By: Zuhur al-Yemeni

An economic study revealed that the Houthi coup militias are following a plan, within the framework of their project to destroy the Yemeni economy that depends on controlling private sector projects by religious and military institutions, in the same manner as the Iranian Revolutionary Guard does in its management of parallel institutions in Iran.

The study, prepared by journalist and economic analyst Muhammad Al-Jumaee, discussed the role of black markets for oil derivatives in transforming the national economy into a hidden economy run by the -snakes of wealth and wars- within the militias, noting that the objective of that plan is to create entities parallel to well-known economic institutions so that their mission is trafficking and industrialization for the benefit of specific institutions, provided that the budget of these entities is not subject to accounting or auditing and is not included in the state budget, even though it is financed from government funds.

The study confirmed that these black markets are only a model for this destruction.

Fuel is the Houthi's weapon:

The Houthi militia is using the fuel crisis in its areas of control as a weapon to blackmail the United Nations with the aim of making millions of dollars by selling it on the black market.

A report issued by the Supreme Economic Council affiliated with the legitimate government, regarding fuel revenues during the first quarter of this year, stated that 59% of the total imported oil in the country reached the Houthi militia-controlled areas.

And oil derivatives are imported through four ports, which are: The port of Hodeidah, which is under the control of the Houthi militia, while the legitimate government controls the ports of Aden, Mukalla and Nashtun.

During the past three months, the total quantity of fuel imported by Yemen amounted to about 1,533,377 metric tons, the majority of which reached the Houthi areas, following the demand for fuel and the militias sold it on the black market, according to the report.

According to the report, about 624,517 metric tons reached the Houthi militia areas by land and sea, with an estimated rate of 59% of the total quantity, while the amount allocated to the liberated areas amounted to about 428,859 metric tons, with an estimated rate of 41%.

The Yemeni government also allowed the safe flow of fuel through the port of Hodeidah, with regard to the shipments allocated to the private industrial sector and humanitarian organizations operating in areas controlled by the Houthi militia, but as the militias used to, it looted customs taxes for the benefit of its military actions.

According to the report, the volume of fuel arriving through the port of Hodeidah amounted to about 84,517.86 metric tons, and the militias obtained legal tax fees for these shipments and transferred them to their war effort.

The report pointed out that the number of ships that were granted exceptional permits to enter the port of Hodeidah - in response to the calls of the United Nations after the Houthis looted the fees accumulated in the Central Bank in Hodeidah - reached about 40 fuel ships during the first quarter of 2021.

And the report mentioned that the Houthi militia looted more than 70 billion riyals of these exceptional shipments' fees and did not use them to improve the humanitarian and living conditions of the Yemeni people.

And the report also mentioned that the militia had used the taxes of these shipments as another weapon to kill Yemenis after financing its terrorist military operations and not allowing the Office of the UN Envoy to exercise any kind of control over these funds, in order to ease the burdens of the citizens' living situation.

And the report made it clear that the cause of the fuel crisis in the militia areas is as a result of the Houthis obstructing the flow of fuel in the liberated areas and forcing traders to sell oil derivatives on the black markets run by the militias.

 

Currency speculation:

The war ignited by the Houthi militia is the main reason for the tragic situation that millions of Yemenis are suffering from today.

The looting of the cash reserves in the Central Bank, cutting off the salaries of employees, directing all state revenues represented in the form of taxes, customs duties and others in favor of the so-called war effort, has brought the Yemeni economy in the gutter., and with it the price of the local currency has fallen to a record level that it has not reached before.

The militia was not satisfied with that, but rather its leaders monopolized the trade in oil derivatives, manipulated their prices, ran a black market from which they earned millions of dollars and became active in the real estate trade, where the leaders of this militia seized the property of their opponents and sold it and the proceeds of these properties they employed in buying hard currency from the market and building Huge palaces the like of which the capital, Sana'a, has never seen before.

