For the first time since the war in Yemen started in 2015, the US and the UK are considering limited air strikes against Houthi military infrastructure in the north-west of Yemen.
This highlights how much the threat perception in western states about the Houthis’ behaviour has been raised, marking a shift from the past.
Options to target the military capabilities of the Houthis cannot be decided in isolation. The coalition would be well advised to consider the interests of its Arab partners and the wider Gulf region as it embarks on its course of action.
Escalating attacks by the Houthis against commercial vessels in the Red Sea have been described by its spokesmen as moves in solidarity with Palestinians in Gaza.
The disruption of a choke point in world trade has, however, had the effect of quickly changing western views on the Iranian-backed group in Yemen.
The warning sent by 12 states – led by the US and the UK – to the Houthis through a joint statement on January 3 said the group must cease attacks or “bear the responsibility of the consequences” emphasises that shifting threat perceptions could turn into unprecedented decisions in the short term.
On the other hand, the US-led Operation Prosperity Guardian, launched on December 18, has clearly not been successful in deterring Houthis’ attacks so far.
Thus the US and its allies clearly understand it is not enough to fully restore safe commercial navigation in the Red Sea. Moreover, after the defensive naval operation was announced by the Pentagon, some European states – France, Italy and Spain – have opted out of the US-led mission, instead providing their contribution under, respectively, the French command and the existing European naval mission, or choosing not to join the operation.
Though Red Sea security is increasingly acknowledged as a global concern, the way Prosperity Guardian has been organised, announced and communicated has indirectly contributed to conveying a message of uncertainty and lack of resolve.
For too long, international stakeholders, especially western states, have underestimated the threat coming from the Houthis’ rise and consolidation. They mainly looked at the Houthis simply as an armed movement fighting in the Yemen civil war, something that – in their view – didn't have a vital impact on regional stability and global balances.
This clearly differed from the perception that many Yemenis and Arab states already had, especially Saudi Arabia and the UAE, which have been targeted, especially since 2019, by Houthi drones and missiles.
Two watershed moments have changed the western states’ perception of the Houthis: first, the Russian invasion of Ukraine in 2022 and now the escalation against shipping in the Red Sea. In fact, Russia is frequently using Iranian-made Shahed-136 drones in Ukraine – the same drones the Houthis used to attack regional targets just weeks before Ukraine was invaded.
From that moment on, the US, the UK and the EU have come to realise that the Houthis’ unrestrained behaviour is a menace to the stability not only of Yemen but of the entire Middle East, in particular because their alliance with Iran and the “axis of resistance” has significantly tightened in recent years.
During her speech at the Manama Dialogue in 2022, EU Commission President Ursula von der Leyen explicitly said “it took us too long to understand” about the group's drone and missile proliferation. The escalation against commercial shipping in the Red Sea has definitely rung the alarm bell in Washington and European capitals.
However, growing threat perceptions of the Houthis have not resulted in overlapped policies so far, as the Prosperity Guardian case reveals, mainly due to the fear of further regional destabilisation.
Capitalising on current threat appraisals, the US, the UK and EU states should now build common policy ground to cope with the Houthi menace: something that can’t be detached from the Yemen war and the need to support UN diplomatic efforts towards a ceasefire and an inclusive peace process.
More easily said than done, but otherwise the risk is to implement a flawed response that wouldn’t restore freedom of navigation in the Red Sea, also with the risk of breaking the informal truce that still holds in Yemen.
However, time is really running out. In the last few days, three events demonstrated the Red Sea has entered the next escalation level.
First, the unprecedented direct confrontation between the Houthis and the US, with three Houthi vessels sunk and 10 fighters killed by the Americans; second, the use of anti-ship missiles and then the deployment of an explosive drone boat by the Houthis; and third, the arrival in the Red Sea of the Iranian warship Alborz.
Whatever option that aims to undermine Houthis’ offensive capabilities should be co-ordinated now by Western states with Arab partners, since they have countered the Houthi threat in the last few years and understand the difficult balancing this demands.
Even taking into account that the Houthis are operating off the back of the Gaza war, as the group advances their own goals, it is important to consider the scenarios ahead and prevent possible retaliation risks.
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What should do investors do now?
What does the S&P 500's new all-time high mean for the average investor?
Should I be euphoric?
No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.
So what happened?
It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.
"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."
Should I buy? Should I sell?
Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.
"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.
All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.
Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.
Will the rally last?
No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.
"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
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One in four Americans don't plan to retire
Nearly a quarter of Americans say they never plan to retire, according to a poll that suggests a disconnection between individuals' retirement plans and the realities of ageing in the workforce.
Experts say illness, injury, layoffs and caregiving responsibilities often force older workers to leave their jobs sooner than they'd like.
According to the poll from The Associated Press-NORC Centre for Public Affairs Research, 23 per cent of workers, including nearly two in 10 of those over 50, don't expect to stop working. Roughly another quarter of Americans say they will continue working beyond their 65th birthday.
According to government data, about one in five people 65 and older was working or actively looking for a job in June. The study surveyed 1,423 adults in February this year.
For many, money has a lot to do with the decision to keep working.
"The average retirement age that we see in the data has gone up a little bit, but it hasn't gone up that much," says Anqi Chen, assistant director of savings research at the Centre for Retirement Research at Boston College. "So people have to live in retirement much longer, and they may not have enough assets to support themselves in retirement."
When asked how financially comfortable they feel about retirement, 14 per cent of Americans under the age of 50 and 29 per cent over 50 say they feel extremely or very prepared, according to the poll. About another four in 10 older adults say they do feel somewhat prepared, while just about one-third feel unprepared.
"One of the things about thinking about never retiring is that you didn't save a whole lot of money," says Ronni Bennett, 78, who was pushed out of her job as a New York City-based website editor at 63.
She searched for work in the immediate aftermath of her layoff, a process she describes as akin to "banging my head against a wall." Finding Manhattan too expensive without a steady stream of income, she eventually moved to Portland, Maine. A few years later, she moved again, to Lake Oswego, Oregon. "Sometimes I fantasise that if I win the lottery, I'd go back to New York," says Ms Bennett.
