Israel’s southern port of Eilat suspended operations on Sunday due to heavy debts and unpaid taxes caused by a dramatic decline in shipping triggered by the Yemeni-Houthi blockade of the Red Sea.
This is seen by observers as a victory for the Houthis and a rare defeat for Israel. The port was built between 1952-56 and opened for traffic in 1957. It accounted for 5-7 per cent of Israeli maritime trade, contributed to the local economy, attracted tourists, and assumed a security function for southern Israel.
During the first 10 months of 2023, the port serviced 134 ships. About 150,000 vehicles were imported from China which normally provides 50 per cent of cars entering Israel. Crude oil was imported at Eilat and piped to Ashkelon for refining. Potash, fertilisers, and minerals were exported through Eilat.
In November, the Houthis began attacks on Israeli, United States and British cargo vessels docking at Eilat and firing missiles and drones at Eilat city to pressure Tel Aviv to agree to a ceasefire or end the Gaza war. This was launched after the October 7th, 2023, attack by Hamas which – according to Israel – killed 1,200 and abducted 150 in southern Israel.
By that December, Eilat shipping had fallen by 85 per cent and in March 2024 half the port staff were suspended although salaries have been paid. Throughout that year, 16 ships docked at Eilat while by mid-May this year, only six ships had arrived at the port. Its commercial closure could adversely affect the Israeli navy which has a base at Eilat that operates patrol boats providing security for the Eilat naval shipyard.
In June, the Israeli government provided a $4 million (€3.4 million) emergency grant, but this was not enough to cover Eilat’s debts and ensure operations. The privatised Eilat Port Company has accumulated more than $8.5 million in debt to service providers, with financial obligations reportedly exceeding $8.5 million. The Eilat municipality last week froze $3 million in the port’s bank accounts to pay tax arrears.
Houthi attacks have compelled big shipping companies, including Maersk and Hapag-Lloyd, to reroute vessels around the Cape of Good Hope at the tip of Africa, boosting costs by 30-40 per cent for goods bound for Mediterranean ports.
Transit time has increased by seven to 10 days. Insurance premiums for ships which continue to ply the Red Sea route have increased by 300-400 per cent. Although Houthi attacks have diminished and the Israeli navy has offered to protect ships, owners argue the route remains too risky.