These leaders have been active in opening fake exchange companies whose mission was represented in trading the currency and striking the remaining strength of the Yemeni riyal with the aim of holding the legitimate government responsible for that.

And today, with the significant decline in the price of the riyal and the insane rise in commodity prices, the militia has unleashed its leaders and supervisors to control the remaining foreign currencies in the market, by closing 17 exchange companies, in addition to preventing dealing with 5 other exchange companies that are considered among the most prominent and largest exchange companies in Yemen. Many years have passed since the establishment of these companies, and today they are threatened with closure if they did not submit to their wishes.

In addition, thousands of companies and factories were forced to close in many governorates, where 80% of working youth lost their jobs as a result of that closure.

According to a report issued by the United Nations, 90% of workers in private sector companies have been laid off. As for the World Bank, it confirmed that the unemployment rate in Yemen last year amounted to about 70%.

The Houthis have destroyed the Yemeni economy through several factors, most notably the suspension of exports and the increase in imports from abroad, in addition to the printing of a new local currency without a balance of foreign currencies that supports the local currency and rise it price, where the Central Bank has reached a stage in which it cannot pay the basic needs, and therefore the result is that it has become suffering from two aspects, one of which is regulatory and the other related to providing financial needs. This subject has led to an increase in prices in retail stores by 40% in various basic commodities, including wheat, rice and sugar, while some luxury items have increased their prices by rates ranging between 20% and 30%, which led to the deterioration of the living situation for the majority of the population to frightening levels, especially with the non-payment of the salaries of state employees in Houthi-controlled areas.

 

Border closures and economic and social disintegration:

In the past, the area of local trade across the northwestern Yemeni border with Saudi Arabia had expanded, and the number of border markets reached more than 80 markets on the Yemeni side and about 30 markets on the Saudi side.

These markets transformed the two adjacent border regions, Yemen and Saudi Arabia, into an economic hub and cemented relations between local communities across the border.

These markets have constituted an important source of Saudi goods for the border communities on the Yemeni side due to their low cost, and since their emergence they have primarily met the needs of Yemeni consumers and were also suitable for Saudi interests in various respects.

Some factors also contributed to the transformation of border markets into economic centers, the most prominent of these factors was the inability of traders from inside Yemen to dispense with Yemeni border traders who played the role of mediator in purchasing products from Saudi Arabia.

Visitors from residents of the border areas did not need entry visas within the scope of these areas, and various goods were available in one place, and prices were exempted from taxes. The markets of the remote Yemeni communities have helped to some extent in securing their livelihoods.

The stability that resulted from the re-demarcation of the border between the two countries in 2000 enabled border markets to become supply and distribution points for goods entering Yemen from Saudi Arabia or vice versa. Western Yemen, to an important economic center.

Today, as a result of the militia coup and the outbreak of war between the Houthis and the Arab coalition, these border areas have turned into battlefields and the situation in these areas has worsened after the Saudi authorities closed the border crossings, which led to the prevention of Saudi citizens from entering Yemen and dealt a severe blow to the markets that Relied heavily on their purchases and the pace of economic downturn has accelerated.

Finally, the direct clashes taking place in the border areas and turning it into battlefields led to the closure of the border markets and the severing of the economic and social relations that had always brought both sides of the border together.

According to Saudi foreign trade statistics, imports from Yemen declined by 80 percent between 2015 and 2020, and imports decreased by 85 percent.

The demise of the border markets not only paralyzed a distinct economic system that linked the interior of Yemen to the areas on the Yemeni-Saudi border but also led to the complication of social ties between the population on both sides of the border, cutting them completely in some cases.

 

Capital emigration:

Since Yemen entered the maze of war due to the Houthi coup, the commercial sector has been greatly affected, as the phenomenon of money and investment emigration has emerged.

Some statistics show that nearly 80% of medium and large foreign investments have left Yemen, while economic experts say that the volume of money migrating from Yemen is about $30 billion.

