The Yemeni economy, already fragile before the conflict, is paying a heavy price for the years-long war led by the Houthi group. The war's repercussions have not been limited to the enormous human cost and the humanitarian crisis, described by the United Nations as the worst in the world, but have extended to a near-total collapse of the state's economic foundations, plunging millions of Yemenis into poverty and hunger.
Background to the collapse: From fragility to systematic destruction
Before 2014, Yemen was among the poorest countries in the Arab world, heavily reliant on limited oil and gas revenues and international aid. With the Houthi takeover of the capital, Sana'a, and the escalation of the conflict in 2015, the economy began to decline rapidly. Vital infrastructure, including ports, airports, power plants, and roads, suffered extensive damage, crippling trade and domestic production. The cessation of oil and gas exports, which accounted for more than 70% of state revenues, deprived the treasury of its most vital source of income.
Dimensions and impact of the economic disaster
The economic catastrophe manifests itself in several devastating ways, most notably the monetary and institutional division. The relocation of the central bank from Sana'a to Aden resulted in two rival central banks, leading to two different monetary policies and two currencies with varying values. This division caused a historic collapse in the value of the Yemeni rial and soaring inflation to record levels, catastrophically eroding the purchasing power of citizens. Furthermore, the government ceased paying the salaries of hundreds of thousands of public sector employees in Houthi-controlled areas, exacerbating the suffering of millions of families who lost their sole source of income.
Regional and international impact of the conflict
The repercussions of the economic war are no longer confined to Yemen's borders. Recently, Houthi attacks on cargo ships in the Red Sea and the Bab al-Mandab Strait, under the pretext of supporting Gaza, have severely disrupted one of the world's most vital shipping lanes. These attacks have forced global shipping companies to reroute their vessels, increasing transportation and insurance costs and impacting global supply chains. Thus, the Yemeni war is no longer merely a local conflict; it has become a significant factor affecting global economic stability and energy security, placing additional international pressure on the international community to find a political solution that ends the conflict and restores stability to the region.
In conclusion, the cost of the Houthi war on Yemen’s economy cannot be measured in numbers alone, but rather in the scale of human suffering and destruction that will require decades and perhaps generations to repair, provided that a comprehensive and sustainable peace is reached that restores Yemen’s health and the unity of its institutions.
