Ineptitude, corruption render Yemenis’ lives even more dire

For years, more than a million government employees have been living in Houthi-controlled areas without salaries, despite the group’s ability to pay them, which has led to an increase in extreme poverty and deterioration in living conditions.
Wednesday 03/02/2021
Yemenis wait in line to receive a free medical exam in front of a school temporarily used as a clinic to help needy people, in the Yemeni capital Sana’a. (AFP)
Yemenis wait in line to receive a free medical exam in front of a school temporarily used as a clinic to help needy people, in the Yemeni capital Sana’a. (AFP)

ADEN – Booming corruption amid ongoing conflict in Yemen is complicating international efforts to alleviate the acute humanitarian crisis.

Despite the support of donors who have invested billions to help Yemenis cope with their difficult situation, the conditions in the country are deteriorating and the whole aid process is almost at a standstill.

At a time when Yemen is enduring a tragic humanitarian crisis, the persistence of war economy and the accumulation of illicit wealth have become entrenched in the poorest Arab country, leading to the loss of billions of dollars that could have been sufficient to alleviate the country’s worsening humanitarian situation.

The war, which has lasted for more than six years, has claimed the lives of at least 233,000 people. About 80% of Yemen’s population has become dependent on aid to survive while facing the worst humanitarian crisis in the world, according to the United Nations.

Corruption and the squandering of aid funds are not blamed on one side of the conflict. The Iran-aligned Houthi militias and the “legitimate” government of President Abd Rabbo Mansour Hadi are both accused of money laundering and diverting funds, according to UN experts who released a report last week.

“The government of Yemen is, in some cases, engaging in money laundering and corruption practices that adversely affect access to adequate food supplies for Yemenis, in violation of the right to food,” said the report submitted to the Security Council.

UN experts said Saudi Arabia deposited $2 billion with the Central Bank of Yemen in January 2018 under a development and reconstruction programme. The money was intended to fund credit to buy commodities – such as rice, sugar, milk and flour – to strengthen food security and stabilise domestic prices.

The UN investigation found that Yemen’s Central Bank broke its foreign exchange rules, manipulated the foreign exchange market and “laundered a substantial part of the Saudi deposit in a sophisticated money-laundering scheme” that saw traders receive a $423 million windfall.

“The $423 million is public money, which has been illegally transferred to private corporations. Documents provided by the Central Bank of Yemen fail to explain why they adopted such a destructive strategy,” according to the UN report.

The Yemeni riyal suffered from a sharp decline until the value of one US dollar reached the equivalent of more than 850 riyals, after it was equal to 215 riyals before the war.

The decline in the value of the Yemeni currency has produced a sharp rise in the prices of basic commodities, leading to rising anger in some areas under the control of the internationally recognised government. This has eventually triggered small protests in some cities.

The Yemeni government places the confrontation of the Houthi militias at the forefront of its stated goals, pushing ahead with efforts to liberate areas that fell under the group’s control.

However, the government is not making significant progress towards this goal. In recent years, some Yemeni politicians and opinion leaders have warned that the government’s ‘legitimate goal’ should not become an excuse for overlooking crucial duties and tasks.

The government critics also argue that authorities should address the causes that led to the decline of the local currency and deal with the severe decline in the quality of public services. They warn public services have reached the point of complete collapse in some areas. The government, according to these critics, should also work to improve security and achieve stability, which is an essential task to achieve other objectives.

For them, the decline in the value of the Yemeni riyal did not only happen due to the war conditions, but also due to the government’s political failure and mismanagement of financial and economic affairs.

The recent UN report said that in areas controlled by the Houthis, the group was collecting taxes and other state revenue needed to pay government salaries and provide basic services to citizens. It estimated the Houthis diverted at least $1.8 billion in 2019, “a large portion” of which was used to fund their war effort.

For years, more than a million government employees have been living in Houthi-controlled areas without salaries, despite the group’s ability to pay them, which has led to an increase in extreme poverty and deteriorating living conditions.

The UN report was objected to by the Yemeni government and met with astonishment by the Houthis, with the government’s central bank management describing the UN team’s conclusions as misleading allegations.

The Houthis largely ignored the report, with the exception of Muhammad Ali Al-Houthi, a member of the Supreme Political Council, who wrote on Twitter: “The experts’ report is very strange.”

The Houthis did not respond to a request for comment on the accusations in the UN report and the Yemeni government rejected the accusations, with the Central Bank saying the operations it carried out were transparent and compliant with international banking and trade requirements.

Yemeni economic researcher Abdul Wahid al-Aubali said that “the revenues received by the Houthis annually amount to more than $1.8 billion.” He told the Anadolu news agency that the Houthis are practically taking over these revenues from taxes, customs and fees, which constituted about 30% of the Yemeni government budget, according to 2014 figures.

Aubali noted that “the Houthis receive more money than the UN report mentioned, but the lack of transparency and terrorism practiced by the militias against journalists have hindered the monitoring and documentation of their abuses.”

The researcher considers that “the UN report contains very dangerous information, and it will affect the Yemeni government’s ability to restore confidence in its financial institutions, because trust is an integral part of the capital of any bank.”

“The documentation of corruption within Yemen’s Central Bank by a UN body will make it difficult to restore confidence and will delay the cooperation of donors, particularly Saudi Arabia, possibly leading to a delay in response to government’s requests for support with new deposits,” Aubali added.

Afaf al-Abarra, a Yemeni journalist specialised in humanitarian affairs, says that the war economy has been entrenched in the country since the beginning of the conflict,allowing many figures affiliated with both the government and the Houthis to accumulate wealth.

Abara explained that “illicit wealth, financial corruption, widespread exploitation and trade in international aid are all factors that have led to the deterioration of Yemenis’ living conditions, with many being on the brink of starvation.”

She pointed out that “at a time when more than a million employees live without salaries, there is a great squandering of funds to finance the war.”She condemned authorities’ indifference to people’s suffering, noting that most employees are “now living in poverty.”

“It’s a tragedy,” she said.

Abara does not see a solution “to this tragedy created by war merchants except to end the conflict, and this will not happen as long as there are big war merchants who benefit from the continuation of the conflict because they make millions of dollars at the expense of the simple citizen who faces the worst humanitarian crisis in the world.”