Many Yemeni businessmen and traders also had to withdraw their savings from local banks and migrate abroad to search for a safe investment environment, especially in Jordan, Djibouti and Ethiopia, in which Yemenis prefer to invest their money.

The Yemeni Migrants Organization estimates the volume of Yemeni investments abroad at about $100 billion, most of which are concentrated in the countries of the Horn of Africa, where Yemeni businessmen control about 10% of the investments in those countries.

 

The seizure of the oldest Islamic bank in Yemen:

The Houthi militias have taken steps to seize the money of 14 prominent merchants in Yemen and control two of the commercial banks they own, as part of a behavior it has been following for several years to undermine the banking system, restrict its activities and share profits and blackmail operating commercial banks by claiming that they have arrears of taxes or Fees that have not been paid for decades.

The militias have also been making political accusations against the major shareholders in these banks, due to some of them refusing to support the Houthi fronts, refusing to acquiesce in the demands of their leaders to pay personal taxes or grant loans without sufficient guarantees.

After the militias took control of Saba Islamic Bank and appointed new management for the bank on their part, it directed, on the fifth of this October, through the Public Funds Prosecution that it manages, to the precautionary seizure of the balances of 12 major merchants, who make up the Board of Directors of the Bank of Yemen and Gulf, after they took Through the branch of the Central Bank of Yemen in Sana’a, to form a committee to control the bank, cancel all the powers of the board of directors and the executive management and transfer all those powers to seizure committee affiliated with the militias.

According to a memorandum issued by the Central Bank branch in Sana'a, they ordered the provisional seizure of the funds of the current board members, in addition to the members of the previous board of directors of the bank.

The Houthi memorandum claimed that the previous and current board members had committed financial violations that weakened the bank’s financial position and harmed the depositors’ money. Then it ordered the seizure of the movable and immovable funds belonging to these, whether it was cash, vehicles, shares, bonds or real estate and the like, and preventing their disposal, although the militias, through their control of the Central Bank branch in Sana’a, had seized control of Yemen and Gulf Bank last month with the aim of seizing depositors’ money and plundering all its assets represented in assets, cash, dues and legal reserves with the Central Bank.

In another Houthi memorandum issued on the seventh of the same month, which was described as confidential and urgent, the Information Collection Unit in the Central Bank branch in Sana’a instructed all companies and exchange facilities to the precautionary seizure of the funds and property of the Chairman of the Board of Directors of the Islamic Bank of Yemen and the Deputy Executive Director for Credit Affairs, in addition to that the militias claimed that the instructions came in implementation of the directives of the Public Funds Appeal Prosecution and that it must be implemented as quickly as possible, and they have informed these companies and facilities with evidence of precautionary seizure of movable and immovable funds and properties, balances, shares and bonds, without providing any reason or justifications that led to this step that targets the oldest Islamic banks in Yemen.

According to banking sources, many banks in the capital, Sana’a, have become almost collapsed and semi-closed due to their inability to fulfill their obligations and carry out their basic functions as a result of the Houthi militias, and through the Central Bank branch in Sana’a, preventing these banks from using their balances, where the militias impose strict restrictions on the banking sector and procedures that worked to limit its activity, in addition to levies and profit-sharing, which led these banks to bankruptcy, and the role of the banking system has declined in financing development and creating job and income opportunities in society

The sources confirmed that CAC Islamic Bank has become bankrupt and the Yemeni Islamic Bank has also faltered, while the work of the National Bank branch in Sana’a has become almost limited to deal with transfers of relief organizations only, but the Houthi militia is covering up the declaration of the bankruptcy of these banks with the aim of creating an impression on people and the international community that the economy is still coherent in its areas of control.

 

Banning the circulation of the new currency:

The Yemeni economy, whether in Houthi-controlled or legitimate government-controlled areas, is highly dependent on imports. And the main importers in Houthi-controlled areas distribute goods throughout the country. However, currently, trade between areas under Houthi control and those under government control has become more difficult, dangerous and costly due to the divided currency system between the two parties.

