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Yemen’s Bank Secrecy vs Transparency: A Recipe for Economic Disaster

Chaos in Yemen’s Banking System

SANAA, Yemen (AP) - Yemen’s long-standing conflict has taken a devastating turn as the country’s internationally recognized government and Houthi rebels engage in a bitter fight over control of its banks. This rivalry is threatening to further destroy an economy already crippled by war.

A Complex Web of Rival Central Banks

The situation has created a complex web of rival central banks, currency notes with different exchange rates, and financial systems that have left Yemenis struggling to access their money. The Houthi rebels, backed by Iran, control much of northern and central Yemen, while the internationally recognized government, supported by Saudi Arabia and the United Arab Emirates, governs the south and east.

Economic Woes Deepen

Yemen’s economy was already the poorest in the Arab world before the war began in 2015. The recent actions by both sides have further eroded the value of the Yemeni riyal, driving up prices for basic goods like food and clothing.

Desperate Situations in Houthi- Controlled Areas

In Houthi-controlled areas, people are unable to withdraw cash from their bank accounts due to a lack of liquidity. This has led to protests outside banks, with many desperate individuals demanding access to their savings.

Conflicting Currencies and Exchange Rates

The internationally recognized government has moved its central bank to Aden and issued new currency notes, while the Houthis have set up their own central bank in Sanaa and introduced new coins. The conflicting currencies have different exchange rates, with Houthi-controlled riyals valued at around 530 to the dollar compared to 1,800 to the dollar for government-issued notes.

Catastrophic Consequences

The dispute has escalated to the point where banks in Houthi-run areas are being banned from international financial transactions. This could have catastrophic consequences for Yemen’s economy, making it increasingly difficult for businesses to import essential goods and for individuals to access their savings.

Experts Warn of Economic Collapse

“The situation is very concerning, as it will likely deepen poverty, worsen food insecurity and malnutrition, and increase reliance on humanitarian assistance,” said Edem Wosornu, director of operations and advocacy for the UN’s Office for the Coordination of Humanitarian Affairs (OCHA).

Cash Crunch and Economic Challenges

The conflict has also led to a cash crunch, with both sides facing significant financial challenges. The Houthi government is struggling to access foreign currency due to international sanctions, while the internationally recognized government is grappling with a lack of revenue following attacks on oil ports.

Ordinary Yemenis Suffer

As the fight for control over Yemen’s banks continues, experts warn that the country’s economy is at risk of collapse. Um Ahmed, a 65-year-old woman who was among those protesting outside a bank in Sanaa, said she was trying to withdraw money to help her son buy a motor scooter for work but was refused. “I served this country as a teacher for 35 years and saved every penny and deposited my money at the bank, but they took it all,” she said. “This money belongs to my husband and me and our children.”

Conclusion

The situation in Yemen is dire, with ordinary citizens suffering the most. The lack of transparency and control over the country’s banking system is making it increasingly difficult for businesses to import essential goods and for individuals to access their savings. Experts warn that the country’s economy is at risk of collapse if not addressed.