- Since the very first day of the war coalition countries declaration to launch military operations on Yemen in March 2015, the economic sector is in the top goals targeted maliciously by their warplanes whose raids destroyed dozens of food and consumer factories, dozens of companies, factories, enterprises, economic investments and public and private service centers in the country. In addition, they imposed a land, sea and air blockade, thoughtlessly printed a currency without an economic cover and relocated the Central Bank’s administration in flagrant violation of international humanitarian and human rights laws.
- The destruction of the industrial sector in Yemen was one of the achieved goals of the war coalition countries against Yemen. They intended to cause extensive damage to Yemen’s productive capabilities, despite the calls of human rights organizations that have urged the UN to neutralize the economy in Yemen, and that the war coalition countries should not use it as an instrument of warfare as this would affect millions of civilians. In fact, targeting the economy as a means of warfare is a war crime according to the rules and provisions of international humanitarian law.
- Production in all sectors and economic activities has deteriorated, resulting in negative growth rates during the last five years from March 2015 to March 2020. The national economy has also suffered great losses due to the war on Yemen. Besides, the indicators of economic growth dropped to its lowest level, due to certain actions taken by the countries of war coalition against Yemen including the following:
- Targeting industrial and production facilities.
- Imposing a land, sea and air blockade on economic activities.
- Transferring the Central Bank’s administration, freezing currency movements, and stopping salaries payment.
- Seizing and depleting financial resources.
- Printing new banknotes outside banking and economic policies.
FIRST: Targeting Industrial and Production Facilities
- The economic and production facilities suffered great losses during the last five years of the war coalition countries against Yemen, which led to a significant decline in those facilities’ productivity. That is clear from the macro and sectorial economic indicators that showed a significant decline during the period from March 2015 to March 2020. This is mainly due to:
- More than 355 factories were destroyed and damaged as they were targeted by air strikes. Consequently, the victims of the bombing of factories and construction sites topped 878 martyrs and wounded.
- More than 10,910 establishments and business facilities were destroyed and damaged as they were targeted by air strikes. Consequently, victims of the bombing of commercial facilities topped 1,361 martyrs and wounded.
- The destruction and damage of more than 149 investment and commercial companies, which were targeted by the air strikes of the Saudi-led war coalition. In addition, the activities of hundreds of commercial companies were suspended due to the siege and war; and victims of the bombing of commercial companies topped 129 martyrs and wounded.
- The air strikes of the war coalition against Yemen targeted 668 commercial markets, which were destroyed and damaged, and 3440 people were killed and wounded therein.
- The air strikes of the Saudi-led war coalition targeted 736 food trucks, burning them down and damaging the food inside them. The war coalition intentionally targeted 774 food stores, 15 grain silos, 387 petrol stations, 6,404 transportation vehicles and 286 fuel tankers. The Saudi-led war coalition forces against Yemen, and through their mercenaries, continue their military land, sea and air operations since 26 March 2015 until this moment, leaving thousands of civilian victims and massive destruction in the economic and infrastructure, in addition to the siege and starvation, which have constituted a humanitarian catastrophe.
SECOND: Imposing a Land, Sea and Air Blockade on Economic Activity
- The comprehensive land, sea, and air blockade and arbitrary restrictions imposed by the countries of the war coalition on Yemen under the pretext of implementing international resolution (2216) created great difficulties, obstacles, problems and losses for international shipping companies upon entering the Yemeni ports. They also expose shipping companies and importers to very large losses due to payment of waiting fines and failure to unload the cargo in Yemeni ports on the specified date. This led to the reluctance of international shipping companies to ship goods to Yemeni ports and contributed to the high costs of imported food and medicine shipments. It has also created stifling fuel crises, tightening the screws on citizens and increasing their suffering, as well as creating a severe crisis in the operation of hospitals, factories and means of transportation.
