Yemen's financial war worsen the humanitarian situation

While Houthi naval attacks have stalled Yemen’s peace process, a new UN agreement between the government and the Houthi militias on banking and aviation issues has sparked hope among many Yemenis.

UN envoy Hans Grundberg announced earlier this week the agreement, which aims to de-escalate tensions and address issues with commercial banks and Yemenia Airways.

However, he did not provide details on when or where these talks would take place, only stating that both sides agreed to begin discussions on economic and humanitarian issues based on a new roadmap.

Yemenis have shown mixed reactions to the new de-escalation agreement, but many are hopeful it will address key economic issues, such as the financial divide and unpaid salaries in Houthi-controlled areas, problems that have persisted for eight years.

A report from the Sanaa Center for Strategic Studies, written by Nade Wali, presented conflicting views.

It suggested the agreement resulted from coalition pressures on the government to favor the Houthis, but also cited Grundberg, who warned that Yemen’s economic split could lead to severe consequences.

Grundberg noted that isolating banks and exchange companies from the global financial system could harm businesses and remittances.

The report highlighted Yemen’s economic paralysis due to a decade of conflict, with the use of two currencies and varying exchange rates complicating matters. It warned that any further pressures could worsen the humanitarian situation and disrupt aid.