Airstrikes are unlikely to deter the Houthis

Jamie Dettmer is opinion editor at POLITICO Europe.

TEL AVIV — In a preemptive bid to warn off Iran and its proxies in the wake of Hamas’ October attacks on southern Israel, United States President Joe Biden had succinctly said: “Don’t.” But his clipped admonition continues to fall on deaf ears.

As Shakespeare’s rueful King Claudius notes, “when sorrows come, they come not single spies but in battalions.” And while exasperated Western powers now try to halt escalation in the Middle East, it is the Iran-directed battalions that are bringing them sorrows.

Raising the stakes at every turn, Tehran is carefully calibrating the aggression of its partners — Hezbollah in Lebanon, Shiite militias in Iraq and Syria, and the Houthis in the Red Sea —ratcheting up to save Hamas from being destroyed by a vengeful Israel. And out of all this needling, it is the Houthis’ more then two dozen attacks in the Red Sea that crossed the line for Western powers — enough to goad the U.S. and the United Kingdom into switching from a defensive posture to launching strikes on dozens of Houthi targets.

As far as Washington and London are concerned, Western retaliation is meant to give teeth to Biden’s October warning, conveying a clear message to Iran: Stop. But why would it?

Privately, the U.S. has reinforced its warning through diplomatic channels. And U.K. Defense Minister Grant Shapps underscored the message publicly, saying the West is “running out of patience,” and the Iranian regime must tell the Houthis and its regional proxies to “cease and desist.”

Nonetheless, it’s highly questionable whether Tehran will heed this advice. There’s nothing in the regime’s DNA to suggest it would back off. Plus, there would be no pain for Iran at the end of it all — the Houthis would be on the receiving end. In fact, Iran has every reason to persist, as it can’t afford to leave Hamas in the lurch. To do so would undermine the confidence of other Iran-backed groups, weakening its disruptive clout in the region.

Also, from Iran’s perspective, its needling strategy of fatiguing and frightening Western powers with the prospect of escalation is working. The specter of a broadening war in the Middle East is terrifying for Washington and European governments, which are beset by other problems. Better for them to press Israel to halt its military campaign in Gaza and preserve the power of Hamas — that’s what Tehran is trying to engineer.

And Iranian mullahs have every reason to think this wager will pay off. Ukraine is becoming a cautionary tale; Western resolve seems to be waning; and the U.S. Congress is mired in partisan squabbling, delaying a crucial aid package for Ukraine — one the Europeans won’t be able to make good on.

So, whose patience will run out first — the West or Iran and its proxies?

Wearing down the Houthis would be no mean feat for the U.S. and the U.K. In 2015, after the resilient Houthis had seized the Yemeni capital of Sana’a, Saudi Arabia thought it could quickly dislodge them with a bombing campaign in northern Yemen. But nearly a decade on, Riyadh is trying to extricate itself, ready to walk away if the Houthis just leave them alone.

The United Arab Emirates was more successful in the country’s south, putting boots on the ground and training local militias in places where the Houthis were already unpopular. But the U.S. and the U.K. aren’t proposing to follow the UAE model — they’ll be following the Saudi one, albeit with the much more limited goal of getting the Houthis to stop harassing commercial traffic in the Red Sea.

Moreover, Western faith in the efficacy of bombing campaigns — especially fitful ones — has proven misplaced before. Bombing campaigns failed to bring Iraq’s Saddam Hussein to heel on their own. And Iran-aligned militias in Iraq and Syria have shrugged off Western airstrikes, seeing them as badges of honor — much like the Houthis, who, ironically, were removed from the U.S. terror list by Biden in 2021. They seem to be relishing their moment in the big leagues.

War-tested, battle-hardened and agile, the Houthis are well-equipped thanks to Iran, and they can expect military replenishment from Tehran. They also have a firm grip on their territory. Like Hamas, the Houthis aren’t bothered by the death and destruction they may bring down on their people, making them particularly difficult to cajole into anything. And if the U.S. is to force the pace, it may well be dragged in deeper, as the only way to stop Iran replenishing the Houthis would be to mount a naval blockade of Yemen.

Few seasoned analysts think the Houthis will cave easily. Tom Sharpe, a former Royal Navy captain and specialist anti-air warfare officer, said he’d suggest “just walk[ing] away.”

“Make going round the Cape the new normal,” he wrote last week, albeit acknowledging he’d expect his advice to be overruled due to the global economic implications. But degrading the Houthis enough to make the Red Sea safe again, he noted, would be “difficult to do without risking a wider regional conflict in which the U.S., U.K. and friends would be seen as fighting on the Israeli side.”

And that is half the problem. Now ensnared in the raging conflict, in the eyes of many in the region, Western powers are seen as enabling the death and destruction being visited on Gaza. And as the civilian death toll in the Palestinian enclave mounts, Israel’s Western supporters are increasingly being criticized for not doing enough to restrain the country, which is determined to ensure Hamas can never repeat what it did on October 7.

Admittedly, Israel is combating a merciless foe that is heedless of the Gazan deaths caused by its actions. The more Palestinians killed, the greater the international outrage Hamas can foment, presenting itself as victim rather than aggressor. But Israel has arguably fallen into Hamas’ trap, with the mounting deaths and burgeoning humanitarian crisis now impacting opinion in the region and more widely.

A recent poll conducted for the Washington Institute for Near East Policy found that 96 percent of the broader Arab world believe Arab nations should now sever ties with Israel. And in Britain, Foreign Secretary David Cameron told a parliamentary panel he feared Israel has “taken action that might be in breach of international law.”

Meanwhile, in addition to issuing warnings to Iran, Hezbollah, and others in the Axis of Resistance to stay out of it, Biden has also cautioned Israeli leaders about wrath — urging the Israeli war Cabinet not to “repeat mistakes” made by the U.S. after 9/11.

However, according to a poll by the Israel Democracy Institute, 75 percent of Jewish Israelis think the country should ignore U.S. demands to shift to a phase of war with reduced heavy bombing in populous areas, and 57 percent support opening a second front in the north and taking the fight to Hezbollah. Additionally, Gallup has found Israelis have lost faith in a two-state solution, with 65 percent of Jewish Israelis opposing an independent Palestinian state.

So, it looks as though Israel is in no mood to relent — and doesn’t believe it can afford to.

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US and UK strike Houthi targets in Yemen after weeks of Red Sea attacks

US and British forces struck rebel-held Yemen early on Friday after weeks of disruptive attacks on Red Sea shipping by Iran-backed Houthi rebels who say they act in solidarity with Palestinians in Gaza.

The pre-dawn air strikes add to escalating fears of wider conflict in the region, where violence involving Tehran-aligned groups in Yemen as well as Lebanon, Iraq and Syria has surged since the Israel-Hamas war began in early October.

Iran “strongly condemned” the strikes, which the United States, Britain and eight other allies said aimed to “de-escalate tensions”.

Nasser Kanani, spokesman for Iran’s foreign ministry, said that the Western strikes “will have no result other than fuelling insecurity and instability in the region”, while “diverting the world’s attention” from Gaza.

China said it was “concerned about the escalation of tensions in the Red Sea”, and news of the strikes sent oil prices up more than 2 percent.

The Houthis have carried out a growing number of attacks on what they deem to be Israeli-linked shipping in the Red Sea, a key international trade route, since October 7, when the Hamas-led attack on Israel sparked the war which is still raging in the besieged Gaza Strip.

The rebels have controlled a major part of Yemen since a civil war erupted there in 2014 and are part of a regional Iran-backed “axis of resistance” against Israel and its allies.

Friday’s strikes targeted an airbase, airports and a military camp, the Houthis’ Al-Masirah TV station said, with AFP correspondents and witnesses reporting they could hear heavy strikes in Hodeida and Sanaa.

“Our country was subjected to a massive aggressive attack by American and British ships, submarines and warplanes,” said Hussein al-Ezzi, the rebels’ deputy foreign minister.