- This has made merchants to ship goods first to the ports of neighboring countries, especially Dubai, and then ship them from Dubai by land to Yemen, taking them through Yemeni land ports, especially Wadia land port. From there, they are transported via land transport lines that witness violent combat confrontations and in such a way that makes them vulnerable to great risks. In fact, some of these shipments were targeted by the coalition countries’ air strikes, while others were subjected to interruptions and extortion, and the payment of additional funds in order to allow their entry from the port of Wadia, then via Mareb to the Capital Secretariat and other governorates. In addition, the significant increase in transportation costs, which have been doubled, has led to a very high increase in the price of these commodities in local markets. This, in turn, increases the suffering of citizens and exhausts all of their savings that they collected during the past years.
THIRD: Transferring the Central Bank’s administration, freezing currency movements, and stopping salaries payment
- In September 2016, the decision to disrupt the Central Bank’s functions in the Capital, Sana’a, by transferring its administration to Aden Province, which was occupied by Saudi Arabia and the UAE, merely complemented a series of economic crimes against the national economy as well as monetary and livelihood stability. In fact, it was meant to tighten the siege on Yemeni citizens and narrow their options for decent living.
- During the ruling period of the Supreme Revolutionary Committee, the Central Bank in Sana’a used to pay the salaries (for all State employees in the civilian and military sectors in all governorates of the Republic) in addition to providing other necessary needs. However, after the relocation of the Central Bank administration in September 2016 to Aden Governorate, the National Salvation Government was unable to disburse the salaries due to the lack of local revenues, which could cover only 8.5% of salaries, according to the 2014 budget.
The economic impacts of the decision to transfer the administration of CBY operations from the Yemeni Capital, Sana’a, to Aden Governorate in September 2016:
- Salary disbursement has been suspended for approximately one million and two hundred thousand public servants.
- Conflict in, not only the Yemeni but also the international, community confidence regarding the consequences of the decision and its social harms, especially as Hadi and Riyadh government have failed to create stability in Aden.
- It has directly and negatively affected companies, enterprises, merchants and businessmen, as most of the owners of enterprises and companies have lost confidence in the process of importing goods across the governorate of Aden.
- It has affected the production process in the Capital, Sana’a, and the neighboring governorates.
- The disappearance of liquidity, in great proportion, has greatly affected the banking system in many governorates.
- There is a low purchasing power against other currencies.
- The prices of all commodities have increased so dramatically that most members of the society are incapable to provide the necessary needs and supplies. Consequently, the poverty rates have increased, many commodities have disappeared and the prices of other commodities have increased significantly.
- Unemployment rates rose due to the lockdown of many companies, enterprises and factories.
- The Central Bank in Aden deliberately stopped periodic allocations to the other banks in Sana’a and other governorates controlled by the Supreme Political Council, in which 85% of the Yemeni banking sector operates as it is a consumer and commercial market for most financial transactions and domestic and foreign money transfers from cash liquidity that was given to banks to meet administrative expenses and depositors’ cash benefits. This has put the Yemeni banks in a crisis, as they could not pay the depositors’ interest.
- The Central Bank of Aden imposed restrictions on domestic and foreign remittance networks in order to control them, including Western Union, MoneyGram, Shift and other networks, because they do not have work permits from it. These networks benefit 27% of the population who receive remittances from expatriates.
- In this regard, the National Salvation Government has continued to implement the Swedish Agreement, despite the intransigence of the coalition and Hadi government in Riyadh. Based on Stockholm understandings of the economic aspect, the Council of Ministers in Sana’a issued a resolution to implement the economic initiative of the Supreme Political Council regarding opening a special account in Hodeidah CBY branch. The revenues of the ports of Hodeidah, Al-Salif and Ras Issa are to be deposited to this account and used for the payment of all the public sector employees’ salaries.
- The Yemeni government in Sana’a called the United Nations to take its responsibilities seriously and compel the other party to implement and fulfill its obligations by supplying the deficit amount between the total costs of salaries and the balance accumulated in the Salary Account. Again, the revenues of Crude Oil for the month of November collected from the governorates of Hadramout, Mareb and Shabwa, occupied by the war coalition led by Saudi Arabia and the UAE, amounted to 86 billion riyals, where more than 2,523,648 barrels of oil were produced with a total value of 156,466,176 dollars, based on the average price of Brent Crude for November.
