[Salon] A Saudi climbdown means victory for Yemen’s Huthis - ArabDigest.org Guest Post

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. Threatened with new attacks, Saudi Arabia has forced the Yemeni government to abandon efforts to cut off the Huthis from the international banking system [photo credit: Ahmed al-Shutiri] The CBY governor and his deputy promptly resigned as their authority was definitively undermined by these developments; his resignation was rejected but he is under ‘soft’ house arrest in Mecca and unable to return to Yemen. Had the CBY strategy been implemented, it would certainly have worsened the humanitarian situation for the 70% of the population living under Huthi rule and damaged the operations of businesses based there. But it would have also been a severe blow to the Huthis whose financial situation has deteriorated significantly in recent months due to a decline in income from fees and taxation of citizens resulting from reduced humanitarian support and lower economic activity. Another financial cost for the Huthis is reduced traffic [and customs and port dues] at Red Sea ports, caused by their own military intervention in attacking Red Sea shipping. The Huthis also have faced increased military expenditures to pay the salaries of the thousands of volunteers who have joined its armed forces hoping to fight in Palestine. Saudi Arabia has, in the process of ending the financial war in Yemen, objectively taken the side of the Huthis, regardless of any rhetoric to the contrary. Its regime forced the IRG to give in to Huthi demands which also included expansion of destinations for flights from Sanaa airport. While there are rumours that IRG oil exports would resume under this deal, they have been denied by the Huthis. These events firmly indicate that Saudi Arabia is unlikely to take any serious action in support of the IRG beyond its drip-fed financial support which barely keeps the government afloat. In this context it is even less surprising to note that not a word has come from Riyadh in criticism of the Huthi war against shipping in the Red and Arabian seas; no doubt popular support for anti-Israel actions in the kingdom is an important factor. Meanwhile, in Yemen low level fighting increases on all fronts, with ongoing pressure by Huthi forces against the divided IRG ones. Although few missiles have been launched since the Israeli destruction of major oil facilities in Hodeida, Huthi attacks on the Red Sea are likely to resume and may be more accurately targeted than in the past. Response to the latest Israeli assassinations in Tehran and Lebanon had not yet taken place at the time of writing but retaliatory violence is almost certain, particularly as the US continues to claim its ‘ironclad’ support for Israel regardless of the atrocities it commits and the increasingly likely collapse of the region into full-scale war. On 30 July a senior US delegation arrived in Riyadh to discuss Yemen, leaving one to wonder whether its pressure will be in favour for or against the finalisation of the Saudi-Huthi ‘peace agreement’ in Yemen. Either way, it is unlikely to sway the Saudi regime which is determined to give priority to its own internal interests and which is caught between its complex interests in obtaining US concessions in exchange for increasing its relationship with Israel and its population’s strong commitment to support Palestine against Israeli massacres. In Yemen itself, the humanitarian situation continues to deteriorate (just 27% of the UN’s plan financed as of 31 July), particularly in Huthi controlled areas. The latest announcement that the US is resuming aid to that area confirms that the WFP’s interruption of food distributions in the Huthi controlled area last December was a result of the US pressure. Their resumption will assist the population but primarily benefit the Huthis and their supporters, given Huthi interference in humanitarian sector activities. However, in the long run the Saudis have given a major boost to the Huthis and further weakened their ‘ally’ the IRG and the PLC it appointed two years ago. For ordinary Yemenis living conditions in the broadest sense will be severely weakened by Riyadh’s volte face. Members can leave comments about this newsletter on the Arab Digest website