Are Houthis blackmailing shipping companies for millions?

Are international shipping companies paying the Houthi rebel groupin Yemen $180 million monthly?

A panel of experts appointed by the United Nations to monitor the Houthis' military evolution seems to think they might be. In a report for the UN Security Council in October, the experts write that the Houthis may have started charging ships going past the Yemeni coastline millions for guarantees that they won't be attacked.

The Houthis have been firing rockets at maritime traffic off Yemen's coast since November last year. The rebel group, which controls most of northern Yemen, says it is doing this to back the Palestinians and to fight against Israel and the US, whom they consider enemies.

"The Houthis allegedly collected illegal fees from a few shipping agencies to allow their ships to sail through the Red Sea and the Gulf of Aden without being attacked," the UN report says, quoting anonymous sources. "The sources estimate the Houthis' earnings from these illegal safe-transit fees to be about $180 million [€169 million] per month."

This money is transferred to the Houthis via the informal network of money transfers known as "hawala," the report continues.

These fees could add up to about $2.2 billion (€2 billion) a year and would be one of the Houthis' largest income streams. They might also give the group a financial incentive to continue their attacks, no matter what happens in Gaza and Lebanon, observers say.

However, the UN experts conceded, they could not independently verify the information.

Experts say numbers don't add up

Several maritime security and insurance experts have expressed doubts about the alleged "safe passage" scheme.

The numbers don't really add up, says Stephen Askins, a lawyer who specializes in piracy and maritime terrorism with UK firm Tatham & Co. "If you start doing the maths and you look at the number of vessels going through that may still be at risk, then you're only left with a handful for whom payment may be worthwhile," he told DW, noting that most of the ships now passing by Yemen reckon they're not at risk. For example, ships serving Russian and Chinese interests have generally not been targeted by the Houthis. 

"It certainly cannot be ruled out that there might be some shipping companies which choose to pay for safe passage," said Lars Jensen, head of Danish shipping intelligence firm Vespucci Maritime. "But the amount mentioned appears unrealistic."

Jensen notes that a 2013 UN report estimated that Somali pirates potentially made up to $413 million over seven years. "From this perspective alone, the notion that the Houthis are making $180 million a month seems completely out of alignment with reality," he told DW.

Askins also thinks it unlikely that the hawala system is being used to send millions to Yemen.

"Only once have I heard, like a whisper on the wind, that a security company suggested that cash could be handed over at sea, at the north end of the Red Sea," he wrote in a post on LinkedIn this week. There is precedent for this: In the past, companies used to pay Somali pirates by dropping suitcases of cash from helicopters. But hawala cash transfers don't work that way. The system is based on trust and relies on private individuals to facilitate the transfer of funds from one person to another.

"You can never say never," Askins concluded. "But is this something ship owners are doing across the industry? My sense is that they are not. It is now  possible to write to the [Houthi authorities] and no one has ever suggested there is a price [for safe passage] ], or that there is a market developing right now."

A divided nation

On the other hand, some evidence may support the claim that shipping companies are negotiating with the Houthis, but probably not the way the UN report claims.  

The claims about the Houthis making money this way seem to have first been published in February this year by a Yemeni organization called Sheba Intelligence, which claimed that ships were paying the Houthis between $500,000 and $1 million for safe passage. That amount is still less than the cost of the longer and more expensive route that avoids the Houthi threat.

Sheba Intelligence, which says it is an open-source investigation outlet and doesn't have a functioning website, did not provide any evidence for its claims and didn't respond to DW's inquiries.

Political motives could also play a part. After a decade of civil war, Yemen is divided. The Houthis have a government in the north, while an internationally recognized government is based in the southern port of Aden. And Sheba Intelligence's social media posts were accompanied by angry accusations from Yemenis that the Houthis were profiting from the Gaza conflict.

Houthis in regular contact with ships

What is clear is that the Houthis are in contact with shipping companies via what they call their Humanitarian Operations Coordination Center, or HOCC. This center was established in February and is supposed to be mitigating the impact of war on civilians and "adhering to Islamic teachings and respecting international humanitarian law."

The HOCC is run by Ahmed Hamed, who also controls the organization that oversees humanitarian aid coming into Houthi-controlled parts of Yemen. According to the Yemeni think tank, Sanaa Center for Strategic Studies, Hamed has a track record of what the think tank calls "shakedowns" that includes diverting funds from local youth welfare, sports, pension and religious authorities.

It is quite plausible that the Houthis could use HOCC as a "rent-seeking mechanism," Mohammed Albasha, founder of the Basha Report, a US-based consultancy specializing in the Middle East and Yemen, told DW. Through its various communications with shipping firms, the HOCC may even have developed a "target base," he added.

"I don't have any concrete information to support it, but I wouldn't be surprised if they are indeed beginning to generate income from a virtual checkpoint," Albasha suggested. 

"In this scenario, the HOCC may initially charge vessels a registration fee and later require payments for safe passage," he explained. "A precedent for this can be seen in the early 2010s, when companies tied to Yemeni military and security officials worked with maritime-security brokers to rent Yemeni warships and sailors as private escorts for [vessels] crossing the piracy-ridden Gulf of Aden, at costs reaching up to $55,000 per ship, per trip."

However, Albasha also doubts the UN experts' figure of $2.2 billion annually. "That claim seems difficult to reconcile," he agreed. "For context, the Suez Canal's revenue dropped by 64.3% in May 2024, falling to $337.8 million from $648 million in May 2023. To assert that the Houthis, who neither control a canal nor dominate the entire Red Sea coast … are earning nearly $200 million per month in a region where shipping activity has halved, is hard to believe."

Edited by: Chrispin Mwakideu