Apr 4, 2017

The Yemeni capital, Sanaa, has been in the hands of the Houthi rebel group for more than two years now. The Houthi takeover of the capital and large areas of the country in September 2014 led not only to the launch of the Saudi-led coalition military action in Yemen by the end of March 2015, but also started one of the worst man-made humanitarian catastrophes in the country’s history and in the world with more than 3.1 million internally displaced persons, and 17 million food-insecure people of whom about 7 million people are severely food insecure and do not know where their next meal is coming from.

The internationally recognized government headed by President Abed Rabbo Mansour Hadi managed in the early months of the ongoing conflict to regain control of large areas of the south of Yemen, along with the key northern governorate of Marib. The governorate emerged from the rubble of the conflict as a new hub for economic activity that provided for the people of the city and kept the government public revenues treasury afloat. In addition to that, the internationally recognized government, with the help of the Saudi-led coalition and especially the United Arab Emirates, managed to regain control over Bab al-Mandab Strait, located at one of the most important routes of world trade and oil export from the region.

The Houthi rebel group, along with troops loyal to Yemen’s former President Ali Abdullah Saleh, is currently fighting fiercely to maintain control over the west coast of the country. The ongoing fighting does not only pose a threat to global trade, but also poses an existential threat to the Houthi rebel group. One of the reasons leading to the rebel group’s takeover of the capital was arguably its disapproval of the outlined geographic division of the future Yemeni federal state, which was proposed at the end of the National Dialogue Conference in February 2014 as a solution to Yemen’s longstanding regional problems, which deprived them from a sea gate and trapped them in mountainous areas with little resources to survive.

The value the rebel group gains from controlling one of the country’s busiest ports — the port of Hodeidah — is of existential matter for income generation, especially after the relocation of the Central Bank of Yemen (CBY) to Aden cut the Sanaa-based Central Bank’s and commercial banks’ lines of communication with international banks and financial institutions. Recent fighting along the country’s west coast and Houthi-Saleh loyalists’ attacks on different vessels and ships in the Red Sea show their strategic interest in the western regions of the country and the great strategic loss the rebel group will suffer from when losing control of them.

The relocation of the CBY and redirecting the country’s small, yet existing revenues to the Central Bank’s new headquarters in Aden and the inability of the Sanaa-based CBY to serve importers’ demand for foreign currency, which led to a decline in economic activities in Houthi-held areas, took their toll on the rebel group’s finances. The Houthi rebel group felt the tightening grip of the internationally recognized government and started looking to exploit other sources of state revenues.