Traders threaten strike in Houthi-controlled Yemen as rebels ban currency

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Traders in Houthi-controlled areas have called for an open strike starting on Wednesday to protest against the rebels’ decision to ban trading with new currency notes. (Supplied: Saaed Al-Batati)
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Workers at local exchange companies told Arab News on Monday that they would shutter businesses until Houthis revoked the decision or provided them with the old notes. (Supplied: Saaed Al-Batati)
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Workers at local exchange companies told Arab News on Monday that they would shutter businesses until Houthis revoked the decision or provided them with the old notes. (Supplied: Saaed Al-Batati)
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Updated 30 December 2019

Traders threaten strike in Houthi-controlled Yemen as rebels ban currency

  • The Houthis recently banned people from using newly printed notes
  • The Yemeni government in Aden has condemned the decision

AL-MUKALLA, Yemen: Traders in Houthi-controlled areas have called for an open strike starting on Wednesday to protest against the rebels’ decision to ban trading with new currency notes issued by the internationally recognized government in Aden.

Workers at local exchange companies told Arab News on Monday that they would shutter businesses until Houthis revoked the decision or provided them with the old notes.

The strike would be the biggest act of civil disobedience against Houthi suppression since the Iran-backed rebels seized power in late 2014. 

The Houthis recently banned people from using the newly printed notes, asking them to replace their notes with a virtual currency called the “electronic riyal.” The move has caused widespread anger, with people leaving Houthi areas with their cash to avoid confiscation.

The Yemeni government in Aden has condemned the decision, calling it a pretext for ripping off people and warned against trading with the Houthi currency or handing over money to the Houthis. Several cabinet ministers did not respond to Arab News requests to comment on the decision.

Speaking to Arab News from inside Houthi-controlled areas, people expressed anger as many have kept their savings in the new notes. If they comply with the Houthis, they will be broke overnight.

“The people in the Houthi-controlled areas are experiencing a complex frustration,” a Yemeni journalist who lives in a Houthi-controlled city told Arab News on condition of anonymity for fear of reprisals.

“People face various security and economical troubles caused by the Houthis. They imposed the decision, indifferent to the already deteriorating humanitarian situation,” he said, adding that a large number of people refused to hand over their new notes to the Houthis, fearing bankruptcy or hunger. 

Residents say that the decision has created a black market where the new notes are changed with old ones at a lower price. Other residents have resorted to buying hard currencies from the black market at inflated rates. Some are smuggling themselves into government-controlled areas with bags of cash that they deposit into bank accounts or replace with old notes.

A trader in Sana’a who had 8,000,000 Yemeni riyals ($32,000) in the new notes traveled to the central province of Marib to replace them with old notes.

In September 2016, Yemeni President Abd Rabbo Mansour Hadi moved the central bank headquarters from Sana’a to the southern city of Aden to stop Houthis plundering its reserves. From its new headquarters, the bank printed new notes when the country was experiencing a severe cash crunch. The Houthis deemed the new notes illegal and accused the government of sinking the market with liquidity.

Experts say that the Houthi decision would have disastrous effects on the country’s troubled economy, stabilization of the currency and people’s lives.

“This decision is disastrous, improvizational and illogical and will have a wider negative impact on the economy,” Mustafa Nasr, director of the Economic Media Center, told Arab News on Sunday, adding that the Houthis would fail to impose their decision due to public mistrust.

“The Houthis cannot cancel a circulating currency or initiate another one in the same country mainly with the scarcity of the old notes,” he said, arguing that the Houthis are using the currency as leverage to pressure the Yemeni government in Aden to deal again with the central bank in Sana’a. 

“The Houthi group would not be able to put into place their electronic riyal. They are using this as a pressure tool on the international community and the internationally recognized government (of Yemen) to restore the central bank in Sana’a.”

Shortly after the Houthis began confiscating the new notes, banks and exchange companies suffered cash problems, triggering them to increase remittance charges five times.

Nasr warned that the larger impact of the Houthi decision would be on the stabilization of the currency, affecting everyone in the country.  

“It puts the country’s economy in the wind by undermining monetary policies that led to the stabilization of the riyal this year. It will stifle the private sector and force it into using under-the-table options,” he said.


Saudi-led coalition tightens the screws on Houthi smuggling routes

Iranian-backed militants ride on the back of a police patrol truck after participating in a Houthi gathering in Sanaa, as Yemen’s legitimage government tightens security measures. (Reuters)
Updated 18 min 19 sec ago

Saudi-led coalition tightens the screws on Houthi smuggling routes

  • Security measures intensified around main sea and land entry posts in Yemen to prevent Iran arms supply to rebels

AL-MUKALLA: The Saudi-led coalition and Yemen’s internationally recognized government have intensified security measures around main sea and land entry posts in Yemen to prevent Iran from smuggling arms to Houthis in Yemen.

