Egypt to Djibouti are adding to the Red Sea region’s volatility. Egyptian and Ethiopian relations, although somewhat improved since the transitions to the al-Sisi and Abiy regimes, respectively, remain tense over the Grand Ethiopian Renaissance Dam (GERD). Ethiopia views the dam as a strategic necessity, while Egypt fears the dam will deplete its water resources. Although Ethiopia’s relations with Somalia and Eritrea have improved from Addis’s historically hostile positions towards Asmara and Mogadishu, Ethiopia’s access to the Red Sea ports remains a point of negotiation between the three countries. Sudan has also become increasingly problematic for its neighbors, as its resources, access to the sea, and ongoing political violence have attracted the attention of Turkey and the Gulf Nations, frustrating Egypt given Cairo and Khartoum’s historically close relationship. And Djibouti remains caught in a tug of war between an ever-growing number of regional and global powers.

The Middle East is home to its own set of conflicts fueling military and economic competition in the Red Sea. The primary regional rivalry continues to be between Iran and Saudi Arabia, who are each vying for regional supremacy via either direct or proxy engagement in conflicts. Iran’s allies are Syria, Lebanon, and the Houthi rebels in Yemen (and also Qatar to a limited extent). Saudi Arabi is allied with the UAE, Bahrain, and Egypt, and the Qataris have historically been Saudi allies but have in recent years struck a more independent foreign policy that resulted in their blockade by Saudi Arabia, Egypt, Bahrain, and the UAE. The conflict between Riyadh and Tehran presents the most probable risk of a regional conflagration that could threaten the political and economic stability of the Red Sea region. At the moment, the risk of a tanker war or all-out military conflict between the U.S. and Iran is quite high, and the closure of the Strait of Hormuz or even the disruption of trade through the Gulf of Oman is a troubling and possible outcome of such an event. 

The formation of Middle East-African alliances has added a further risk of conflict to the region. In addition to its relationship with Sudan (where Saudi Arabia and Iran have competed with Eritrea), Turkey has poured significant aid and investment into Somalia, and Istanbul now owns all of the country’s major ports. Saudi Arabia and the UAE have sparred with Ethiopia over influence in Eritrea. Additionally, Qatar’s alignment with the Turks, Saudis, and Emiratis at different times has increased Doha’s influence in nations along the Horn of Africa. It is in Djibouti, however, that the greatest risk to the Red Sea itself lies, as the city-state has drawn the attention of the great powers.

In addition to a slew of Middle Eastern and African powers including Qatar, the UAE, Saudi Arabia, Turkey, Ethiopia, Somalia, Eritrea, and Egypt, a number of global powers have set their sights on Djibouti as a strategic asset. The U.S., China, Russia, Japan, France, and Italy have all secured or pursued military bases in Djibouti, which is situated close to the critical Strait of Bab-el-Mandeb. China’s first overseas military base, positioned in Djibouti, is situated just miles from Camp Lemonnier, the only significant U.S. military base in Africa. Russia failed to secure a base in Djibouti and has looked further inland for African military partnerships; France, Italy, and Japan maintain smaller operations. The U.S.-China base rivalry in Djibouti (if it could be thought of as such), is symptomatic of the larger continental rivalry between two Great Powers, as both Washington and Beijing continue to vie for influence in Africa with rival political ideologies and systems of economic development. Djibouti is thus a true powder key, not merely for regional rivalries but also for the larger Great Power game between the U.S. and China. An economic and military conflict between Washington and Beijing would impact Djibouti, threatening to disrupt trade routes passing through the Red Sea. 

In the near future we can expect to see increasing economic competition in the Red Sea as both traditional fossil fuels and renewable energy sources bolster already-significant levels of trade and innovative projects such as Neom and the GERD. The struggle for economic power will fuel increased investment by developed or middle-income regional powers such as Egypt, Turkey, or Saudi Arabia, Qatar, or the UAE into developing countries such as Sudan, Somalia, and Eritrea. Furthermore, global powers such as the U.S., China, EU, and Japan will be increasingly drawn to key Djibouti and other key ports to protect access to key trade routes. With shifting alliances and economic competition, however, comes increased risk of conflict in a region already home to numerous zones of instability. To minimize risk to the global supply chain, powers with military, economic, or political interests in the Red Sea region will have to work together to ensure that conflicts are contained or prevented altogether in the interest of stabilizing both regional and global markets. 

Featured image used courtesy of Asharq Al-Awsat, English edition

*This piece was completed in August 2019, although it is just now being published.

Nathanael C. Heath

Nathan Heath is a 2nd year MALD Candidate at Fletcher School of Law and Diplomacy. He focuses primarily on political risk and negotiations in the Middle East, North Africa, and the Horn of Africa.