Yemen’s rival powers battle over banknotes

The Iran-allied Houthis, who say people should only use the old bills, have defended the ban as a move against inflation and what they call rampant money-printing by the government. (File/AFP)
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Updated 18 January 2020

Yemen’s rival powers battle over banknotes

  • The Houthis outlawed the use and possession of crisp new Yemeni riyal bills
  • The riyal stood at about 560 to the dollar across Yemen before the ban was announced in mid-December

SANAA/ADEN: Yemen’s warring sides opened a new front in their five-year conflict on Saturday - a battle over old and new banknotes that threatens to create two economies in the same state.

As of midnight, the Houthi movement which controls the capital Sanaa outlawed the use and possession of crisp new Yemeni riyal bills issued by its rivals in the internationally recognised government based in the southern port town of Aden.

The Iran-allied Houthis, who say people should only use the old bills, have defended the ban as a move against inflation and what they call rampant money-printing by the government.

The government has branded the ban an act of economic vandalism. And the population, as ever, have been left stuck in the crossfire.

Yemenis from both sides told Reuters the ban had effectively created two currencies with diverging values, adding to the turmoil in a state already governed by two powers and brought to its knees by the war.

In the one-month build up to the ban, people in Houthi-controlled areas have been queuing to try to exchange their new riyal notes for old, turning the grubby and torn bills into a prized and relatively scarce commodity.

The riyal stood at about 560 to the dollar across Yemen before the ban was announced in mid-December. The rate has since slipped a little in Houthi-controlled areas to around 582, but slumped much further to 642 in the south, an area now awash with new bills.

That relative strength might look like a boon for northerners, if only they could get hold of enough of the old notes in time to keep afloat in the largely cash-based economy.

“We go for the exchange and they won’t take [the new notes] from us. Or say they need three, four or five days,” craftsman Abdullah Saleh al-Dahmasi told Reuters on a Sanaa street a week before the ban came into force.

“The new one isn’t accepted and the old one is worn out, they have to find a solution,” the 27-year-old said.

A few days before the ban came in, around 20 angry men and women were turned away from one exchange which said it had filled its quota for the day. Many had been coming there for three days in the hope of swapping their cash.

North-south trade has become far more expensive as traders have to buy and sell two types of riyal - told apart by the state of the paper and the different sizes and designs.

TWO CENTRAL BANKS

Many people in Sanaa told Reuters they felt the ban was needed to constrain inflation. But they were facing difficulties in the short-term.

“When people saw that new currency come into circulation, they held onto it as it was new and shiny. But now it’s a problem that they have it,” said 28-year-old Abdallah Bashiri, a private sector worker in Sanaa.

In that city, legal exchanges will swap 100,000 Yemeni riyals (around $172) in new notes for electronic currency that can be spent on things like phone credit or electricity bills, for a small fee of around $1.50.

But things get more challenging when it comes to actual paper that can be spent in food markets. Sanaa residents said unofficial exchanges are offering to change 100,000 riyals of new notes into 90-96,000 riyals of the scarcer old.

After the Houthis stormed the capital Sanaa in 2014 and ousted the government of President Abd Rabbu Mansour Hadi, Yemen’s central bank split into two branches - one in Sanaa, under Houthi control, and one internationally recognised branch in Aden, which has access to money printers.

The Aden authorities have defended their decision to step up the printing of new money from 2017, saying it was an attempt to deal with a building cash crunch and pay public sector salaries.

“The Houthis ... did not consider the economic cost to society,” Yousef Saeed Ahmad, adviser to the governor of Aden’s central bank, told Reuters there this week.

“We hope the measures taken are short-term. They cannot be kept up because the economy is one, it is interrelated and commodities flow from Sanaa to Aden and vice versa. This measure will aggregate the living conditions of all Yemenis,” he said.

The Houthis have defended their ban as a way of defending the value of the currency.

“The Sanaa central bank had to take measures to stem the dangerous practices the Aden central bank was carrying out through their monetary policy,” said Sami Al-Siyaghi, in charge of foreign banking operations at the Sanaa central bank.

“The imposition of [Aden’s] monetary stance on us led to the collapse of the national currency against foreign currency ... With each new issuance you notice a commensurate collapse in the riyal against foreign currency,” Siyashi told Reuters. 