Over the last couple of months, hundreds of Yemeni coast guard soldiers have been deployed off the Yemeni coasts on the Red Sea and the Arabian Sea, as the coalition tightens security checks at the Shihen border crossing in the western province of Mahra.
Dozens of army and security checkpoints have also stepped up the inspection of vehicles that cross into Houthi-controlled territories in northern Yemen. Local army officers and experts say those measures have yielded considerable results, as several arms shipments have been intercepted before reaching the Houthis.

Yemen alert
In the Red Sea, local officers said Yemeni troops had consolidated their presence on the island of Perim near Bab Al-Mandab Strait, and off the coasts of the provinces of Hodeida and Taiz.
The coast guard initiated a hotline for receiving alerts from local fishermen, who were urged to report any suspected movements of boats in the Red Sea.
“Local fishermen are now helping us monitor the sea. They alert us about any ship or a boat suspected of carrying weapons to Houthis,” a coast guard officer in the Red Sea Khokha district told Arab News on condition of anonymity because he was not authorized to brief reporters, adding that coast guard forces had increased sea patrols around Zuqar and Perim Islands with the same aim.
The two islands are located at the southern entrance of the Red Sea, where arms shipments from Iran are thought to pass through.
The same officer said that three ships carrying a large amount of explosive materials heading to Houthis had been intercepted at sea in the last three months.
Last week, the commander of the Yemeni coast guard in the western coast announced seizing a ship carrying 20 tons of urea fertilizer. The material can be used for making bombs.
The investigation with the three Yemeni fishermen captured on the ship showed that they received cargo from unidentified smugglers near the Somali port city of Zeila and were asked to give it to the Houthis for several thousand Saudi riyals.
“A big smuggling network is involved,” the officer who learned about the investigation said.
“We are confident that the Iranian smugglers do not directly hand over shipments to the Yemenis. All directions come from big smugglers in Yemen. We have learnt that Iranian smugglers pretending to be fishermen are active near Somalia.”

FASTFACTS

• The coast guard initiated a hotline for receiving alerts from local fishermen.

• Three ships carrying a large amount of explosive materials heading to Houthis ‘had been intercepted at sea in the last three months.’

• Yemen’s coast guard authority crumbled in late 2014 when Houthis seized control of Sanaa and expanded across the country, triggering a civil war.

In the southeastern province of Hadramout, dozens of soldiers have been deployed across a vast and porous coastline at suspected entry points for arms and drugs.
Maj. Gen. Faraj Salmeen Al-Bahsani, the governor of Hadramout, said the deployment was the last phase of a plan aimed at securing the province’s coasts.
“The coalition has asked us to secure areas between Shiher and Mahra to prevent smuggling,” he told Arab News. “We have discovered several vehicles carrying weapons to the Houthis.”

Starting from scratch
Yemen’s coast guard authority crumbled in late 2014 when Houthis seized control of Sanaa and expanded across the country, triggering a civil war.
When the Saudi-led coalition intervened militarily in support of Yemen’s government, monitoring the country’s sea waters was left to the coalition’s navy. At the same time, the coalition had to rebuild the coast guard by training troops inside and outside Yemen, building facilities and equipping the forces with boats that would enable them to take on the mission.
The governor of Hadramout said that the coast guard branch in the large province was now working without much help as the coalition had furnished them with the equipment needed for the missions.
“We have stood on our feet thanks to great help from the coalition. They provided us with radar and boats,” Al-Bahsani added.

Smuggling focal points
Yemeni experts believed that large shipments of Iranian weapons to the Houthis went through a few seaports that were under rebel control in the western province of Hodeida.
“It is true that the Houthis might bring in light devices and weapons on land through government-controlled areas. But rockets, drones and heavy weapons come through Hodeida,” Yasser Al Yafae, a political analyst, told Arab News.
Hodeida city, which hosts Yemen’s biggest seaport, was the target of a major military offensive that managed to liberate several seaports on the Red Sea and reach the city’s outskirts.
The offensive was canceled in late 2018 under the UN-brokered Stockholm Agreement that obliged the coalition-backed Yemeni forces to stop hostilities in exchange for a Houthi withdrawal from Hodeida’s seaport. Two years later, the Houthis have neither pulled out of the seaports nor allowed inspection on ships docked.
“The inauspicious Stockholm Agreement allowed Houthis to use Hodeida seaports to smuggle, weapons, weapons and drones,” Yahya Abu Hatem, a Yemeni military expert, told Al-Arabiya Al-Hadath on Friday.