Yemen: Houthi extortion is strangling the private sector and threatening economic collapse
The private sector in Yemen is experiencing its worst period in history, as business owners and merchants face a systematic economic war waged by the Houthi militias in the areas under their control. Military conflict is no longer the only threat facing Yemenis; illegal levies and taxes have become a sword hanging over the neck of commerce, draining merchants' savings and pushing many to the brink of bankruptcy or forcing them to relocate their capital.
The variety of methods of extortion and financial blackmail
The de facto authorities in Sana'a and the areas under their control impose an endless series of levies under various pretexts. These range from "war effort" contributions and support for sectarian events held throughout the year to the imposition of exorbitant customs duties and taxes at newly established checkpoints between governorates. Economic reports indicate that these practices have no legal or constitutional basis, relying instead on force and intimidation. Merchants who refuse to pay face arrest, the closure of their shops, or the confiscation of their goods, creating a hostile and risky environment for investment.
Disastrous repercussions for the national economy
These arbitrary tax policies have led to an unprecedented erosion of national capital. Hundreds of companies and commercial establishments have been forced to scale back their operations or close permanently, while others have resorted to transferring their investments to liberated areas or outside Yemen in search of a safer environment. This ongoing drain of capital directly contributes to deepening the economic recession and exacerbates unemployment rates, which have reached record levels, as thousands of employees and workers lose their sources of income due to the closure of businesses.
The ordinary citizen... the first victim
Ultimately, it is the ordinary Yemeni citizen who bears the heavy burden of these levies. Merchants and business owners are forced to pass on the costs of these imposed taxes to the prices of goods and services, leading to exorbitant price increases and rampant inflation that citizens cannot cope with, especially given the interruption of salaries and the plummeting purchasing power of the local currency. International and UN organizations have repeatedly warned that the continuation of these practices exacerbates the humanitarian crisis in Yemen, which is considered one of the worst in the world, and threatens widespread famine as the population becomes unable to afford basic food supplies.
Background of the conflict and its ongoing impact
Since the Houthi militias' coup and takeover of state institutions in 2014, they have systematically dismantled the formal economy and created a parallel economy to serve their own interests and finance their military operations. This approach has destroyed the legislative and regulatory framework of the Yemeni economy and isolated the country from the global financial system. The continued imposition of these levies is not only a violation of private property rights but also a full-fledged economic crime that threatens Yemen's future and hinders any efforts at economic recovery in the near future.
