Christoph Reuter explains how Hadi’s decision to relocate Yemen’s central bank set in motion the economic disaster that is exacerbating the humanitarian crisis and causing widespread starvation:
When the Saudi offensive — initially conceived as an operation that would take mere weeks — still hadn’t produced the desired results after a year, Riyadh pivoted to using starvation as a weapon. Starting in June 2016, President Hadi ceased sending revenues from the conquered oil fields to the central bank, transferring the money instead to an account in a Saudi Arabian bank. That July, he gave the order to cut the central bank’s access to all hard-currency accounts abroad. Then, on September 18 of that year, he removed Bin Humam and moved the bank to battle-plagued Aden — allegedly to protect its independence.
Just days later, he said: “It may be that we will no longer be able to pay the salaries of state employees.” Hunger as a weapon. In the Houthi-controlled areas, civil servants have only received just short of four-months’ salary in the two years that have since elapsed.
Transferring the central bank to Aden was akin to breaking it up. For an entire year after its arrival in Aden, the new bank didn’t even have a SWIFT code, meaning it had no access to the global money-wiring system. And the oil revenues continued to make their way into the account in Saudi Arabia. Bin Humam’s successors had only one recipe for addressing the currency’s ongoing loss of value: printing more of it, hundreds of billions of rials. “We are stumbling into a catastrophe. The inflation can get a lot worse,” says Bin Humam. Of the $2 billion in aid that Saudi Arabia pledged in early 2018, only around $20 million has actually been dispersed, the rest is still in accounts in Saudi Arabia.
When Hadi moved the central bank to Aden, he destroyed the last national institution that was still intact after the start of the war. Humanitarian agencies warned at the time that doing this would significantly worsen the suffering of the population, but the “legitimate” government did it anyway because the welfare of the people has never been one of its priorities. It was a stupid and destructive decision whose dangerous consequences were obvious to everyone that was paying attention. The economic war on Yemen has hurt rebel-held parts of the country hardest, but the collapse of the currency has hurt the entire civilian population no matter where they happen to be. The Saudi coalition and the “legitimate” government were unable to achieve the goals of their misbegotten war, and instead chose to ruin the country and drive the people into such penury that they starve.
There are things that could still be done to pull the country back from the brink, but it remains to be seen if there is any political will to do them:
The bitterness in Bin Humam’s voice is impossible to miss as he issues an appeal to the world. “If the international community wants to, it can stop the fall. If it reestablishes a genuinely independent central bank and ensures that oil revenues are paid into it, that civil servants are paid, and if they stabilize the rial with something closer to $4 billion rather than $2billion, they can save the country.”
“But do they really want to?”
Ending the economic war on Yemen is every bit as important as halting the fighting, and if there is any chance of averting the worst famine in decades it has to happen right now. As ever, the international response to Yemen’s crisis has been too slow and inadequate. If the administration were serious about supporting the efforts of the U.N. special envoy, Martin Griffiths, they would make addressing this part of the crisis a top priority.