‘Social explosion’ in Lebanese camps imminent, warn officials

Updated 21 February 2020

‘Social explosion’ in Lebanese camps imminent, warn officials

  • Situation volatile as Palestinian refugees face economic crisis after US peace plan

BEIRUT: Authorities are battling to prevent “a social explosion” among Palestinian refugees crammed into camps in Lebanon, a top official has revealed.

Fathi Abu Al-Ardat, secretary of Palestine Liberation Organization (PLO) factions in Lebanon, told Arab News that urgent measures were being put in place to try and stop the “crisis” situation getting out of control.

“Conditions in Palestinian refugee camps in Lebanon are very difficult due to the economic crisis facing the country, and we are trying to delay a social explosion in the camps and working on stopgap solutions,” he said.

And Dr. Hassan Mneimneh, the head of the Lebanese-Palestinian Dialogue Committee (LPDC), said: “More Palestinian refugees from the camps in Lebanon are immigrating. Embassies are receiving immigration requests, and Canada is inundated with a wave of immigration because its embassy has opened doors to applications.”

According to a population census conducted in 2017 by the Central Administration of Statistics in Lebanon, in coordination with the Palestinian Central Bureau of Statistics (PCBS), there are 174,422 Palestinian refugees in Lebanon spread across 12 camps and nearby compounds.

Mneimneh insisted the figure was accurate despite the UN Relief and Works Agency (UNRWA) estimating there to be 459,292 refugees in the country. He said: “The census we had conducted refers to the current reality in Lebanon.”

He added that he feared “increased pressure on European donor countries over UNRWA in the coming days after the unilateral implementation of the ‘Deal of the Century’ (the US peace plan for the Middle East) by Israel.

“Israel’s goal is to undermine UNRWA’s mission as a prelude to ending the Palestinian cause and, thus, preventing the return of Palestinians.”

Mneimneh held a meeting on Wednesday with two Lebanese and Palestinian action groups in Lebanon to discuss Palestinian asylum issues in light of the American peace plan. There were no representatives of Hezbollah or Hamas present at the talks.

He said: “This deal kick-starts an unusual stage that carries the most serious risks not only to the Palestinian people and cause, but also to the other countries and entities in the Arab region.

“The first of these is Lebanon, which senses the danger of this announcement in view of the clauses it contains to eliminate the Palestinian cause, including the refugee issue and the possibility of their settlement in the host countries.”

Al-Ardat said: “Palestinian refugees have no choice but to withstand the pressures on them to implement the so-called ‘Deal of the Century.’ What is proposed is that we sell our country for promises, delusions, and $50 billion distributed to three countries. Palestine is not for sale.”

He pointed out that “the camps in Lebanon resorted to family solidarity in coordination with the shops in the camps. Whoever does not have money can go to the shop after two (2 p.m.) in the afternoon and get vegetables for free.

“We have been securing 7,000 packs of bread to distribute in the camps and buying the same amount to sell the pack at 500 liras. But this does not solve the problem.”

He added: “The PLO leadership continues to perform its duty toward the refugees and, until now, we have not been affected by the restrictions imposed by banks in Lebanon, and refugees are still receiving medical treatment.

“However, our concern now is that Palestinian refugees do not starve, taking into account all the indications that the situation in Lebanon will not improve soon.

“Twenty percent of the Palestinians in Lebanon receive wages either from UNRWA — as they work there — or from the PLO because they are affiliated with the factions, but 80 percent are unemployed and have no income.”

The meeting hosted by Mneimneh agreed “the categorical rejection of the ‘Deal of the Century’ because it means further erasing the identity existence of the Palestinian people as well as their national rights, especially their right to return and establish their independent state.

“It also means assassinating the Palestinian peoples’ legitimate rights and supporting Israel’s usurpation of international justice and 72 years of Arab struggle.

“The deal includes ambiguous, illegal and immoral approaches that contradict all relevant UN and Security Council resolutions, especially with regard to the establishment of the Palestinian state on the Palestinian territories occupied in 1967 and the inalienable right of Palestinian refugees to return to their homeland and establish their state with Jerusalem as its capital,” a statement on the meeting added.

“UNRWA must remain the living international witness to the ongoing suffering and tragedy of the Palestinian people, and UNRWA must continue to receive support.”

Attendees at the talks also recommended “improving the conditions of the Palestinian refugees in Lebanon to strengthen the elements of their steadfastness until they return.” This was “based on the Unified Lebanese Vision for the Palestinian Refugees Affairs in Lebanon document, which includes the right to work.”