The dispute between the White House and Congress over the defense of the Red Sea is becoming risky for the economy

An aerial view of the United States Navy aircraft carriers USS Gerald R. Ford and USS Dwight D. Eisenhower together in the Eastern Mediterranean on November 3, 2023.

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The calls from Congress to consider prioritizing U.S.-flagged ships come as the Iran-backed Houthis continue to attack ships in the Red Sea. According to US defense officials, there were 40 attacks on merchant shipping. Over the weekend, the United States and its allies carried out the latest strikes against the Iran-backed Houthis rebels, which included anti-ship cruise missiles. Mohammed Al-Bukhaiti, a member of the Houthis' Ansarallah politburo, responded on Saturday that the group's attacks “will continue until the aggression against Gaza ends.”

Recently, four senators – including three from the Senate Foreign Relations Committee – asked the White House about the “legal justification” for President Biden's “unilateral” decision not to protect the security of US ships in light of the deaths of five US soldiers in the line of duty Prioritize the region. Other nations, including US ally France, have already said their priority is to escort French-linked ships after facing nationalist pressure.

International law requires merchant ships to be registered in a country. The country in which a ship is registered is identified by that country's flag. Insurance and a country's tax environment often play a role in a ship's flag state. For this reason, the Marshall Islands, for example, are a popular registration country. The flag standard—which requires that only 2.6% of U.S. trade be conducted on U.S.-flagged ships—links the economic interest of the United States to the Navy's protection of all ships.

At a hearing last Tuesday in the House of Representatives, Charles “Bud” Darr, executive vice president of MSC, the world's largest shipping company, was asked by Congressman Salud Carbajal (D-CA) whether the U.S. Navy is concerned about the safety of U.S.-flagged ships Priority should be given to ships over foreign ships.

MSC has no U.S.-flagged ships in its fleet, but was the No. 1 shipping company handling U.S. imports, according to 2023 cargo arrivals.

“We are a conduit for global trade,” said Darr, a former U.S. Navy soldier. He added that although MSC operates under a foreign flag, it pays U.S. taxes and employs many Americans in all of its operations.

“Keep trade routes open,” Darr said. “It comes down to meeting the trading needs of trading partners and what they need is what we provide.”

MSC's maritime alliance partner, Maersk, was No. 1 in handling U.S. exports. Maersk is also a foreign-flagged ocean carrier, but has some U.S.-flagged ships, as do other foreign shipping companies, including Hapag Lloyd.

Rep. Carbajal's office did not respond to CNBC's request for comment.

The Senate is concerned about the White House's military action

In their letter to the White House, Senator Tim Kaine (D-VA), a member of the Senate Armed Services and Foreign Relations Committees, said; Senator Todd Young (R-IN), member of the Senate Foreign Relations Committee; and Sen. Chris Murphy (D-CT), chairman of the Senate Foreign Relations Committee's Middle East, South Asia, Central Asia and Counterterrorism Subcommittee, questioned the executive branch's authority over the issue of foreign ships.

“It could also be argued that directing military action to defend U.S. merchant shipping lies within this authority. However, most ships transiting the Red Sea are not US vessels, raising questions about the extent to which these powers can be exercised,” they wrote.

In the letter, also signed by Sen. Mike Lee (R-UT), the senators asked: “Does your administration believe there is a legal justification for a president to unilaterally order U.S. military action to defend ships of foreign nations?” “

While the senators expressed support for “smart steps to protect U.S. personnel and assets, hold the Houthis accountable for their actions, and deter further attacks,” they said Congress must deliberate carefully before offensive military actions approved.

In an email response to CNBC, Senator Kaine's office said the goal of the letter was to understand the administration's strategy to deter Houthi attacks, the legal authority for U.S. military actions without congressional approval, and “to “prevent the nation from slipping into war without public debate.” required by the constitution.”

“Senator Kaine and his colleagues are seeking answers on both the strategy and legal authority of our current actions,” the email said. “A president can act unilaterally to defend the United States. “In addition, congressional approval is required,” Kaine’s office said. “Senator Kaine believes it is clear that actions taken to defend foreign merchant vessels, even if strategically sound, do not constitute 'self-defense' by any accepted definition. This would require congressional authorization.”

Kaine's office also said it would like to know whether there is a plan to ask other nations to join in defending global shipping.

“Military action is also only carried out by the United States and Great Britain, although other nations' trade is also directly affected, arguably more directly than U.S. trade,” Kaine's statement said.

Still, trade data shows that the majority of U.S. trade occurs on foreign ships.

The White House and the Senate offices of Murphy, Young and Lee did not respond to requests for comment by press time.

The United States is conducting Operation Prosperity Guardian as a defensive operation in the Red Sea, supporting more than 20 countries. Defense officials told CNBC that between four and eight coalition ships are monitoring the waters at any given time.

U.S. Navy Rear Admiral Mark Montgomery (ret.), senior fellow at the nonpartisan Foundation for Defense of Democracies and policy director of the Senate Armed Services Committee under Senator John McCain, explains to CNBC the questions raised by U.S. congressmen against the United States' position , to maintain freedom of navigation for all nations as a principle.

Under international law, freedom of navigation is defined as “the freedom of movement of ships, the freedom to enter ports and use facilities and docks, to load and unload goods, and to transport goods and passengers.”

“The share of U.S. shipping is 2-3%, and the share of that 2-3% that transits the Red Sea is even smaller,” Montgomery said. “The United States stands for freedom of navigation, transparency and maritime freedoms. This means we are committed to protecting all shipping, including foreign vessels.”

In recent testimony on Capitol Hill, trade officials warned a House subcommittee that oversees maritime transportation that the U.S. economy should not be separated from the global economy on the issue of Red Sea security. One expert said: “No shipping, no shopping.”

Maersk recently announced that two of its American-flagged ships, the Maersk Detroit and the Maersk Chesapeake, were attacked on January 24 during a planned U.S. Navy escort for a northbound transit of the Bab el-Mandeb. Following these attacks, Maersk announced it would no longer sail through the Red Sea, a decision also recently made by Hapag-Llloyd and MSC. Shipping companies are prepared for attacks in the Red Sea that could last between six months and a year, despite US counterattacks.

Montgomery said several issues made it impractical to consider U.S.-flagged shipping as an alternative. The United States has experienced a sharp decline in merchant ships since World War II, and there are also problems with U.S. ship construction. Materials and labor must be located in the United States, where ships are more expensive to build and the cost of transporting ocean freight on a U.S.-flagged ship is higher than on a foreign-flagged ship.

“We don’t have enough merchant ships, ships and maintenance,” he said.

It is not a new problem, he said, noting that a House special committee on China has asked questions about the issue. “Congress is well aware of this problem,” Montgomery said.