“America and Britain will have to prepare to pay a heavy price and bear all the dire consequences of this blatant aggression,” he added, according to official Houthi media.

US President Joe Biden called the strikes a “defensive action” after the Red Sea attacks and said he “will not hesitate” to order further military action if needed.

With fighter jets and Tomahawk missiles, 60 targets at 16 Houthi locations were hit by more than 100 precision-guided munitions, US Central Command said in a statement.

Unverified images on social media, some of them purportedly of Al-Dailami airbase north of the rebel-held capital Sanaa, showed explosions lighting up the sky as loud bangs and the roar of planes sounded.

Houthi military spokesman Yahya Saree said at least five people had been killed.

‘Repeated warnings’

In a statement, Biden called the strikes a success and said he ordered them “against a number of targets in Yemen used by Houthi rebels to endanger freedom of navigation in one of the world’s most vital waterways”.

Biden called the strikes a “direct response” to the “unprecedented” attacks by the Houthis which included “the use of anti-ship ballistic missiles for the first time in history”.

Blaming the Houthis for ignoring “repeated warnings”, British Prime Minister Rishi Sunak said in a statement the strikes were “necessary and proportionate”.

Britain’s defence ministry released footage of Royal Air Force jets returning to their Cyprus base after the mission, and US Centcom video showed warplanes apparently taking off from a sea-based carrier.

US Defence Secretary Lloyd Austin said the strikes “targeted sites associated with the Houthis’ unmanned aerial vehicle, ballistic and cruise missile, and coastal radar and air surveillance capabilities”.

A joint statement by the United States, Britain, Australia, Bahrain, Canada, Denmark, Germany, the Netherlands, New Zealand and South Korea said the “aim remains to de-escalate tensions and restore stability in the Red Sea”.

The Houthis said they will not be deterred.

“We affirm that there is absolutely no justification for this aggression against Yemen, as there was no threat to international navigation in the Red and Arabian Seas,” Houthi spokesman Mohammed Abdulsalam posted on X, formerly Twitter.

He said there was no threat to any vessels apart from “Israeli ships or those heading to the ports of occupied Palestine”.

Prior to Friday’s strikes, Gerald Feierstein, a former US ambassador to Yemen, said bombing the Houthis would be “counterproductive”.

Strikes against the Houthis, who have weathered years of air raids by a Saudi-led coalition, would have little impact and would only raise their standing in the Arab world, said Feierstein of the Middle East Institute think-tank in Washington.               

Saudi Arabia calls for ‘restraint’

Yemen’s neighbour Saudi Arabia is trying to extricate itself from a nine-year war with the Houthis, though fighting has largely been on hold since a truce in early 2022.

“The Kingdom of Saudi Arabia is following with great concern the military operations,” a foreign ministry statement said after the US and British strikes.

Riyadh called for “self-restraint and avoiding escalation”.

US and allied forces in Iraq and Syria, where they are part of an anti-jihadist coalition, have also faced stepped-up attacks since the outbreak of the war in Gaza, with Washington responding to several by bombing the sites of pro-Iran groups.

Israel has also stepped up strikes against targets in Syria, and has exchanged regular fire with Lebanon’s Hezbollah over its northern border.

Washington, which has said it seeks to avoid a spreading conflict, in December announced a maritime security initiative, Operation Prosperity Guardian, to protect shipping in the Red Sea route which normally carries about 12 percent of global maritime trade.

Twelve nations led by the United States warned the Houthis on January 3 of “consequences” unless they immediately stopped attacks on commercial vessels.

On Tuesday, however, the Houthis launched what London called their most significant attack yet, with US and British forces shooting down 18 drones and three missiles.

The final straw for the Western allies appeared to come early Thursday when the US military said the Houthis fired an anti-ship ballistic missile into a shipping lane in the Gulf of Aden.

It was the 27th attack on international shipping in the Red Sea since November 19, the US military said.

The intensifying attacks have caused shipping companies to divert around South Africa’s Cape of Good Hope. Electric car manufacturer Tesla said it was suspending most production at its German factory because of a parts shortage due to shipping delays linked to Houthi attacks.

(FRANCE 24 with AFP)

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The Middle East is on fire: What you need to know about the Red Sea crisis

On October 7, Hamas fighters launched a bloody attack against Israel, using paragliders, speedboats and underground tunnels to carry out an offensive that killed almost 1,200 people and saw hundreds more taken back to the Gaza Strip as prisoners. 

Almost three months on, Israel’s massive military retaliation is reverberating around the region, with explosions in Lebanon and rebels from Yemen attacking shipping in the Red Sea. Meanwhile, Western countries are pumping military aid into Israel while deploying fleets to protect commercial shipping — risking confrontation with the Iranian navy.

That’s in line with a grim prediction made last year by Iranian Foreign Minister Hossein Amirabdollahian, who said that Israel’s counteroffensive in Gaza meant an “expansion of the scope of the war has become inevitable,” and that further escalation across the Middle East should be expected. 

What’s happening?

The Israel Defense Forces are still fighting fierce battles for control of the Gaza Strip in what officials say is a mission to destroy Hamas. Troops have already occupied much of the north of the 365-square-kilometer territory, home to around 2.3 million Palestinians, and are now fighting fierce battles in the south.

Entire neighborhoods of densely-populated Gaza City have been levelled by intense Israeli shelling, rocket attacks and air strikes, rendering them uninhabitable. Although independent observers have been largely shut out, the Hamas-controlled Health Ministry claims more than 22,300 people have been killed, while the U.N. says 1.9 million people have been displaced.

On a visit to the front lines, Israeli Defence Minister Yoav Gallant warned that his country is in the fight for the long haul. “The feeling that we will stop soon is incorrect. Without a clear victory, we will not be able to live in the Middle East,” he said.

As the Gaza ground war intensifies, Hamas and its allies are increasingly looking to take the conflict to a far broader arena in order to put pressure on Israel.

According to Seth Frantzman, a regional analyst with the Jerusalem Post and adjunct fellow at the Foundation for Defense of Democracies, “Iran is certainly making a play here in terms of trying to isolate Israel [and] the U.S. and weaken U.S. influence, also showing that Israel doesn’t have the deterrence capabilities that it may have had in the past or at least thought it had.”

Northern front

On Tuesday a blast ripped through an office in Dahieh, a southern suburb of the Lebanese capital, Beirut — 130 kilometers from the border with Israel. Hamas confirmed that one of its most senior leaders, Saleh al-Arouri, was killed in the strike. 

Government officials in Jerusalem have refused to confirm Israeli forces were behind the killing, while simultaneously presenting it as a “surgical strike against the Hamas leadership” and insisting it was not an attack against Lebanon itself, despite a warning from Lebanese caretaker Prime Minister Najib Mikati that the incident risked dragging his country into a wider regional war. 

Tensions between Israel and Lebanon have spiked in recent weeks, with fighters loyal to Hezbollah, the Shia Islamist militant group that controls the south of the country, firing hundreds of rockets across the frontier. Along with Hamas, Hezbollah is part of the Iranian-led “Axis of Resistance” that aims to destroy the state of Israel.

In a statement released on Tuesday, Iran’s foreign ministry said the death of al-Arouri, the most senior Hamas official confirmed to have died since October 7, will only embolden resistance against Israel, not only in the Palestinian territories but also in the wider Middle East.

“We’re talking about the death of a senior Hamas leader, not from Hezbollah or the [Iranian] Revolutionary Guards. Is it Iran who’s going to respond? Hezbollah? Hamas with rockets? Or will there be no response, with the various players waiting for the next assassination?” asked Héloïse Fayet, a researcher at the French Institute for International Relations.

In a much-anticipated speech on Wednesday evening, Hezbollah leader Hassan Nasrallah condemned the killing but did not announce a military response.

