After the Fall of Perim Island: Houthi Conflict Spillover and the Cascading Costs Borne by the Horn of Africa

In September, Iran-backed Houthi forces occupied Yemen's Perim Island. According to DW, the island commands the narrowest point of the Bab el-Mandeb strait and lies only about 20 kilometers from Djibouti on the Horn of Africa, with flights to Ethiopia taking just 20 minutes. In early October, Yemeni government forces and Saudi allies launched a counteroffensive—this Red Sea conflict, which has been escalating since the outbreak of the Gaza war in 2023, is now transmitting shocks to ports, refugee camps, and landlocked economies on the African side.

The impact fell first on the Obock region in northern Djibouti. According to DW citing UNHCR data, since September at least 3,700 refugees have entered Djibouti from Yemen, mostly women and children; UNHCR is preparing to assist an additional approximately 10,000 people who have not yet crossed the border. UNDP Resident Representative in Djibouti Alexandra Rocasalvo told DW: "There isn't much water here. There is absolutely no groundwater. Everything has to come from seawater desalination." Obock borders Eritrea, has an extremely arid climate, and supply pressures quickly became apparent.

The economic impact has emerged in parallel. According to DW, vessel insurance and reinsurance costs have nearly doubled compared with before, and many ships are therefore no longer willing to transit the Suez Canal or the Red Sea, instead rerouting around the southern tip of Africa, with the additional costs ultimately passed on to consumers. Rocasalvo noted that Djibouti itself is in a phase of construction, with strong demand for cement and raw materials—she told DW: "Basically, this place is in an economic upswing, which means, like any country in an upswing, it needs building materials: cement, raw materials, and other things." According to DW, ships no longer willing to transit the waterway due to soaring insurance costs means reduced foreign currency inflows that would otherwise have been used to import these goods.

The hardest hit is Ethiopia. The world's most populous landlocked country routes roughly 95 percent of its imports and exports through the port of Djibouti. Rising maritime insurance costs have translated directly into price pressure in Ethiopia, which had already been forced to implement fuel rationing during certain periods due to a Hormuz Strait blockade. The country's long-term goal is to reduce external dependence—for example, by powering vehicles with domestically generated electricity to replace imported fuel—but the security uncertainty along the port corridor has not been eliminated.

A more direct threat emerged on September 23: fighting broke out in Ethiopia's northern Tigray region. According to DW, the Ethiopian National Defense Force is reported to have made advances against a Tigray-led anti-government coalition, but the rebels at one point advanced onto the main corridor linking the port of Djibouti to Ethiopia's interior. DW cited some experts as saying that the ENDF's advance has reduced the threat of a new trade blockade—but as long as the conflict remains unresolved, the situation could still fluctuate.

The misalignment between power and cost is particularly concentrated in Djibouti. This majority-Muslim country of just over one million people sits at the strategic chokepoint at the southern end of the Red Sea. According to DW, the United States, China, France, Italy, and Japan all maintain military bases in Djibouti, while the German Bundeswehr was stationed there as part of an anti-piracy naval operation until 2021. When refugees in Obock queue for desalinated water while multinational bases operate intensively along the coast, who bears the costs of the conflict and who holds the strategic leverage becomes self-evident.

The risk of further spillover has not been eliminated. DW noted that if the fighting inside Ethiopia escalates into a full-blown regional war, navigation safety in the Bab el-Mandeb strait and surrounding waters could be further constrained. Ethiopian Prime Minister Abiy Ahmed has repeatedly hinted at wanting to "correct" the "injustice" of his country's loss of direct sea access—either through a political agreement, such as the once-explored outreach to Somaliland, or through force; Eritrea's port of Assab is often described as the most likely military target. Eritrea and Ethiopia have severed diplomatic ties, and regional powers such as Sudan, Egypt, and Somalia may lean toward Eritrea's side. Assab sits at the end of the "panhandle" of Eritrean territory, commanding the southern stretch of the Red Sea, and any contest over the port would directly affect shipping lanes.

Also according to DW citing expert views, growing concern has been raised over cooperation between the Shia Houthi forces and Somalia's Sunni al-Shabaab militants—although the two are fundamentally opposed ideologically, they have found common ground in their hostility toward Israel and the United States. It should be noted that such cooperation remains an expert concern at present and lacks independent confirmation.

On the diplomatic front, according to DW, three African non-permanent members of the UN Security Council—the Democratic Republic of Congo, Liberia, and Somalia—held an emergency meeting in mid-September, jointly calling for freedom of navigation and supporting a UN-framework solution to the Yemen crisis. Meanwhile, some transit demand is shifting toward ports in Kenya and Tanzania, and Nigeria's Dangote Group is also advancing a new refinery project in Kenya—intra-African shipping and energy alternatives are being reshaped by this distant conflict.