International Crisis Group: Yemen's central bank instrumental in preventing famine

Earlier this month, International Crisis Group began publishing a series of briefings entitled “Instruments of Pain: Conflict and Famine,” which calls attention to and examines the unfolding famines in Yemen, South Sudan, Nigeria and Somalia. The first of these briefings focuses on Yemen and the roots of Yemen’s food crisis in the ongoing conflict. Crisis Group calls for a halt to the plans for an assault on the Port of Hudaydah by the Saudi-led coalition and emphasizes that all parties to the conflict must enable the central bank to address the growing financial problems in the country, which must ultimately be solved by a ceasefire and a lasting political solution to the conflict.

Crisis Group emphasizes the size of the crisis in Yemen; seventeen million people in the country are now food insecure, an increase of three million from the start of the year. According to UNICEF, 460,000 children are acutely malnourished. This huge amount of need leaves seven out of 22 Yemeni governorates at a phase four level of emergency food insecurity, with phase five being famine.

“The evolving hunger crisis has both a supply and demand side, with an underlying motif of combatants pursuing war by any means with little to no regard for the population. According to a prominent Yemeni entrepreneur, ‘the real story of the humanitarian crisis is that Huthi/Saleh forces and the corrupt people around President Hadi are all benefitting from the war economy while the people of Yemen suffer’.”

The briefing criticizes both the Saudi-led coalition and the Houthi-Saleh alliance for their actions, which have put so many Yemenis at risk of starvation. Houthi forces have blockaded the city of Ta’iz since 2015 and interfered regularly with humanitarian efforts. The Gulf coalition has hindered the delivery of humanitarian aid, perhaps most notably by imposing a naval blockade on the Port of Hudaydah for the first year of the war. The impending military operations that the Saudi-led coalition seems determined to undertake will now cut off the small amount of food supplies that have been able to enter the country since the blockade was lifted.

However, the greater problem at the moment, the briefing states, is that Yemenis are unable to purchase the food products that do make it into the country. The fighting has destroyed the Yemeni economy and left families destitute. A major factor in this state of affairs is the inability of the central bank to pay public-sector salaries due to limited finances, a liquidity crisis and the difficulty of moving money from place to place in Yemen. These issues were worsened when President Hadi moved the central bank from San’a to Aden, before which both parties had allowed the bank to function with minimal interference.

“Each side blames the other for the economic disaster. The government says it cannot pay salaries in Huthi/Saleh-controlled territories until these remit tax and other import revenues to the bank in Aden (nationally these revenues accounted for around 30 per cent of pre-war government income). The Huthi/Saleh authorities accuse the government of trying to starve the north and refuse to recognise or share accounts with Aden. As the two sides bicker, Yemenis across the country are slowly starving.”

The International Crisis Group urgently calls for several steps in order to save the millions of Yemeni lives that hang in the balance of the conflict. The Saudi-led coalition must not invade Hudaydah, and the central bank in Aden must be allowed to resume public salaries and perform basic functions without interference. The briefing calls for a political settlement that provides for these functions of the central bank, as well as for cooperation between the Aden and San’a branches, deposit of revenues into the central bank system, and emergency funding from Saudi Arabia and the UAE for the poorest Yemenis. Crisis group also emphasizes the need for a ceasefire to support these measures, urging all parties to re-engage with UN peacemaking efforts and calling on the UN Security Council to demand a ceasefire and unhindered humanitarian aid. These steps are crucial to preserving the lives of the 17 million Yemenis at ever-increasing risk of starvation.