Red Sea boils over

For months now, sailors navigating the narrow Bab- el-Mandeb Strait that links Europe to Asia have faced a growing threat of drone strikes, missile attacks and even hijackings by Iran-backed Houthi militants operating off the coast of Yemen.

The Houthi movement, a Shia militant group supported by Iran in the Yemeni civil war against Saudi Arabia and its local allies, insists it is only targeting shipping with links to Israel in a bid to pressure it to end the war in Gaza. However, the busy trade route from the Suez Canal through the Red Sea has seen dozens of commercial vessels targeted or delayed, forcing Western nations to intervene.

Over the weekend, the U.S. Navy said it had intercepted two anti-ship missiles and sunk three boats carrying Houthi fighters in what it said was a hijacking attempt against the Maersk Hangzhou, a container ship. Danish shipping giant Maersk said Tuesday that it would “pause all transits through the Red Sea until further notice,” following a number of other cargo liners; energy giant BP is also suspending travel through the region.

On Wednesday the Houthis targeted a CMA CGM Tage container ship bound for Israel, according to the group’s military spokesperson Yahya Sarea. “Any U.S. attack will not pass without a response or punishment,” he added. 

“The sensible decision is one that the vast majority of shippers I think are now coming to, [which] is to transit through round the Cape of Good Hope,” said Marco Forgione, director general at the Institute of Export & International Trade. “But that in itself is not without heavy impact, it’s up to two weeks additional sailing time, adds over £1 million to the journey, and there are risks, particularly in West Africa, of piracy as well.” 

However, John Stawpert, a senior manager at the International Chamber of Shipping, noted that while “there has been disruption” and an “understandable nervousness about transiting these routes … trade is continuing to flow.”

“A major contributory factor to that has been the presence of military assets committed to defending shipping from these attacks,” he said. 

The impacts of the disruption, especially price hikes hitting consumers, will be seen “in the next couple of weeks,” according to Forgione. Oil and gas markets also risk taking a hit — the price of benchmark Brent crude rose by 3 percent to $78.22 a barrel on Wednesday. Almost 10 percent of the world’s oil and 7 percent of its gas flows through the Red Sea.

Western response

On Wednesday evening, the U.S., Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, the Netherlands, New Zealand, and the United Kingdom issued an ultimatum calling the Houthi attacks “illegal, unacceptable, and profoundly destabilizing,” but with only vague threats of action.

“We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews. The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways,” the statement said.

Despite the tepid language, the U.S. has already struck back at militants from Iranian-backed groups such as Kataeb Hezbollah in Iraq and Syria after they carried out drone attacks that injured U.S. personnel.

The assumption in London is that airstrikes against the Houthis — if it came to that — would be U.S.-led with the U.K. as a partner. Other nations might also chip in.

Two French officials said Paris is not considering air strikes. The country’s position is to stick to self-defense, and that hasn’t changed, one of them said. French Armed Forces Minister Sébastien Lecornu confirmed that assessment, saying on Tuesday that “we’re continuing to act in self-defense.” 

“Would France, which is so proud of its third way and its position as a balancing power, be prepared to join an American-British coalition?” asked Fayet, the think tank researcher.

Iran looms large

Iran’s efforts to leverage its proxies in a below-the-radar battle against both Israel and the West appear to be well underway, and the conflict has already scuppered a long-awaited security deal between Israel and Saudi Arabia.

“Since 1979, Iran has been conducting asymmetrical proxy terrorism where they try to advance their foreign policy objectives while displacing the consequences, the counterpunches, onto someone else — usually Arabs,” said Bradley Bowman, senior director of Washington’s Center on Military and Political Power. “An increasingly effective regional security architecture, of the kind the U.S. and Saudi Arabia are trying to build, is a nightmare for Iran which, like a bully on the playground, wants to keep all the other kids divided and distracted.”

Despite Iran’s fiery rhetoric, it has stopped short of declaring all-out war on its enemies or inflicting massive casualties on Western forces in the region — which experts say reflects the fact it would be outgunned in a conventional conflict.

“Neither Iran nor the U.S. nor Israel is ready for that big war,” said Alex Vatanka, director of the Middle East Institute’s Iran program. “Israel is a nuclear state, Iran is a nuclear threshold state — and the U.S. speaks for itself on this front.”

Israel might be betting on a long fight in Gaza, but Iran is trying to make the conflict a global one, he added. “Nobody wants a war, so both sides have been gambling on the long term, hoping to kill the other guy through a thousand cuts.”

Emilio Casalicchio contributed reporting.

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How Houthi rebels are threatening global trade nexus on Red Sea

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The U.S. is mustering an international armada to deter Iranian-backed Houthi militias from Yemen from attacking shipping in the Red Sea, one of the world’s most important waterways for global trade, including energy cargos.

The Houthis’ drone and missile attacks are ostensibly a response to the war between Israel and Hamas, but fears are growing that the broader world economy could be disrupted as commercial vessels are forced to reroute.

On Tuesday, U.S. Secretary of Defense Lloyd Austin held a videoconference with 43 countries, the EU and NATO, telling them that “attacks had already impacted the global economy and would continue to threaten commercial shipping if the international community did not come together to address the issue collectively.”

Earlier this week, the U.S. announced an international security effort dubbed Operation Prosperity Guardian that listed the U.K., Bahrain, Canada, France, Italy, the Netherlands, Norway, the Seychelles and Spain as participants. Madrid, however, said it wouldn’t take part. 

The Houthis were quick to respond. 

“Even if America succeeds in mobilizing the entire world, our military operations will not stop unless the genocide crimes in Gaza stop and allow food, medicine, and fuel to enter its besieged population, no matter the sacrifices it costs us,” said Mohammed Al-Bukaiti, a member of the Ansar Allah political bureau, in a post on X

Here’s what you need to know about the Red Sea crisis.

1. Who are the Houthis and why are they attacking ships?

International observers have put the blame for the hijackings, missiles and drone attacks on Houthi rebels in Yemen, who have stepped up their attacks since the Israel-Hamas war started. The Shi’ite Islamist group is part of the so-called “axis of resistance” against Israel and is armed by Tehran. Almost certainly due to Iranian support with ballistics, the Houthis have directly targeted Israel since the beginning of the war, firing missiles and drones up the Red Sea toward the resort of Eilat.

The Houthis have been embroiled in Yemen’s long-running civil war and have been locked in combat with an intervention force in the country led by Sunni Saudi Arabia. The Houthis have claimed several major strikes against high-value energy installations in Saudi Arabia over the past years, but many international observers have identified some of their bigger claims as implausible, seeing the Houthis as a smokescreen for direct Iranian action against its arch enemy Riyadh.

After first firing drones and cruise missiles at Israel, the rebels are now targeting commercial vessels it deems linked to Israel. The Houthis have launched about 100 drone and ballistic missile attacks against 10 commercial vessels, the U.S. Department of Defense said on Tuesday

As a result, some of the world’s largest shipping companies, including Italian-Swiss MSC, Danish giant Maersk and France’s CMA CGM, were forced to reroute to avoid being targeted. BP also paused shipping through the Red Sea. 

2. Why is the Red Sea so important?

The Bab el-Mandeb (Gate of Lamentation) strait between Djibouti and Yemen where the Houthis have been attacking vessels marks the southern entrance to the Red Sea, which connects to the Suez Canal and is a crucial link between Europe and Asia. 

Estimate are that 12 to 15 percent passes of global trade takes this route, representing 30 percent of global container traffic. Some 7 percent to 10 percent of the world’s oil and 8 percent of liquefied natural gas are also shipped through the same waterway. 

Now that the strait is closed, “alternatives require additional cost, additional delay, and don’t sit with the integrated supply chain that already exists,” said Marco Forgione, director general with the Institute of Export and International Trade.

Diverting ships around Africa adds up to two weeks to journey times, creating additional cost and congestion at ports.

