The economic battle raged after the central bank that is controlled by the Saudi-aligned forces in Aden to Thursday stopped interactions with six big banks active in NSG-controled regions, and in a reciprocal measure, Sana’a stopped interactions with 12 banks active in PLC-controled regions.
In March, the central bank issued a two-month ultimatum to Yemeni banks that they should move their headquarters from Sana'a to Aden, and this deadline expired at the end of May.
Last week, central Bank governor Ahmad al-Mabaqi in a press conference talked about more strict measures against banks active in NSG-ruled regions.
It is worth mentioning that like political and military divisions, Yemen is also witnessing a division in the monetary and financial field in the north and south, and now there are two central banks in this country, one run by the PLC and the other by NSG.
The Aden-based central bank is recognized by international institutions, something granting it access to the global SWIFT system. It is also the only institution through which the local banks can finance imports and transfer foreign currency
On the opposite side, though the Sana'a-based central bank is not connected to the international financial network, the most powerful banks of Yemen operate in its area of coverage.
Since 2020, NSG-controled central bank banned use of banknotes issued by the rival central bank.
Taking place at a time the economic conditions are dire due to nearly a decade of Saudi-led Arab aggression and Western sanctions, these financial tensions only add to the suffering of the people. According to Mahmoud Naji, the head of Yemeni banks union, it is the people of Yemen that bear the brunt of this rift. After all, in a country that meets about 90 percent of its needs through imports, the financial fighting which raises the risk of bankruptcy of some big banks will leave its impacts in the form of market price hikes.
The moves by the Aden bank is also expected to complicate way of entry of remittances of the migrants which provide a lifeline for millions of Yemenis at home.
Last Thursday, the money transfer company MoneyGram informed Yemeni banks and its branches and agents that they need to obtain a no-objection certificate from the "Central Bank of Yemen" in Aden no later than June 4, 2024.
According to Naji, the banking sector is facing a more serious liquidity crisis than before. This government official warned about consequences of the irresponsible decisions of the officials of the the central bank to stop boasting about their ability to harm banks and depositors.
The worries about negative impacts of economic tensions on currency prices come as Aden central bank recently announced its eighth auction this year for foreign currencies. According Al-Arabiya Al-Jadeed report, in this auction in which the proposed price was 1,700 rials for a US dollar, each dollar was soled for 1,731.
According to experts, the currency auction system has already proven its ineffectiveness and this has only helped accelerate the fall of the Yemeni rial against foreign currencies. Rashid al-Hadad, an economist from Yemen, told Al-Araby Al-Jadeed that the monetary policies of the government and the central bank in Aden have had no tangible effect on ending the financial chaos and the fall in the national currency price.
Wahid al-Fawdaee, a banking expert, believes that the worrying monetary situation in Yemen invites for a fundamental revision of policies.
It should be noted that currently the US dollar is traded at 531 rials in the areas under the NSG control and 1,760 rials in the areas under the control of Aden government.
US and allies' financial pressures on Ansarullah
Though the Aden-based government seeks to justify its recent monetary decisions as independent and with purely financial nature, Ansarullah and a majority of the people of Yemen accuse the US and its agents of playing behind-the-scenes role to advance its new conspiracy.
In fact, it seems that the Aden-controled central bank under the auspices of the Americans is seeking to intensify the economic pressure on the government of Sana'a to cause difficulties to people and put strains on the banking system of the NSG.
After the Aden decision, Ansarullah leader Sayyed Abdel Malek al-Houthi in a television interview described the measures as "pouring oil on the flames."
"The pressure on the Yemeni banks is an American effort to support the Israeli enemy and a reaction to Yemen's attacks on their interests in the Red Sea," he added.
Since the Israeli invasion of Gaza in October 2023, Ansarullah, in support of the oppressed Palestinian people, closed the Bab-el-Mandeb Strait and the Red Sea on ships from and to the Israeli regime and repeatedly attacked Israeli and allied British and American ships.
Referring to the destructive impacts of decisions by the Aden-controled central bank on peace and triggering a civil war, al-Houthi said: "What drives some people to auction themselves and what they have to serve the Israeli enemy? Is there anyone who wants to lose everything; their security, their peace?"
These threats come as last year Aden support to foreign economic pressures on Sana'a triggered attacks of some oil export terminals in the southern provinces by NSG army. This punitive measure halted oil exports and caused deprivation of Aden of millions of dollars in oil revenues.
The emphasis on the role of the foreign hostile countries in the central bank's decisions was also made by Mohammad Ali al-Houthi, a member of Supreme Political Council of Yemen in Sana'a.
"We can give a painful and hard response to the Saudi and Emirati-affiliated decision of the central bank in Aden to stop interaction with 6 banks in Sana'a. Their decisions are a kind of adventure because the economy is of mutual benefit and whoever plays will regret it" he said.
According to unconfirmed reports, in recent months, the central bank has transferred huge amounts of foreign currency to the city of Jeddah in Saudi Arabia through the Aden International Airport.
This triggered a warning from al-Houthi to Saudi Arabia that such violation will be a service to Israeli enemy and will push Riyadh into big troubles.
He went on that pressures on the banks are in line with the pro-Israeli American actions. The US, he said, tries to involve Saudi Arabia into the pressures on Sana'a banks and this is an aggression and a dangerous game.
Also, Mohammad Abdel Salam, Sana'a's chief negotiator, warned Riyadh of involvement in the US war on the Yemeni banks.
Rashad al-Watiri, a Sana’a-based colonel, believes that
Aden's banking measure are part of a broader US-British campaign to
escalate on Ansarullah to press Sana'a to stop its sea operations
against the Israeli ships in the Red Sea.
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