Negotiating a ceasefire in the economic conflict in Yemen – Middle East Report N°231 | January 20, 2022 – Yemen

Along with territorial battles, the parties to Yemen’s war are embroiled in struggles for control of key parts of the country’s economy. This last struggle causes great civil suffering. The new UN envoy is expected to make this a central task in achieving an economic truce.

Principle results

What’s up?UN-led efforts to broker a ceasefire in Yemen have been repeatedly stalled due to a standoff between Houthi rebels and the internationally recognized government over who has authority to control goods, especially fuel, entering the port of Hodeidah on the Red Sea. With the escalation of the conflict, the UN is struggling to move forward.

Why is this important?Economics has become integral to parties’ efforts to strengthen their own positions while weakening their rivals. Economic competition fueled fighting at the front and hampered attempts to restore peace. But diplomats trying to stop the war have too often evaded the question.

What should be done?Yemen needs an economic ceasefire as much as a military one. Together with other UN actors, the new UN envoy is expected to launch a mediation trail to identify key players in the economic conflict and begin laying the groundwork for an economic truce even as the shootings escalate. continue.


Yemen is caught in overlapping emergencies that have defied mediation. In the north, bloody battles rage for control of Marib governorate between the internationally recognized government of Abed Rabbo Mansour Hadi and the Houthi rebels who ousted him in 2015. Hadi’s government is blocking fuel from entering the Huthi-held port of Hodeidah, and a tug of war around the riyal, Yemen’s currency, led to its collapse into nominally government-controlled towns. These crises are part of a struggle over the economy – call it an economic conflict – that has deepened Yemen’s humanitarian crisis, accelerated its political and territorial fragmentation and hampered the restoration of peace. So far, mediation efforts have tended to treat economic issues as technical issues or have sought to approach them as “confidence-building measures” adopted in the service of political dialogue. The new UN envoy should recognize them as being at the heart of the conflict and negotiate an economic ceasefire at the same time, and in the same way he seeks to achieve a military truce.

The economic conflict pits the Hadi government against Huthi rebels over control of the country’s natural resources, trade flows, businesses and markets. State and non-state institutions that facilitate and hinder trade, such as banks, customs authorities and other regulatory bodies, as well as the parties’ respective security services, play a supporting role. The advantage of the Huthis in this struggle is their growing control of territory and population centers; the Yemeni government is its international legal authority.

The roots of the economic conflict go back to the country’s failed political transition, which began in 2012 and collapsed in the face of the Huthi rebellion in 2014, triggering seven years of civil war and foreign intervention. Economic and military conflicts have not progressed at the same pace. Some aspects of the former were held at bay during the early stages of the war by an informal technocrat-led economic truce that helped protect pre-war economic institutions that remained highly centralized even though, by many other means, the country collapsed. Sanaa officials have spoken to political leaders on both sides of the dispute and the parties have quietly allowed the central bank to maintain a level of neutrality. However, the truce was never meant to be more than a stopgap measure and it did not last.

Since the economic truce collapsed during 2016 and 2017, the economic conflict has become more acute and more closely linked to Yemen’s deadly war. Its most visible features are the split of the central bank into rival authorities in Sanaa and Aden, a power struggle over control of trade flows and fuel taxation in particular, and the steep fall in the value of the riyal in the areas. theoretically controlled by the government. The depreciation of the riyal has pushed the price of imported necessities such as food and fuel out of reach for many people. As a result, Yemen is the site of what the UN calls one of the biggest humanitarian crises in the world. By the end of 2021, the war had claimed the lives of around 377,000 Yemenis, according to the United Nations Development Programme. Of these, most were killed not by frontline fighting, shelling or airstrikes, but by starvation and preventable disease, the vast majority of them young children and women.

The tactics of the parties in the economic conflict have often failed. Government moves to wrest control of the economy from the Huthis have tended to backfire, largely because the Huthis control Yemen’s main population centers and therefore its biggest markets. Diplomats have struggled to convince the government of the folly of its actions, in part because the economy is one of the few remaining sources of perceived leverage for President Hadi and his entourage. Given what is at stake – its very survival – the government is unlikely to walk away from the economic war without major concessions from the Huthis, who perceive they have the upper hand in the conflict and do not see so no reason to compromise. Yet by further delaying a settlement, the government risks ceding even more ground to the Huthis.

Party economic tactics have hampered the succession of UN envoys who, since 2015, have been tasked with ending the war. For better or worse, their efforts have tended to focus on the political and military aspects of the conflict while viewing the economic conflict as a subplot, even when fundamentally tied to the core political issues that divide the parties. . The Stockholm Accord, which prevented a battle for Hodeidah, sidestepped rather than solved important economic problems. More recent efforts to resolve the Marib crisis and the embargo on Hodeidah have also failed by treating extremely large proposed economic concessions as “confidence-building measures”.

This approach must change. Although the economic dimensions of the conflict in Yemen are not the only obstacles to peace, it is difficult to imagine the parties achieving a lasting military truce if they fail to conclude an economic truce in parallel. The new UN envoy, Hans Grundberg, who took office in September, is considering how his office can resolve the economic conflict. He has some useful patterns to follow. In Libya, for example, the office of the UN envoy has launched a separate channel for economic issues that fall within broader conflict resolution efforts. Grundberg should take a page from this book, laying out a formal pathway to address the economic challenges that have become intertwined with the tougher political issues that separate the parties. The concrete goal would be an agreement in which the parties to the conflict pledge to stop working to harm each other economically and to cooperate for the benefit of ordinary Yemenis who desperately need both economic opportunity and better services.

In early 2022, the conflict over Marib escalated. Without progress on the economy, Grundberg is unlikely to be able to stop filming. Many of the same obstacles to a deal that have hampered the mediators in their pursuit of a military ceasefire will hamper their efforts to reach an economic truce. Even with international support – which outside actors should certainly lend him – the envoy faces a difficult climb. But that climb will almost surely be even steeper without a dedicated effort that allows mediators to better understand and address the economic issues that are so fundamentally tied to the political drivers of Yemen’s civil war. Seven years after the beginning of this brutal conflict, it is high time to tackle this task.

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