3. What is the West doing about it?

Over the weekend, the American destroyer USS Carney and U.K. destroyer HMS Diamond shot down over a dozen drones. Earlier this month, the French FREMM multi-mission frigate Languedoc also intercepted three drones, including with Aster 15 surface-to-air missiles. 

Now, Washington is seeking to lead an international operation to ramp up efforts against the Iran-backed group, under the umbrella of the Combined Maritime Forces and its Task Force 153. 

“It’s a reinsurance operation for commercial ships,” said Héloïse Fayet, a researcher at the French Institute for International Relations (IFRI), adding it’s still unclear whether the operation is about escorting commercial vessels or pooling air defense capabilities to fight against drones and ballistic missiles. 

4. Who is taking part?

On Tuesday, the U.K. announced HMS Diamond would be deployed as part of the U.S.-led operation.

After a video meeting between Austin and Italian Defense Minister Guido Crosetto, Italy also agreed to join and said it would deploy the Virginio Fasan frigate, a 144-meter military vessel equipped with Aster 30 and 15 long-range missiles. The ship was scheduled to begin patrolling the Red Sea as part of the European anti-piracy Atalanta operation by February but is now expected to transit the Suez Canal on December 24.

France didn’t explicitly say whether Paris was in or out, but French Armed Forces Minister Sébastien Lecornu told lawmakers on Tuesday that the U.S. initiative is “interesting” because it allows intelligence sharing.

“France already has a strong presence in the region,” he added, referring to the EU’s Atalanta and Agénor operations.  

However, Spain — despite being listed as a participant by Washington — said it will only take part if NATO or the EU decide to do so, and not “unilaterally,” according to El País, citing the government.

5. Who isn’t?

Lecornu insisted regional powers such as Saudi Arabia should be included in the coalition and said he would address the issue with his Saudi counterpart, Prince Khalid bin Salman Al Saud, in a meeting in Paris on Tuesday evening. 

According to Bradley Bowman, senior director of the Center on Military and Political Power at Washington’s Foundation for Defense of Democracies, a number of Middle Eastern allies appear reluctant to take part.

“Where’s Egypt? Where is Saudi Arabia? Where is the United Arab Emirates?” he asked, warning that via its Houthi allies Iran is seeking to divide the West and its regional allies and worsen tensions around the Israel-Hamas war.

China also has a base in Djibouti where it has warships, although it isn’t in the coalition.

6. What do the Red Sea attacks mean for global trade?

While a fully-fledged economic crisis is not on the horizon yet, what’s happening in the Red Sea could lead to price increases.

“The situation is concerning in every aspect — particularly in terms of energy, oil and gas,” said Fotios Katsoulas, lead tanker analyst at S&P Global Market Intelligence.

“Demand for [maritime] fuel is already expected to increase up to 5 percent,” he said, and “higher fuel prices, higher costs for shipping, higher insurance premiums” ultimately mean higher costs for consumers. “There are even vessels already in the Red Sea that are considering passing back through the Suez Canal to the Mediterranean, even if they’d have to pay half a million dollars to do so.”

John Stawpert, a senior manager at the International Chamber of Shipping, said that while “there will be an impact in terms of the price of commodities at your supermarket checkout” and there may be an impact on oil prices, “there is still shipping that is transiting the Red Sea.” 

This is not “a total disruption” comparable to the days-long blockage of the canal in 2021 by the Ever Given container ship, he argued. 

Forgione, however, said he was “concerned that we may end up with a de facto blockade of the Suez Canal, because the Houthi rebels have a very clear agenda.”

7. Why are drones so hard to fight?

The way the Houthis operate raises challenges for Western naval forces, as they’re fending off cheap drones with ultra-expensive equipment. 

Aster 15 surface-to-air missiles — the ones fired by the French Languedoc frigate — are estimated to cost more than €1 million each while Iran-made Shahed-type drones, likely used by the Houthis, cost barely $20,000. 

“When you kill a Shahed with an Aster, it’s really the Shahed that has killed the Aster,” France’s chief of defense staff, General Thierry Burkhard, said at a conference in Paris earlier this month. 

However, if the Shahed hits a commercial vessel or a warship, the cost would be a lot higher.

“The advantage of forming a coalition is that we can share the threats that could befall boats,” IFRI’s Fayet said. “There’s an awareness now that [the Houthis] are a real threat, and that they’re able to maintain the effort over time.”  

With reporting by Laura Kayali, Antonia Zimmermann, Gabriel Gavin, Tommaso Lecca, Joshua Posaner and Geoffrey Smith.

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Labour abuses, including slavery, found on European fishing vessels

Research by a Washington DC-based organisation which tracks illicit money flows has found that tens of thousands of workers every year on these boats are estimated to be trapped in unsafe conditions.


Hazardous, forced work conditions sometimes akin to slavery have been detected on nearly 500 industrial fishing vessels across the globe – including in several European nations.

It is much harder, though, than you’d imagine to identify those responsible for abuses at sea, thanks to a lack of transparency and regulatory oversight.

That’s according to a new report concluded by the Financial Transparency Coalition, a Washington DC-based nonprofit organisation which tracks illicit money flows.

Working closely with the Associated Press, the study is a comprehensive attempt to identify the companies operating vessels where tens of thousands of workers every year are estimated to be trapped in unsafe conditions.

The report, published this week, found that a quarter of vessels suspected of abusing workers are flagged to China, as well as many to countries including Thailand, Taiwan and South Korea.

The picture is not much better in Europe though, with vessels from Russia, the UK and Spain in particular accused of mistreatment of fishers.

Considering that the research focuses on fishing on the high seas which are traditionally lawless areas beyond the jurisdiction of any single country, it’s clear that the revealing of these crimes is merely scratching the surface of a much wider-spread problem.

Forced labour in the seafood industry is a rarely seen but common phenomenon – and one increasingly recognised as a “widespread human rights crisis,” according to the report’s authors.

Globally, it’s estimated that as many as 128,000 fishers face threats of violence, debt bondage, excessive overtime and other conditions indicative of forced labour, according to the UN’s International Labour Organisation.

Both European and US companies are under increasing pressure to clean up supply chains in labour-intensive industries where worker abuse is widespread.

The Financial Action Task Force set up by the G7 – which includes France, Germany, Italy and the UK – has recently identified illegal logging and mining as a key driver of money laundering.

The G7 has also encouraged its members to set up publicly available databases to raise awareness about the financial flows that fuel environmental crimes.

The seafood industry, however, has so far escaped the same scrutiny, in part because governments often lack the tools to regulate what takes place hundreds of miles from land.

The Financial Transparency Coalition came up with a list of 475 individual vessels suspected of forced labour since 2010.

Of that amount, flag information was available for only about half of the total – another indication of the need for greater ownership transparency, the group says.

They also found that some 22.5% of industrial and semi-industrial fishing vessels accused of forced labour between 2010 and 2023 were owned by European companies, topped by Spanish, Russian and UK firms.

Daily life on the vessels

Even when the workers concerned aren’t European, unscrupulous behaviour by these ships’ owners has a knock-on effect on consumers on the continent.

“The Outlaw Ocean Project has documented the forcible transfer of more than a thousand Uyghurs and members of other Muslim minorities 2,000 miles from their homes in landlocked Xinjiang to 10 fish processing plants in the coastal province of Shandong since 2018,” Andrew Wallis, CEO of anti-slavery charity Unseen, tells Euronews.


“Some of these facilities supply British and European seafood wholesalers, who in turn sell to supermarkets including Tesco, Sainsbury’s, Waitrose, Morrisons and other retailers; caterers supplying pubs, hotels and restaurants, schools and universities; and the National Health Service,” he adds.

Onboard these ships, life is often bleak.

Coventry University’s Dr Chapsos tells Euronews the vessels are run by “organised crime networks, recruiting people by deception, promising them work in the fishing industry”.

