Yemen's Houthi rebels and its inter💙nationally recognised government are locked in a fight for control of the country's banks that experts warn is threatening to further wreck an economy a⭕lready crippled by nearly a decade of war.
The rivalry over the banks is throwing Yemen's financial system♛ into deeper turmoil. Already, the Houthis who control the north and centre of the country and the government running the south use different currency notes with different exchange rates. They also run rival central banks.
The escalating money divide is eroding the value of Yemen's currency, the riyal, which had driven up prices for clothing and meat before the Islamic holiday of Eid al-Adha st🌊arted on Sunday.
For weeks, Yemenis in Houthi-co🍸ntrolled areas have been unable to pull their money out of bank savings accounts, reportedly because the Houthi-run central bank, based in the capital, Sanaa, has stopped providing liquidity to commercial and government banks. Protests have broken out in front of some banꦐks, dispersed by security forces.
Y🍌emen has been torn by civil war ever since the Iranian-backed Houthi rebels took over Sanaa and much of Yemen's north and centre in 2015.
The Saudi-backed interna꧑tionally recognised government and its nominal ally the Southern Transitional Council, a group supported by th⛄e United Arab Emirates, govern the south and much of the east, centred in the southern port city of Aden.
Yemen was already the Arab world's poorest country before the war began. Punitive actions by each side against the other's banks over the past week now threaten to undermine merchants' ability to import food and basic commodities and to disrupt the transfer of remittances from Yemenis abroad, on which many families depend, said Edem Wosornu, direct🌞or of operations and advocacy for the UN humanitarian coordination office known as OCHA.
“All these factors will likely deepen poverty, worsen food insecurity and malnutrition, and increase reliance on humanitarian assistance,” she told a UN Security Council briefing on Thursday. The dispute could escalate to the point that banks in Houthi-𓃲run areas are barred completely from international financial transactions, which she said would have “catastrophic ramifications.”
The internationally reꦕcognised government moved the central bank to Aden in 2016, and since then began issuing new banknotes to replace worn-out riyals. Houthi authorities, which set up their own central bank in Sanaa, banned the use of the new money in areas under their control.
In March, the Houthi-controlled central bank announced it was rolling out its own new 100-riyal coins. The international community and Yemen's recognised government denounced the move, saying the Houth𓃲is were trying to set up their own financial system and warning it will deepen Yemen's economic divide.
Adding to the conf🍌usion, the bills have di𝓀fferent exchange rates — riyals issued in Sanaa go for about 530 to the dollar, while those from Aden are around 1,800 to the dollar.
In response, the Aden-based central bank gave banks 60 days to relocate their headquarters to the southern city and stop operatin🐼g under Houthi policies, or else risk facing sanctions related to money laundering and anti-terrorisܫm laws.
The central bank was “forced to make these decisions, especially after the Houthi group issued their own currency and took unilateral steps towards complete in♍dependence from the internationally recognised Central Bank in Aden,” said Mustafa Nasr, an economic expert and head of the Studies and Economic Media Centre SEMC.
No banks met the deadline — either because they needed more tim✨e or because they f🅺eared Houthi sanctions if they moved, Nasr said.
When t▨he deadline ran out last week, the central bank in Aden banned dealing with six banks headquartered in Sanaa, meaning currency exchange offices, money transfer agencies and banks in the soﷺuth could no longer work with them.
In retaliation, the Houthi-run central bank in Sanaa banned all dealings with 13 banks headquartered in Adeꦚn. That means people in Houthi-controlled areas can't deposit or withdraw funds through those banks or receive wire transfers made through them.
Even as the fight for control is going on, both sides are facing a cash crunch. The Hou💃thi gove༺rnment has few sources of foreign currency and its new coins aren't recognised outside its territory.
In January, the United States designated the Houthis as a global terror group in response to the rebels' attacks on shipping in the Red Sea and♓ Arabian🍰 Sea.
The Houthis s🃏ay the attacks are in retaliation for the Israel-Hamas war in the Gaza Strip. Because of the US decision, banks around the world might be concerned and reluctant to continue any financial dealings with banks that have headquarters under Houthi control, said Youssef Saeed, a University of A🌼den economic professor.
The economy in Aden isn'tꦫ significantly better. The g💫overnment's revenues have been hit hard ever since Houthi attacks on oil ports in late 2022 forced a halt in oil exports, the main earner of foreign currency.
Since𒐪 March, depositors in Houthi-run areas have been unable to pull money out of their accounts. The central bank in Sanaa hasn't announced any formal restrictions, but several economists told The Associated Press that it has informally stopped releasing funds that individual banks have put in its coffers — in part because of a lack of liquidity.
At one bank that saw protests by depositors last month,ꦫ the International Bank of Yemen, a note hung in the lobby said, “In coordination with the Central Bank, withdrawals from old accounts have been suspended until further notice.”
Um Ahmed, a 65-year-old woman who was among those protesting outside the bank, said that she was trying to withdraw money to help her son buy a motor scoꦕoter for work, but the bank refused.
“I served this country as a teacher for 35ꦫ years and saved every penny and deposited my money at the bank, b🌟ut they took it all,” she said. “This money belongs to my husband and me and our children.”
