Around the world a storm is building on the oceans after decades of calm. In the Red Sea Houthi militias have launched dozens of attacks on ships with drones and missiles, cutting container activity in the Suez canal by 90% while cocking a snook at the US Navy. The Black Sea is filling up with mines and crippled warships; this year Ukraine hopes to eject the Russian navy from Crimea, its base since Catherine the Great. The Baltic and North seas face a shadow-war of pipeline and cable sabotage. And Asia is seeing the largest build-up of naval power since the second world war, as China tries to coerce Taiwan into unifying and America seeks to deter a Chinese invasion. After Taiwan’s election this week, tensions there could soar.
These events are not a coincidence, but a sign of a profound shift taking place on the planet’s oceans. The world economy is still globalized. Some 80 percent of trade by volume and 50 percent by value travels on a fleet of 105,000 container ships, tankers and freight vessels that ply the oceans day and night, taken for granted by the people whose livelihoods depend on them. Yet superpower rivalry and the decay of global rules and norms mean that geopolitical tensions are deepening. The inevitable and underappreciated consequence is that oceans are a contested zone for the first time since the cold war.
The quest for opportunity and order at sea has a long history. In the 17th century Grotius, a Dutch jurist, laid out the principle of freedom of navigation and in the 19th Britain enforced it by means of the Royal Navy and a network of ports and forts. Open oceans were enshrined in the post-1945 order and, from the 1990s, the maritime world reflected the rise of globalization and American power. That emphasized hyper-efficiency and extreme concentration.
Today 62 percent of containers are carried by five Asian and European firms, 93 percent of ships are built by China, Japan and South Korea, and 86 percent are scrapped in Bangladesh, India or Pakistan. The US Navy’s specialist role has been as the near-monopoly provider of security, using over 280 warships and 340,000 sailors.
This vast and intricate system faces two challenges. One is fraught geopolitics. China’s naval build-up means the US Navy’s primacy in the Pacific is being contested for the first time since 1945. There are more rogue actors. As well as the Iran-backed Houthis, landlocked Ethiopia’s dictator is leasing a Red Sea naval base in neighboring Somaliland.
The law of the sea is in decline. China ignores tribunal rulings that it objects to. And the West’s use of sanctions has triggered a smuggling boom: 10 percent of all tankers are part of an anarchic “dark fleet” operating outside mainstream laws and finance — twice the share of 18 months ago.
The geopolitical winds are being strengthened by technological and climate disruption. China has invested in anti-ship missiles, pushing US Navy vessels farther offshore. Arms proliferation means militias like the Houthis now have cruise missiles, a capability that, until recently, only states possessed.
The knowledge economy — and the dominance of Wall Street and Silicon Valley — depend on 600-odd subsea data cables vulnerable to sabotage. Climate shifts are changing geography and incentives. The Panama canal is short of water; trade routes are expanding in the Arctic as it melts; and the green-energy boom is catalysing a scramble to mine the seabeds.
Disorder therefore looms on the high seas. One cost will be transient disruptions to commerce. Seaborne trade is worth about 16 percent of global GDP. The shipping system is adaptable but only up to a point.
Single shocks can often be absorbed. The Houthi attacks have so far caused a spike in insurance and shipping rates, but have not yet led to broader price rises, because the container and oil markets have spare capacity.
When markets are tight or there are synchronous shocks, the penalty is higher. The post-lockdown shipping crunch in 2021 and the Black Sea grain disruptions in 2022 caused worldwide inflation. Although shipping is a low share of most products’ final price, unpredictability at sea would lead firms to shrink their supply chains, adding to costs.
Large-scale conflicts at sea could be devastating. Maritime confrontations have their own distinct qualities, because the difficulty of rapidly reinforcing fleets means that escalation is less likely than on land.
Still, it is easy to identify where conflict could break out. Attacks by, say, Iran or Russia on pipelines, liquefied-natural-gas routes or data cables could be crippling. Spats over strategic islands could trigger confrontation in the South China Sea and Indian Ocean. And embargoes of economies more sophisticated than Russia’s or Iran’s could do enormous damage. A simulation by Bloomberg shows a blockade of Taiwan and Western countermeasures cutting global GDP by 5 percent.
All this shows the need to deter rogue actors and hostile states. Yet there is no easy passage back to the calm waters of the 1990s. Appeals to uphold universal laws are unlikely to succeed. Trade-dependent China has much to lose, but wants to subvert Western sanctions and pursue illegal claims in the South China Sea. It does not help that America has not ratified the main global treaty on maritime law. Nor can the West quickly re-establish its naval dominance after chronic underinvestment. With a puny 5 percent of global shipyard capacity, it will need decades to rebuild its fleets.
Dead calm
A different response is needed. Western countries must double-down on maintaining their technological edge, in submarines and autonomous vessels, for example.