When onboard, “it’s hell on earth,” he says.

“They’re often faced with “wage withholding, beatings, the confiscation of passports, deprivation of food and drinking water and even death from neglect or violence,” Wallis explains.


“The Outlaw Ocean Project found that workers catching export-bound squid may be forced to stay offshore for more than three years, subjecting them to the risk of diseases such as beriberi, caused by a shortage of the vitamin B1 found in fresh fruits and vegetables – leading to some deaths,” he adds.

Who are the people behind the industry?

Wallis tells Euronews that, on the whole, the “Chinese state, unscrupulous businesses and business practices as well as European and Western businesses demand too much profit from their procurement supply chains” are to blame.

The practice is not entirely without regulation, though.

Both in Europe and globally, these fleets are fishing in the so-called Exclusive economic zone of other coastal states – either legally or illegally.

Each coastal state has the responsibility of policing its maritime zone and, therefore, regulations do exist.


“The question is,” Chapsos says, “whether the coastal state has the means, capabilities and capacities to efficiently and effectively police their waters and whether corruption of officials to turn a blind eye plays another significant role.”

If a crime takes place in open, international waters, it is supposed to be regulated by the UN Convention of the Law of the Seas (UNCLOS).

In the charter, there are numerous mentions of slavery at sea.

One asks every state to take effective measures to prevent and punish slavery on ships flying their flag, while another authorises the boarding of vessels suspected to be engaged in the slave trade.

The issue often comes down to “which country will take the responsibility to implement this,” Chapsos says.


“It’s the open seas, so it has to be done collectively by the international community, under the guidance and coordination of international organisations like the UN, EU, AU, ASEAN,” he adds.

It appears that is not as straightforward as it may seem.

What might the solution be?

The answer is far from simple, Wallis says – and the issues seem to lie with the need for profit and lack of respect for desperate workers.

“If you don’t have to pay your workforce and have them in a situation of forced labour and control, then you lower your costs,” Wallis tells Euronews.

He says there is much work to be done by the international community, but it is achievable – in Europe at least.


“Implementing a mandatory human rights due diligence legislation as well as a Tariff Act that stops goods tainted by forced labour being able to enter the European Market as well as rigorous implementation of the law and sanctions would go a long way,” Wallis adds.

Chapsos agrees, saying there is “a lot” governments can do in terms of tightening regulations on international waters and activity.

First on his list? Banning transshipments at sea.

That’s the process where the fishing vessel regularly transfers its catch to other vessels at sea to be transported to the landing site, which enables the fishing vessels to stay out at sea for longer.

“Transhipments are usually the means to transfer trafficked fishers to the vessels and vice versa, so cutting this ‘supply’ would help improve controls,” Chapsos explains.


He also suggests the implementation of tighter controls at landing sites, including finding out exactly who is on the crew of each ship as well as documentation checks by state authorities.

Anti-corruption measures are crucial too, he says, warning “those who conduct the checks could be or become corrupt.”

Other suggestions include the establishing of fish catch certificates.

That is a similar method used by producers on land – namely where it’s possible to see where the meat bought from supermarkets comes from with specific details about the farmer and where they have come from.

“That should apply to fish as well, as soon as they arrive at the landing site,” Chapsos says.


While it seems that wide governmental regulation is still a way off, the professor suggests that even lay people with no authority can help to make even a small difference to these shippers’ lives.

“Local coastal communities can play their part by reporting anything suspicious,” he says, “especially in remote ports they can play an essential role; they know their place better than anyone else, any trafficked or enslaved fishers onboard would stand out for them.”

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Treasury Department’s hunt for Russian oil sanction violators on the seas is intensifying

A Russian-chartered oil tanker in the sea off Morocco in an area identified by maritime technology company Windward as a hub for smuggling oil.

Europa Press | Getty Images

The U.S. Department of the Treasury’s Office of Foreign Assets Control announced three vessels and shipping companies being sanctioned for violating the Russian oil sanctions on Thursday, only a few days after Treasury began a separate, larger probe of approximately 30 ship management companies covering 100 vessels suspected of violating a price cap on Russian oil.

“Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” said Deputy Secretary of the Treasury Wally Adeyemo in a statement on Thursday. “We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap.”

But as the Treasury seeks to cut off the Kremlin’s access to oil profits, its hunt for crude tankers and shippers violating OFAC guidelines is revealing complexities in its own guidelines and a murky marine industry.

The shipping entities identified on Thursday were United Arab Emirates-based. The vessels were Kazan Shipping Incorporated’s Kazan, Progress Shipping Company Limited’s Ligovsky Prospect, and Gallion Navigation Incorporated’s NS Century. But while those ships are now UAE-based, Matthew Wright, lead analyst of freight at marine intelligence firm Kpler, tells CNBC the location of where the company is based may be different from the location of the beneficial owner. In this case, Wright says the beneficial owner is likely still Russian-based.

“Based on the history of these fleets, these vessels were all owned and operated by Sovcomflot,” Wright said. “Management of all the Sovcomflot ships was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tankers SCF Management but it’s just another name. Ownership hasn’t changed since 2006. They’re not part of either the dark or grey fleet really as I consider them still Russian-owned.” 

30 ship owners targeted in new Treasury probe

This is just one example of the murkiness within the Russian oil trade. The probe against 30 shipowners begun earlier this week reveals how identifying and finding proof of vessels traversing the oceans with sanctioned oil is not as straightforward as suggested by initial headlines covering the Treasury allegations. These companies received warning letters from the government about activity deemed suspicious and requests for documentation. There are grey areas in the U.S. government’s Russian oil guidelines, though the efforts can ultimately lead maritime investigators to the truth.

In the U.S. Treasury’s “Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil,” ship owners are under a Tier 2 category. According to the Treasury, this group within the maritime industry are “actors who are sometimes able to request and receive price information from their customers in the ordinary course of business.”

If a ship owner is unable to obtain such pricing information, according to the Treasury’s guidelines, the Tier 2 actors (ship owners) need to request “customer attestations” where their charter customers pledge in a document they will not purchase seaborn Russian oil above the price cap.

This document could provide a “safe harbor” for ship owners who are relying on that customer’s “attestation” to comply with sanctions. This safe harbor is also extended to the ship insurance companies.

“Ship owners rely on the charterer to provide ample proof that the Russian oil on board the vessel has been sold below the price cap,” said Andy Lipow, president of Lipow Oil Associates. “The sanctions can easily be circumvented if a dishonest charterer presents documents that falsify the true cost of the oil.”

Lipow said one clue to suspicious paperwork is a price of oil that is well below the market, selling Russian crude oil in Asia today at $50 per barrel when Brent is trading at $80.

“That is a red flag,” Lipow said.  

Based on the safe harbor, if the ship owner or management company can be absolved of wrongdoing, the documents can still lead Treasury to the charterer.

The U.S. Treasury told CNBC it does not comment on current investigations.

Tracking Russian oil

A breakout of the Russian oil trade by Kpler shows around 30% of Russian exports from Western ports are still using commercial shipping with beneficial ownership within the European Union.

Wright said this “dark fleet” is comprised of vessels typically 20 years and older which have loaded or predominantly loaded Venezuelan or Iranian cargoes in the last few years.

“There is often some evidence that they have been disguising their activities by turning off their AIS, but not in all cases,” said Wright, referring to the automatic identification system used by marine vessels to track location. “Ownership is often opaque and the operator does not engage in standard commercial shipping outside of operating these vessels.”

There are also “grey fleet” vessels sold since the Russian invasion of Ukraine with the aim of transporting Russian exports and avoiding sanctions. These vessels, according to Wright, have had EU ownership.

“Most vessels have been sold by owners based in Europe to owners who were not previously active in the tanker market,” he said. “The owners are based mainly in Hong Kong, China, India, and the UAE.”

