Fight for control of Yemen's banks between rebels, government threatens to further wreck economy

People shop in a supermarket in Sanaa, Yemen, before the Eid holiday on Saturday, June 15, 2024. –

Yemen has been torn by civil war ever since the Iranian-backed Houthi rebels took over Sanaa and much of Yemen’s north and center in 2015. The Saudi-backed internationally recognized government and its nominal ally thea group supported by the United Arab Emirates, govern the south and much of the east, centered in the southern port city of Aden.

The internationally recognized 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 response, the Aden-based central bank gave banks 60 days to relocate their headquarters to the southern city and stop operating under Houthi policies, or else risk facing sanctions related to money laundering and anti-terrorism laws.

When the 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 south could no longer work with them.headquartered in Aden. That means people in Houthi-controlled areas can’t deposit or withdraw funds through those banks or receive wire transfers made through them.

The economy in Aden isn't significantly better. The government’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.

Source: Financial Digest (financialdigest.net)

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