Yemen update

Summary: at the point when Hamas launched their 7 October attack a deal in Yemen appeared close to being realised but the war in Gaza and Huthi maritime attacks in support of Palestine have pushed to the sidelines the possibility of peace in a country ravaged by nearly ten years of civil war.

We thank our regular contributor Helen Lackner for today’s article. An expert on Yemen, Helen also works as a freelance rural development consultant with a particular interest in water, among other environmental issues. Saqi Books has published the paperback edition with new material of her Yemen In Crisis, now subtitled Devastating Conflict, Fragile Hope. It is a seminal study of the war, what lies behind it and what needs to happen for it to finally end. In July 2022 Routledge published her latest book Yemen: Poverty and Conflict. Helen’s most recent Arab Digest podcast “Yemen in the Gaza war” is available here.

Huthi attacks against shipping in the Red and Arabian seas are continuing on a more or less consistent schedule indicating Ansar Allah’s capabilities have clearly not been degraded by the 177 US-UK strikes in the 141 days of the American-led bombing campaign to the end of May. While most strikes have missed ships or been intercepted, in the past week two have been seriously hit and abandoned by their crews, the Verbena which is drifting in the Gulf of Aden and the Tutor which sank in the Red Sea on 19 June. The strikes will no doubt be hailed as great successes by Ansar Allah. But they take place in a context of a serious deterioration of the overall situation in Yemen.

Finalisation of the agreement to end Saudi involvement in the war is currently indefinitely suspended as – however much both sides might want it – the Gaza war and Huthi maritime attacks make it impossible for Riyadh to finalise the deal. US pressure on the issue has blown hot and cold in recent months, at some moments encouraging the peace process, at others discouraging it, reflecting a weak and indecisive strategy. It may also factor into the conversation between the US and the Saudis on ‘normalisation’ with Israel. Huthi strikes will continue as long as the Israeli genocide in Gaza shows no sign of abating, and yet another US red line [a full scale attack on Rafah] is ignored by the Netanyahu government, something else which is unlikely to change unless the US takes the obvious and effective action of interrupting supplies of weapons and ammunition. Although Huthi attacks have minimal impact on Israel, they are significantly affecting world trade.

Huthi attacks against shipping in the Red and Arabian seas are continuing on a more or less consistent schedule [photo credit: Ansar Allah]
Huthi attacks against shipping in the Red and Arabian seas are continuing on a more or less consistent schedule [photo credit: Ansar Allah]
Meanwhile, low funding for humanitarian aid (22% of a reduced appeal as of 19 June) has contributed to the worsening economic and financial situation for the 70% of the Yemeni population under Huthi control. Since last December, the World Food Programme has ceased all its distribution activities in that part of Yemen as it failed to reach agreement with Ansar Allah on a reduced distribution mechanism.

The Huthi response was aggressive and seemingly counterproductive. Earlier this month, they arrested 13 UN staff from different institutions, as well as about 40 staff of international NGOS, accusing them of being US and Israeli spies and going so far as to release some so-called confessions. The UN and international agencies concerned protested energetically though, on past record, this is unlikely to impress the Huthis. What is certain is that it will worsen the humanitarian crisis which remains very severe even if nowhere near as horrific as the levels of starvation in Gaza or the multiple humanitarian emergencies in Sudan.

The economic and financial war has also escalated significantly in recent weeks. Beginning in 2016 when the Internationally Recognised Government (IRG) transferred the Central Bank from Sana’a to Aden, the war of the banks has since gradually worsened leaving the country with two separate financial structures. International financial institutions recognise the IRG’s Central Bank of Yemen (CBY) in Aden which has been unable to stifle the Sana’a based commercial banks which are far more active as they operate where the majority of the population and economic activities take place. To date, the Sana’a-based commercial banks continue to access the SWIFT mechanism essential for international payments for imports and for remittances from Yemenis abroad to their relatives. But should that access be lost the consequence would be calamitous. The importance of remittances cannot be over-estimated as in the absence of salaries and jobs they are the only source of finance for thousands of families.

Over the years the gap between the exchange rate of the riyal between IRG and Ansar Allah areas has become vast as in the area under their control the Huthis forbid the use of riyals printed by the IRG Central Bank. In June 2024 old riyals [which are physically disintegrating due to age and use in an economy which is primarily cash based] exchanged at YR 530 per US$ dollar, whereas the slightly different new notes issued by the IRG in Aden exchange at YR 1800 per dollar.

The economic and financial war worsened in November 2022 when the Huthis interrupted the IRG’s main source of income, its oil exports, by attacking the relevant ports. They then further improved their financial situation by imposing heavy taxes and interdicting land transport of goods unloaded in IRG controlled ports, forcing most ships to dock at Hodeida, with fees and customs duties paid to Huthi authorities. Unsurprisingly by 2023 the Huthis were looking forward to further improving their finances with the Saudi agreement that would pay for the salaries of government staff, including military and security personnel whose most recent official payment in June this year was for the second half of October 2018.

The 7 October Hamas attack abruptly changed the narrative. Huthi interventions in the Red Sea in support of Palestine massively boosted their popularity throughout Yemen but this did not compensate for the deterioration of living standards caused by the lack of salaries and reduced humanitarian support. Red Sea ports have now become distinctly unattractive to shippers because of increased costs and the risks involved due to Huthi attacks on maritime trade and the retaliations of US/UK forces. Thus, the earlier financial and economic advantages that the Huthis had are increasingly under stress.

In April, Ansar Allah produced some coins to replace the collapsing YR 100 notes [equivalent to US$ 0.20]. The IRG responded immediately by ordering all banks to transfer their headquarters to Aden within 60 days. As the deadline approached, both sides issued ‘tit for tat’ decrees making impossible demands on the banks based in the other’s cities. As pointed out by UN Special Envoy Hans Grundberg in his June briefing to the UNSC, “if… banks in Sana’a are indeed cut off from international financial transactions, it would severely impact the economy” affecting essential imports. While Eid may have put a hold on this financial war, its resumption will have severe consequences.

The financial element of the ongoing struggle weakens the Huthis, who are responding with the above-mentioned arrests as well as increased attacks on the military fronts. These are facilitated by the vast number of new recruits who have joined them since the Gaza war started: these young men intended to go and fight in Palestine but instead have been sent to various Yemeni fronts after their brief training.

This series of ongoing crises bodes ill for coming months. While UN SE Grundberg may be determined to continue working towards peace, the world political environment is not encouraging and the country’s factions are not helping. Meanwhile people throughout Yemen continue to suffer economic collapse and poverty which most recently has worsened with the return of a number of epidemics.

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