The price cap rules state that exports of Russian crude or refined products on EU-owned, insured, or serviced tonnage must be below the relevant price cap.

Since July, Wright says most exports from Russia are assumed to be above the caps, yet a large number of ships from within the EU continue to trade. This is because of the way Russian crude is traded.

“It is very likely vessels loading Russian cargoes that are EU-owned will have documentation showing a crude trade below the price cap, even if the cargo was actually traded above the price cap,” Wright said. “This is because a charterer or middleman will have traded it at a price that can be shown to the owner as part of a wider trade with the final buyer. The (vessel) owner is unlikely to have any evidence to the contrary.”

Vessel owners do not produce these documents, he said, but are provided with these documents by the charterer.

“The vessel owners are merely the custodians of information provided to them,” Wright said.

Beks Shipmanagement & Trading confirmed to CNBC it is among the companies that received warning letters from the Treasury this week and is sending documents to the government. The company had been identified in earlier press reports, though Treasury declined to specify companies to receive letters.

In an email to CNBC, the company rejected the Treasury’s allegations. “Despite the fact that the U.S. Treasury Department requested voyage details from 30 different ship management including 100 vessels, it is an obvious bad faith and reputation damaging purpose that only our management company was mentioned in the news recently circulated in the media,” a Beks spokesperson wrote.

The company, based in Turkey, announced in October the deployment of SpaceX’s Starlink satellite connectivity system across its fleet of 40 bulkers and tankers for enhanced vessel tracking.

“Our vessels are traded worldwide with their tracking system always switched to the on position. We employ our vessels by abiding (by) all international laws and regulations without breaching any sanction regime,” the company wrote in the email.

Beks said it has been conducting due diligence procedures on all of its voyages as well as carrying out the necessary sanction checks with its London-based lawyers.

According to Kpler, Beks Shipmanagement’s fleet had numerous tanker port calls to Russia since the start of sanctions on February 24, 2022. One example is the oil products tanker Bek Aqua.

Kpler was able to track the travel of the tanker using the tanker’s satellite beacons through the AIS short-range coastal tracking system currently used on ships.

The tanker Beks Aqua arrived at the Russian Port of Nakhodka on Oct 26 and was loaded with either diesel or Naptha on November 1. The vessel then arrived at the Port of Singapore on November 10 and departed empty on November 14.

But following the satellite data doesn’t allow for understanding of contract prices.

“While we can track the vessel’s journey from Russia to Singapore, unless we have the sales contract, we do not know the price the oil product was purchased for,” Lipow said. “The only fact we have is companies like Beks Shipping are employed to move Russian oil. It is possible that someone filed false paperwork with the shipowner. This is why tracking the Russian oil sanctions is not straightforward,” he said.

Beks Shipmanagement said the requested voyage details will be provided to the U.S. Treasury with full transparency.

We're using sanctions to deny Russians the weapons they need, Deputy Treasury Sec. Wally Adeyemo

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AI is policing the package theft beat for UPS as ‘porch piracy’ surge continues across U.S.

A doorbell camera in Chesterfield, Virginia, recently caught a man snatching a box containing a $1,600 new iPad from the arms of a FedEx delivery driver. Barely a day goes by without a similar report. Package theft, often referred to as “porch piracy,” is a big crime business.

While the price tag of any single stolen package isn’t extreme — a study by found that the median value of stolen merchandise was $50 in 2022 — the absolute level of package theft is high and rising. In 2022, 260 million delivered packages were stolen, according to home security consultant SafeWise, up from 210 million packages the year before. All in all, it estimated that 79% of Americans were victims of porch pirates last year.

In response, some of the big logistics companies have introduced technologies and programs designed to stop the crime wave. One of the most recent examples set to soon go into wider deployment came in June from UPS, with its API for DeliveryDefense, an AI-powered approach to reducing the risk of delivery theft. The UPS tech uses historic data and machine learning algorithms to assign each location a “delivery confidence score,” which is rated on a one to 1,000 scale.

“If we have a score of 1,000 to an address that means that we’re highly confident that that package is going to get delivered,” said Mark Robinson, president of UPS Capital. “At the other end of the scale, like 100 … would be one of those addresses where it would be most likely to happen, some sort of loss at the delivery point,” Robinson said.

Powered by artificial intelligence, UPS Capital’s DeliveryDefense analyzes address characteristics and generates a ‘Delivery Confidence Score’ for each address. If the address produced a low score, then a package recipient can then recommend in-store collection or a UPS pick-up point. 

The initial version was designed to integrate with the existing software of major retailers through the API —a beta test has been run with Costco Wholesale in Colorado. The company declined to provide information related to the Costco collaboration. Costco did not return a request for comment.

DeliveryDefense, said Robinson, is “a decent way for merchants to help make better decisions about how to ship packages to their recipients.”

To meet the needs of more merchants, a web-based version is being launched for small- and medium-sized businesses on Oct. 18, just in time for peak holiday shipping season.

UPS says the decision about delivery options made to mitigate potential issues and enhance the customer experience will ultimately rest with the individual merchant, who will decide whether and how to address any delivery risk, including, for example, insuring the shipment or shipping to a store location for pickup.

UPS already offers its Access Points program, which lets consumers have packages shipped to Michaels and CVS locations to ensure safe deliveries.

How Amazon, Fedex, DHL attempt to prevent theft

UPS isn’t alone in fighting porch piracy.

Among logistics competitors, DHL relies on one of the oldest methods of all — a “signature first” approach to deliveries in which delivery personnel are required to knock on the recipient’s door or ring the doorbell to obtain a signature to deliver a package. DHL customers can opt to have shipments left at their door without a signature, and in such cases, the deliverer takes a photo of the shipment to provide proof for delivery. A FedEx rep said that the company offers its own picture proof of delivery and FedEx Delivery Manager, which lets customers customize their delivery preferences, manage delivery times and locations, redirect packages to a retail location and place holds on packages.

Amazon has several features to help ensure that packages arrive safely, such as its two- to four-hour estimated delivery window “to help customers plan their day,” said an Amazon spokesperson. Amazon also offers photo-on delivery, which offers visual delivery confirmation and key-in-garage Delivery, which lets eligible Amazon Prime members receive deliveries in their garage.

Debate over doorbell cameras

Amazon has also been known for its attempts to use new technology to help prevent piracy, including its Ring doorbell cameras — the gadget maker’s parent company was acquired by the retail giant in 2018 for a reported $1 billion.

Camera images can be important when filing police reports, according to Courtney Klosterman, director of communications for insurer Hippo. But the technology has done little to slow porch piracy, according to some experts who have studied its usage.

“I don’t personally think it really prevents a lot of porch piracy,” said Ben Stickle, a professor at Middle Tennessee State University and an expert on package theft.

Recent consumer experiences, including the iPad theft example in Virginia, suggest criminals may not fear the camera. Last month, Julie Litvin, a pregnant woman in Central Islip, N.Y., watched thieves make off with more than 10 packages, so she installed a doorbell camera. She quickly got footage of a woman stealing a package from her doorway after that. She filed a police report, but said her building’s management company didn’t seem interested in providing much help.

Stickle cited a study he conducted in 2018 that showed that only about 5% of thieves made an effort to hide their identity from the cameras. “A lot of thieves, when they walked up and saw the camera, would simply look at it, take the package and walk away anyway,” he said. 

SafeWise data shows that six in 10 people said they’d had packages stolen in 2022. Rebecca Edwards, security expert for SafeWise, said this reality reinforces the view that cameras don’t stop theft. “I don’t think that cameras in general are a deterrent anymore,” Edwards said.

The best delivery crime prevention methods

The increase in packages being delivered has made them more enticing to thieves. “I think it’s been on the rise since the pandemic, because we all got a lot more packages,” she said. “It’s a crime of opportunity, the opportunity has become so much bigger.”

