Houthi economic escalation against the Yemeni government: a currency and oil war

The Yemeni arena is witnessing a dangerous shift in the course of the ongoing conflict, as confrontations have moved from direct military fronts to an open economic war waged by the Houthis against the internationally recognized Yemeni government. This economic escalation is a pressure strategy aimed at strangling the legitimate government's financial resources, further complicating the Yemeni situation and threatening the collapse of what remains of the state's economic institutions.

Background to the economic war and the division of the banking system

This escalation was not a sudden occurrence, but rather the culmination of a series of events that began with the Houthis' decision to ban the circulation of the newly printed national currency in the areas under their control. This led to a sharp monetary division and a significant disparity in exchange rates between Sana'a and Aden. This division created two conflicting financial systems, casting a dark shadow over domestic trade and the purchasing power of citizens. The group continues to enact unilateral legislation and measures targeting the banking sector in the liberated areas, in an attempt to undermine the Central Bank in Aden.

Targeting oil ports and drying up resources

Perhaps the most dangerous phase of this escalation was the Houthi drone attacks on oil export terminals in Hadramawt and Shabwa (such as the Al-Dhaba port), which brought crude oil exports to a complete halt. This action dealt a devastating blow to the national economy, as the Yemeni government relies heavily on oil revenues to cover salaries, provide basic services, and support the local currency. This oil blockade has led to a significant budget deficit and a rapid depreciation of the Yemeni rial in areas under the control of the internationally recognized government.

Customs and border crossings war

In addition, the Houthis have intensified their measures at newly established customs checkpoints between provinces, imposing double taxes and customs duties on goods coming from areas controlled by the legitimate government. These measures have forced many traders and importers to reroute their goods through the port of Hodeidah instead of the port of Aden, depriving the legitimate government of vital customs revenues and bolstering the group's financial resources in Sana'a.

Humanitarian and political repercussions

This economic escalation has a heavy human cost, borne by ordinary Yemenis. As the currency continues to plummet and prices soar, poverty and hunger are spreading, and international organizations warn of an impending humanitarian catastrophe if the economy is not kept separate from the military and political conflict. Regionally and internationally, this escalation complicates the efforts of the UN envoy and international mediators to achieve peace, demonstrating that the economic situation has become a key bargaining chip, no less important than the military and security issues.