In a move that represents a dangerous escalation in the ongoing economic war in Yemen, the Houthi group targeted the assets of one of the country's largest commercial banks, threatening to deepen the financial divide and potentially cause a complete collapse of the banking sector, which is already suffering from the repercussions of years of war.
This measure comes amid a protracted conflict between the internationally recognized Yemeni government, which has its temporary headquarters in Aden, and the Houthi group, which controls the capital, Sana'a, and large areas of northern Yemen. This conflict has not been limited to military battles, but has extended to a fierce economic war, one of the most prominent aspects of which was the division of the Yemeni Central Bank into two branches in Sana'a and Aden, and the issuance of different currencies, leading to monetary chaos and discrepancies in exchange rates between different regions.
Background of the banking conflict
The economic war has recently escalated following the Central Bank in Aden's decision to mandate all commercial and Islamic banks to relocate their headquarters from Sana'a to Aden within a specified timeframe. The Houthi group has denounced this decision as a declaration of economic war and vowed to take what it described as "painful" countermeasures. Targeting the assets of major banks that might comply with the relocation order is seen as the first of these retaliatory measures, aimed at pressuring the banking sector and preventing it from adhering to the Aden government's directives.
The importance of the event and its expected impact
Targeting the Yemeni banking sector has disastrous repercussions at all levels:
- At the local level, this measure threatens to disrupt essential financial services for millions of Yemenis, including the payment of public sector salaries, remittances from expatriates which are a vital lifeline for the economy, and the operations of humanitarian organizations that rely on banks to deliver aid. It also undermines the remaining confidence in the banking system and could prompt depositors to withdraw their funds, potentially leading to a severe liquidity crisis and the collapse of entire banks.
- At the regional and international levels, this escalation further complicates the Yemeni landscape and undermines peace efforts. It also hinders the work of the international community and aid organizations, and makes it difficult for international companies to operate in the Yemeni market. The collapse of the formal banking sector could lead to a flourishing of the black market and informal financial networks, making it more difficult to trace funds and combat money laundering and the financing of terrorism.
Observers fear that this targeting could be the start of a series of measures that will lead to a complete paralysis of the Yemeni economy, exacerbating the world's worst humanitarian crisis and pushing millions of residents to the brink of famine.