In the past, traders and importers kept their stock of goods in Sana'a and then distributed them to other regions, but recently some traders began storing goods in the governorates of Aden or Marib, and from there they are distributed to Sana'a and other Houthi-controlled areas in order to avoid the additional costs resulting from Houthi directives of securing old banknotes or transferring cash between government-controlled areas and Houthi-controlled areas.

All of this reflected negatively on the citizen, where nearly 24 million people in Yemen, or 80% of the total population, need humanitarian assistance, and about 7.4 million of them face the threat of starvation.

And this means that humanitarian actors trying to meet these needs will face significant new obstacles due to the ban on new banknotes.

Large portions of the relief aid, worth billions of dollars are distributed in Yemen such as cash transfers by using the new currency banknotes issued from Aden, which are no longer accepted in Houthi-controlled areas and where most of the beneficiaries of that aid are located.

And in order to distribute the money in these areas, the organizations providing aid will face increased fees, so each dollar of aid will have less impact.

On the other hand, hundreds of thousands of Yemenis left the areas under the control of the Houthis, in search of sources of income in the areas controlled by the legitimate government, after their salaries were cut off. For example, the population of Marib increased from about 300,000 persons before the coup to more than one and a half million people today. And many of these people have families who remain in Houthi-controlled areas and depend on remittances that come from their relatives to survive, but the currency ban has hampered the ability of these people to transfer these funds to their relatives, as a result of the high transfer commission, which amounts to half the amount to be transferred.

Thus, looking into the future, ordinary citizens will continue to be the biggest victims if this currency war continues, as costs are rising, their money is losing value and the country's economy is disintegrating more and more.

One of the studies prepared by the head of the Yemeni Economic Media Center, Mustafa Nasr, showed the features and indicators of the systematic destructive plan used by the putschists in order to destroy the economy of Yemen, through the systematic depletion of foreign exchange reserves, support for oil derivatives, the adoption of the war effort as a means of collection to finance the Houthi militias and total tampering state revenue.

This study indicated that the coup had a negative and direct impact on the collapse of the national currency, the rise in inflation rates and on the economic sectors.

 

Money laundering:

Since its coup, the Houthi militia has been working on a fundamental change in the national capital in order to consolidate the foundations of the imamate, and for this, the militia has established an extensive collection network.

Since entering Sana'a, the Houthi militia has appointed supervisors with the aim of monitoring and documenting bank accounts and the sources of revenue institutions in order to confiscate them.

With the aim of looting Yemenis, the Houthi militia worked in two phases: the first phase represented in looting money, pension funds, insurances, pensions and the Central Bank, then moved to the second phase represented in targeting private companies and private commercial banks and confiscating those funds using all state agencies.

Yemeni economic circles have previously warned that commercial banks will be affected in the long run due to the violation of banking secrecy by the Houthi militia, using them to blackmail people and seize the accounts of others, and this is what made people lose their confidence in these banks and work to withdraw their money to areas under the control of legitimacy. These banks have asserted that it will not be easy in the future to persuade depositors to return to dealing with banks.

And other sources said that the Houthi militia used the Information Collection Unit in the Central Bank in Sanaa to implement its plan to violate banking secrecy, where the “servers” and central administrations of banks are located in Sana’a, and prevented them from providing the Central Bank in Aden with any data and threatened to close them.

These practices prompted many people to demand the withdrawal of their deposits from banks, but they encountered the inability of these banks to provide sufficient liquidity. This issue has opened a door to the manipulation of deposits, where the owners of these deposits had to barter bank branches in the areas of legitimacy to spend them in installments in return for commissions of up to 20%.

The practices carried out by the militias also led to the suspension of the work of the Anti-Money Laundering Committee, because the militias took control of the Information Unit and prevented banks from providing any data to the Central Bank in Aden, which is the legitimate representative of the Yemeni government with the world, which exacerbated the risks of increasing money laundering operations and financing the militias.