Edwards said that the two most-effective measures consumers can take to thwart theft are requiring a signature to leave a package and dropping the package in a secure location, like a locker.

Large lockboxes start at around $70 and for the most sophisticated can run into the thousands of dollars.

Stickle recommends a lockbox to protect your packages. “Sometimes people will call and say ‘Well, could someone break in the box? Well, yeah, potentially,” Stickle said. “But if they don’t see the item, they’re probably not going to walk up to your house to try and steal it.”

There is always the option of leaning on your neighbors to watch your doorstep and occasionally sign for items. Even some local police departments are willing to hold packages.

The UPS AI comes at a time of concerns about rapid deployment of artificial intelligence, and potential bias in algorithms.

UPS says that DeliveryDefense relies on a dataset derived from two years’ worth of domestic UPS data, encompassing an extensive sample of billions of delivery data points. Data fairness, a UPS spokeswoman said, was built into the model, with a focus “exclusively on delivery characteristics,” rather than on any individual data. For example, in a given area, one apartment complex has a secure mailroom with a lockbox and chain of custody, while a neighboring complex lacks such safeguards, making it more prone to package loss.

But the UPS AI is not free. The API starts at $3,000 per month. For the broader universe of small businesses that are being offered the web version in October, a subscription service will be charged monthly starting at $99, with a variety of other pricing options for larger customers.

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AI news is driving tech ‘building blocks’ stocks like Nvidia. But another ‘power’ area will also benefit, say these veteran investors

Kneel to your king Wall Street.

After forecasting record revenue backed by a “killer AI app,” Nvidia has teed up the Nasdaq

for a powerful Thursday open. Indeed, thanks to that chip maker and a few other generals — Microsoft, Apple, Alphabet, etc.— tech is seemingly unstoppable:

Elsewhere, the Dow

is looking rattled by a Fitch warning over debt wranglings ahead of a long weekend.

But our call of the day is accentuating the positive with some valuable insight on tech investing amid AI mania from a pair of seasoned investors.

Inge Heydorn, partner on the GP Bullhound Global Technology Fund and portfolio manager Jenny Hardy, advise choosing companies carefully given high valuations in some parts of tech that could make earnings vulnerable.

“But looking slightly beyond the volatility, tech has the advantage of being driven by many long-term secular themes which will continue to play out despite a weaker macro,” Hardy told MarketWatch in follow-up comments to an interview with the pair last week. GP Bullhound invests in leading global tech companies, with more than $1 billion in assets under management. 

“We try to make sure we’re exposed to these areas that will be more resilient. AI is the perfect example of that –- none of Microsoft, Amazon or Google will risk falling behind in the AI race -– they will all keep spending, and that will continue to drive earnings for the semiconductor companies that go into these servers higher,” said Hardy, who has worked in the investment industry since 2011.

“The way that we think about investing around [AI] is in the building blocks, the picks and shovels infrastructure, which for us is really the semiconductor companies that go into the training servers and the inference servers,” she said.

Advanced Micro Devices
Taiwan Semiconductor


and Palo Alto

are all in their portfolio. They also like the semiconductor capital equipment industry — AI beneficiaries and tailwinds from increasingly localized supply chains — with companies including KLA
Lam Research

and Applied Materials

As Hardy points out, “lots of big tech has given us lots of certainty as it relates to AI, lots of certainty as it relates to the amount they are going to spend on AI.”

Enter Nvidia’s results, which Hardy said are proof the “AI spend race has begun…Nvidia’s call featured an impressive roster of companies deploying AI with Nvidia – AT&T, Amgen, ServiceNow – the message was that this technology adoption is widespread and really a new normal.” She said they see benefits spreading across the AI value chain — CPU providers, networking infrastructure players, memory and semicap equipment makers.

Heydorn, who traded technology stocks since 1994 and also runs a hedge fund with Hardy, says there are two big tech trends currently — “AI across the board and power semiconductors driven by EV cars and green energy projects.”

But GP Bullhound steers clear of EV makers like Tesla
where they see a lot of competition, notably from China. “Ultimately, they will need semiconductors and the semiconductors crucially are able to keep that pricing power in a way that the vehicle companies are not able to do because of the differences in competition,” she said.

Are the tech duo nervous about anything? “The macro economy is clearly the largest risk and further bank or real-estate problems,” said Heydorn, as Hardy adds that they are watching for second-order impacts on tech.

“One example would be enterprise software businesses with high exposure to financial services, which given those latest problems in that sector, might see a re-prioritization of spend away from new software implementations,” she said.

In the near term, Heydorn says investors should watch out for May sales numbers and any AI mentions from Taiwan via TSMC, mobile chip group MediaTek

and Apple

supplier Foxxconn

that may help with guidance for the second half of the year. “The main numbers in Taiwan will tell us where we are in inventories. They’re going to tell us if the 3-nanonmeters, that’s a new processor that’s going into Apple iPhones, are ready for production,” he said.

Read: JPMorgan says this is how much revenue other companies will get from AI this year

The markets

Nasdaq-100 futures

are up 1.8% , S&P 500

futures are up 0.6%, but those for the Dow

are slipping on debt-ceiling jitters. The yield on the 10-year Treasury note

is up 4 basis points to 3.75%.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily. Follow all the stock market action with MarketWatch’s Live Blog.

The buzz

Fitch put U.S. credit ratings on ‘ratings watch negative’ due to DC “brinkmanship” as the debt-ceiling deadline nears. House Speaker Kevin McCarthy told investors not to worry as an agreement will be reached.

Best Buy

stock is up 6% after an earnings beat, while Burlington Stores

is slipping after a profit and revenue miss. Dollar Tree

and Ralph Lauren

are still to come, followed by Ulta

and Autodesk

after the close.

Nvidia is up 25% in premarket and headed toward a rare $1 trillion valuation after saying revenue would bust a previous record by 30% late Wednesday.

Opinion: Nvidia CFO says ‘The inflection point of AI is here’

But AI upstart UiPath

is down 8% after soft second-quarter revenue guidance, while software group Snowflake

is off 14% on an outlook cut, while cloud-platform group Nutanix

is rallying on a better outlook.

Elf Beauty

is up 12% on upbeat results from the cosmetic group, with Guess

up 5% as losses slimmed, sales rose. American Eagle

slid on a sales decline forecast. Red Robin Gourmet Burgers

is up 5% on the restaurant chain’s upbeat forecast.

Revised first-quarter GDP is due at 8:30 a.m., alongside weekly jobless claims, with pending-home sales at 10 a.m. Richmond Fed President Tom Barkin will speak at 9:50 a.m., followed by Boston Fed President Susan Collins.

A Twitter Spaces discussion between presidential candidate Florida Gov. Ron DeSantis and Elon Musk was plagued by glitches.

The best of the web

Before Tina Turner died at 83, she gave us these 5 retirement lessons

Can WallStreetBets’ spectacular short-squeeze be repeated?

Paralyzed walks naturally again with brain and spine implants

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:


Security name




Anheuser-Busch InBev

Advanced Micro Devices

Palantir Technologies





Random reads

“No way.” Abba says it won’t perform at 50th anniversary Eurovision win

The Welsh harbor that looks like a dolphin from high above.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.

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PlayStation, treasure hunts and natural wonders: What life is like onboard a giant oil tanker

An oil tanker being serviced by a bunkering vessel.

Courtesy: Hafnia

If you think that life at sea is like the movie franchise “Pirates of the Caribbean,” think again.

The movies, which feature ambushes, looting and a drunken captain, are far from real life, according to shipping veteran Ralph Juhl.

“That is, of course, a lot of bollocks,” Juhl told CNBC by phone.

For starters, the consumption of alcohol is banned on many ships.

But there is one similarity with the movie, Juhl said: the code of conduct between seafarers. In the franchise, the Pirate’s Code was chronicled in a book kept by character Captain Teague, and loosely followed by some.

