The Pentagon has announced Operation Prosperity Guardian, a U.S.-led initiative to safeguard Red Sea shipping, with more than 20 countries reportedly indicating their willingness to participate. However, the specifics of each country’s involvement are unclear, leading to confusion among shipping companies. Some of these are re-routing their vessels away from the area due to the recent attacks that have taken place. It will be interesting to observe how this initiative impacts global trade and, consequently, world economies, and ultimately Forex or trading sectors.
WHAT HAS THE UNITED STATES ANNOUNCED?
U.S. Secretary of Defense, Lloyd Austin, unveiled plans on Tuesday for a multinational operation aimed at protecting Red Sea shipping, namely Operation Prosperity Guardian. During his visit to the Middle East, Austin confirmed that Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles, Spain, Greece, and Australia are a part of this coalition.
WHAT ARE OTHER NATIONS SAYING?
France, while supporting efforts to secure freedom of navigation in the Red Sea, has confirmed that its ships will remain under French command. There is uncertainty regarding any increase in deployment of naval forces. Italy plans to dispatch naval frigate Virginio Fasan to the Red Sea as part of its existing operations, but will not be a part of Operation Prosperity Guardian. While Spain has ruled out unilateral participation in the operation, Britain has committed destroyer HMS Diamond to the cause. Greece, on the other hand, has pledged to send a naval frigate to the Red Sea and take part in the operation.
WHAT EXISTING NAVAL COALITIONS OPERATE IN THE AREA?
There are already several international operations working towards the protection of shipping lanes in the region, operational against disruptions caused by piracy off the coast of Somalia. Among these missions are Operation Atalanta set up by European Union Naval Force Somalia (EUNAVFOR), Operation Agenor which focusses on the safety of navigation through the Strait of Hormuz, and the U.S-led Combined Maritime Forces (CMF).
Keeping a vigilant eye on Operation Prosperity Guardian will be essential for traders as the actions taken under this initiative can have far-reaching effects on global trade patterns, which may create fluctuation in trade and forex markets. This initiative could impact commodities such as oil, precious metals, and various currencies.