A Saudi climbdown means victory for Yemen’s Huthis
Summary: a volte face by the Saudis has given the Huthis a huge
victory as Riyadh orders the Internationally Recognised Government to
capitulate in a fight over Yemen’s central bank.
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. Her latest book Yemen: Poverty and Conflict was published by Routledge in 2022. Helen’s most recent Arab Digest podcast “Yemen in the Gaza war” is available here.
Crises in the region shockingly worsen and multiply with a series of
high profile assassinations added to the ongoing Israeli genocide. In
this context, few have noticed a fundamental development in Yemen which
has further strengthened the Huthi movement and has long-term
implications for the country’s future. As detailed in our 24 June posting,
the financial war between the Huthis and the Internationally Recognised
Government [IRG] intensified in recent months, as the IRG attempted to
put serious and effective pressure on Huthi finances by taking full
control of the banking system. Most banks are based in Sana’a where
their main activities are located and most Yemenis and major businesses
live under Huthi control. On 2 April, the IRG, which has authority
within the international banking system, gave banks two months to move
their HQs to Aden. This would have caused considerable difficulties to
Ansar Allah finances, as well as to the millions of Yemenis dependent on
remittances and businesses importing essential commodities. As pointed
out by Ned Whalley of the Sanaa Center
for Strategic Studies “financial sanctions … were perhaps the
government’s last card in its efforts to negotiate economic relief or
affect the power imbalance.” Personally, I would have done without the
word ‘perhaps’ in that sentence. In June, despite considerable pressure,
but with IRG agreement, the Aden Central Bank of Yemen (CBY) started
the process of excluding the banks from the international SWIFT transfer system.
In response, after weeks of escalating threats against Saudi Arabia, accusing it of instigating these moves, Huthi leader Abdul Malik al Huthi
demanded that Saudi Arabia order a halt to the process. The Saudis
promptly gave in and on 10 July summoned the Presidential Leadership
Council (PLC) to a meeting, demanding that the measures be reversed. The
PLC had no option: since late 2022, the IRG has depended almost
exclusively on Saudi financing after the Huthis prevented oil exports by
attacking ports on Yemen’s south coast. The PLC complied and ordered
the cancellation of the measures, despite the broad popular support for
the CBY move through genuine demonstrations throughout the country. It
is clear to the vast majority of the population that the economy and
finance are the only remaining weapons against the Huthis, given the
latter’s military superiority.
Saudi and Huthi demands were strengthened on 10 July by UN Special
Envoy Hans Grundberg’s appeal to President al Alimi to allow time for
further negotiations. On 23 July the outcome was Grundberg’s announcement
that the government and Ansar Allah had agreed on measures “cancelling
all the recent decisions and procedures against banks by both sides and
refraining in the future from any similar decisions or procedures;
resuming Yemenia Airways’ flights between Sana’a and Jordan and
increasing the number of flights to three daily flights, and operating
flights to Cairo and India daily or as needed” as well as continuing the
different discussions which have been ongoing for years now. He
recognised "the significant role of the Kingdom of Saudi Arabia in
bringing this agreement about.” Translated into plain English, the
Saudis forced the IRG to cave in to Huthi demands, without any
counterpart concessions.
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