For those who sail for a living, there is a similar type of agreement, Juhl said.

The crew on board an oil tanker operated by Hafnia.

Courtesy: Hafnia

“Seafarers, no matter where they come from — India, Ukraine, Denmark, the Philippines — there is this conduct of how you behave on a ship … You can actually endanger both yourself and all of your colleagues if you are not playing that social game, being on board the ship. So, you take responsibility, you follow authority,” Juhl said.

Juhl, an executive vice-president at oil tanker firm Hafnia, has worked in the industry for several decades, starting as an ordinary seaman — the lowest rank of sailor — in 1983.

“When you as a seafarer [go] on board … you are a contribution to the society and you have to fit in … there is this code of the high seas,” he added.

A captain’s life

“Pirates of the Caribbean” is a seafaring stereotype familiar to Hafnia’s DSA Dixon, who has been a captain for five years. Dixon — who sails vessels known as product tankers, which transport both refined and unrefined petroleum products around the world — had to convince his parents-in-law that his role was nothing like the movie, he told CNBC by phone.

“A lot of people have a very different representation of a seafarer, looking at Pirates of the Caribbean,” he said.

Captain DSA Dixon (in black) says he invents games to keep his crew’s morale up during months at sea.

DSA Dixon | Hafnia

Dixon might be captaining a ship such as the huge Hafnia Rhine, which is about 230 meters long by 33 meters wide, with a capacity of more than 76,000 deadweight tons — a measure that includes the oil cargo, plus fuel, food, water and crew members, but not the weight of the ship itself.

Where the ship goes depends on where the demand for oil is and Dixon has sailed to every continent bar Antarctica, he said.

Dixon aims to keep to a schedule of three months at sea followed by three months at home in Mumbai, India, he said, and he started his most recent voyage on the Mississippi River in the U.S., sailing to Brazil and going on to Saudi Arabia via Gibraltar and the Suez Canal, before returning to Brazil.

The greatest part of my job is I’ve seen things that an average human being might not.

Compared to someone working an office job, Dixon said he spends more time with his wife and six-year-old son, as when he is at home he’s “completely” there. “I love this part of my life, because when I go back home, I’m Santa Claus,” he said. “It doesn’t get stagnated at any point – when it’s about to get stagnated, I’m back at sea.”

High days and holidays

Aside from navigation, Dixon said the most important part of his job is to keep the crew in good spirits, as they spend months at sea together.

“We have at times, 20, 25 people on board, they’re all different nationalities, different cultures, different languages … our ship is as good as the people on it,” Dixon said.

There’s no fixed daily routine, Dixon added. “There’s no one way to describe life on board. It’s challenging of course, but the challenge keeps you motivated all the time,” he said.

Along with navigation and managing the crew, Dixon might be talking to officials who come aboard when the ship is docked or coming up with ways to celebrate religious festivals.

The engine control room of an oil tanker. Hafnia Chief Engineer Dmytro Lifarenko spent around six months on board during the Covid-19 pandemic in 2020.

Courtesy: Hafnia

“Irrespective of nationality, or religion, people celebrate each other’s events or festivals,” Dixon said. “I even invent something like a treasure hunt on board. The ship is massive, I divide [crew] into teams … and let them find their own way,” Dixon added.

These games might sound “kiddish,” but they serve an important purpose, Dixon said. “These are grown-up men, some might be 50 years-old, and they’re doing this, but it’s the way to bond … we need to socialize and a happy ship is always an excellent vessel,” Dixon said.

Dixon makes sure the crew take Sundays off, spending it as they choose: perhaps playing PlayStation, chatting or sleeping. “I make sure there’s an excellent lunch,” Dixon added.

Traveling across oceans means getting to experience some of the world’s natural spectacles, with Dixon seeing the light phenomenon aurora borealis — also known as the northern lights — while sailing near Norway.

An aurora borealis light display in the southern part of Norway, one of the natural spectacles seen by oil tanker captain DSA Dixon during his seafaring life.

Heiko Junge | Afp | Getty Images

“The only regret I have is what I see I’m not able to share it, I want my family to see [things] at that very point, at that very moment, a photograph won’t capture it,” Dixon said. How did he feel seeing the lights? “You feel complete, I will say. You feel abundant,” he said.

“The greatest part of my job is I’ve seen things that an average human being might not,” he added.

Rough waters

Alongside enjoying scenes of wonder, life as a seafarer can be tough.

Hafnia Chief Engineer Dmytro Lifarenko is from Ukraine and was at home when Russia invaded the country in February 2022, fleeing with his wife and children across Europe to Valencia in Spain.

“I don’t know how I would handle … knowing that the bombs were there and I’m on board,” he told CNBC by phone, speculating about how he would have felt if he had been at sea when war broke out.

While his most recent voyage was five months long — sailing from Singapore to France and then Australia — he has recently taken extended leave to settle his family in their new home.

Chief Engineer Dmytro Lifarenko is from Ukraine and was at home when Russia invaded the country in February 2022. He has since moved with his family to Spain.

Dmytro Lifarenko | Hafnia

“I miss my family a lot during the voyage,” Lifarenko said — he and his wife have three children: a daughter of six months, six-year-old son and a 12-year-old daughter.

“Being two parents for three kids, this is fine. Being [effectively] a single mom for our kids, that’s very difficult … to be honest, this is the worst part of the job.”

This is something Juhl is sympathetic to: “That’s a big ‘uncomfort’ for many seafarers, that they are now so involved in their family [while at sea], even though they can’t do anything about it,” he said.

The boiler suit dressed man with a big spanner — it’s not the sailor that we’ll need in the future.

Ralph Juhl

Executive vice president, Hafnia

During the Covid-19 pandemic in 2020, Lifarenko spent about six months onboard, which is longer than his usual voyage. He said guided meditations sent to him by Hafnia were useful to deal with an uncertain situation.

“You keep thinking about the things that you actually cannot change, and that’s quite close to depression, but this [was] like a helpful hand,” he said.

But, despite some downsides, Lifarenko said he loves his job because of its variety. “You cannot say what is your routine, because the routine part is quite small. Most of the time, you are solving some situation, which requires you to use your brain, and you’re thinking, how to fix this … or how can we maintain this in a better way,” he said.

He has also enjoyed seeing the natural world while onboard, including spotting whales and sailing close to the volcanic Canary Islands.

Future sailors

Juhl spent more than a decade as a seafarer, starting at age 16 and sailing to places such as Honduras and South Korea, and becoming a navigator on chemical carrier ships before captaining ferries. He came onshore in 1997 and is now responsible for Hafnia’s technical operations. He described those onboard as “working their butts off.”

“They never go ashore anymore, there are terminals far away from cities and so on. So, this romantic life and impression of seafarers, it is pretty much gone. It’s hard work,” he said.

Oil tanker crew prepare mooring ropes to secure a bunker barge to their vessel for refueling.

Courtesy: Hafnia

This means attracting the next generation of crew is potentially tougher. “It’s a lonely life from time to time. And today you cannot offer young people loneliness,” he said.

Juhl wants to encourage more women to become seafarers and Hafnia is working on a pilot program to operate two ships where half the crew are female, to understand how the culture onboard might change, both positively and negatively, and how to solve that.

However, issues remain: Authorities in countries where women are discriminated against might not deal with female captains, for example, so Hafnia has had to temporarily assign a male captain for port stays in such places, Juhl said.

There has been internet access on board tankers for just a couple of years, Juhl added, and he wants to get creative about what might be possible as technology involves. 

He’s especially keen for sailors to be able to communicate with their families at home, he said.

“Hopefully we can soon make holograms where the captain can go to his cabin with his supper, and then he can open his hologram and he can sit and eat with his wife … we have to think that way,” Juhl said. And new technology will mean seafarers need different skills. “The boiler suit dressed man with a big spanner — it’s not the sailor that we’ll need in the future,” he said.

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