FOURTH: Seizing and Depleting Financial Resources
- Since the beginning of war on Yemen, the Saudi-led war coalition countries have worked to stop oil and gas exports, interrupt the country’s revenues from foreign currencies and decrease foreign currencies transfers to Yemen from abroad. They also worked to stop the World Bank operations in Yemen, which are estimated to be almost one billion dollars annually, and to exhaust cash reserves at the Central Bank of Yemen. Moreover, the offices of foreign organizations, embassies, missions, consulates and international commercial attaches in Yemen have been closed and Arab and foreign development projects have been suspended.
- In addition, the value of the local currency deteriorated against foreign currencies, especially the dollar, which amounted to 740 riyals per dollar. The great decrease in maritime traffic has also paralyzed the movement of foreign trade. Finally, the Central Bank of Yemen was transferred to Aden, resulting in a near-total interruption in the country’s revenues in foreign currencies and most of the revenues in local currencies. In addition, Yemen losses in revenues from customs duties and taxes were estimated at (583) million dollars, and losses in State resources from oil exports were estimated at (7000) million dollars. In short, Yemen’s losses in the State’s financial resources reached 7,583 million dollars for the year 2015 only. Again, the losses of the private sector in non-oil exports and re-exports of foreign commodities were estimated at 612 million dollars, while losses in service exports were 962 million dollars for the year 2015. By this, the losses in exports, customs and tax duties reached 9,157 million dollars for the year 2015. These losses increased to 9,272 million dollars in the year 2016, and then decreased to 7,746.4 million dollars in the year 2017 and to 7,701.9 million dollars in the year 2018, bringing the total losses for the past four years of the aggression to an amount of 33,877 million dollars. By adding profits losses, it amounted to 36,285.5 million dollars.
- Food imports and oil derivatives constitute about 60% of the total value of Yemeni merchandise imports from abroad annually. The remaining 40% is used in importing goods and other products with a total value of (5,980) million dollars. In addition to the costs of the food and oil derivatives bill, the annual Yemeni merchandise import bill amounts to 14.697 billion dollars annually. Hence, Yemen will not be able to meet them fully in normal circumstances due to the interruption of oil and gas exports and the significant drop in non-oil exports.
- On the other hand, the countries of war coalition against Yemen diverted all commercial imports from Hodeidah to the port of Aden. In addition to a two-billion-dollar deposit, any grants, loans, and revenues for Aden or Mareb branches are delivered at the Central Bank branch in Aden.
- During the past years of war on Yemen, all oil and gas resources were under the control of Saudi Arabia, the UAE and their mercenaries, where revenues loss due to the war on Yemen amounted to approximately (12 trillion riyals). This amount would have been sufficient to pay the salaries of public sector employees throughout the Republic for 12 years.
- The Yemeni government in Sana’a also showed that customs and tax revenues for oil derivatives vessels amounted to (6,212,231,986 YR) during the month of November 2019. It has been deposited into the Salary Initiative account. The total revenues delivered to the Salary Account at the Central Bank of Yemen in Hodeidah Governorate, as of November 30, 2019, have become (11,863,474,243 YR).
FIFTH: Printing Banknotes outside Banking and Economic Policies
- One of the reasons for increasing the internal and external debt is that the Central Bank in Aden printed banknotes of various groups for more than one trillion and seven hundred billion Yemeni riyals without cash cover. This caused an increase in the money supply and created inflation that was reflected in the high levels of poverty and the deterioration of the standard of living. This indicates that such measures taken by the Central Bank in Aden reflect a state of confusion and failure in managing the financial and monetary policy rather than a step to avoid an acute liquidity crisis as seen by the bank. Besides, the decision of printing new banknotes does not have any regard to the generally accepted considerations.
- The deterioration in the national currency value is due to the misguided banking policies pursued by the Central Bank in Aden since the bank’s administration was transferred from Sana’a and also printing new banknotes with a total amount that reached to one trillion and 700 billion riyals within three years. This is actually more than twice what the Central Bank in Sana’a has printed since its founding 40 years ago, as the money supply in 2015 did not exceed 850 billion riyals.