Shibhaljazeera Net | Economy | Yemen
A report from the UN Security Council’s Expert Panel on Yemen accused the Sana’a government of generating approximately $180 million monthly in levies from shipping agencies in exchange for not intercepting their commercial vessels in the Red Sea, supporting military activities through illegal generation of significant resources, and attempting to print currency abroad.
During the Red Sea Crisis
In the annual report, reviewed by “Boqash” and submitted to the UN Security Council on October 11, 2024, the panel, consisting of five members, discussed the coordination between shipping agencies and a company linked to a senior official of the Sana’a government. It also revealed the depositing of fees into various accounts through banking operations and settlements involving trade-based money laundering.
The report estimated that the Sana’a government earns around $180 million monthly from the illegal tolls for secure passage of vessels.
The report also stated that the Sana’a government relies on illegal means to generate financial resources for its military activities, including exploiting the telecommunications sector and oil smuggling. Networks operating in multiple jurisdictions, such as shell companies and money exchange firms, are used to fund these activities, particularly in the oil and liquefied gas sectors.
The panel further accused the Sana’a government of using armed elements extensively and illegally to freeze or seize the assets of individuals and entities, take over company management, and engage in smuggling of arms, drugs, dual-use communications equipment, pesticides, medicines, and Yemeni cultural properties.
According to the experts, military attacks in the Red Sea targeting ships linked to Israel have had a compounded effect, with Yemen being the most affected. These attacks resulted in significant increases in shipping costs, insurance, and consequently, higher global prices for basic commodities.
The report also cited experts who said that the Sana’a government relies on foreign support for developing and producing complex weapon systems, including short- and medium-range missiles, ground attack guided missiles, anti-ship guided missiles, surface-to-air missiles, unmanned aerial reconnaissance vehicles, and one-way attack drones. These systems are supported by training and technical assistance provided by Iran’s Quds Force, Hezbollah, and Iraqi groups.
The report noted that a roadmap agreement could only be signed when the regional situation becomes favorable and when the Sana’a government stops attacking ships in the Red Sea. It emphasized the need to address long-standing economic challenges threatening peace, security, and stability in Yemen before they lead to a full-scale war.
Economic Escalation Effects
The report stated that the Sana’a government carried out actions aimed at undermining the economy in areas under the Aden government’s control. These included imposing restrictions on local trade, intervening in banking and financial institutions, and issuing controversial coins (such as the 100-riyal coin in March 2024 to replace damaged paper currency). It also included seizing Yemeni Airlines planes and freezing their assets, as well as threatening to return to war due to the decision to revoke the licenses of six major banks in Sana’a and prevent them from using the US SWIFT payment system.
The report indicated that political and military actions directly affect the economy, exacerbating the instability spiral in Yemen. The Red Sea threats from the Sana’a government since mid-November 2023 have disrupted international trade and Yemen’s economy, increasing shipping and insurance costs and delaying the arrival of goods to Yemen, which translated into rising prices, especially for basic goods.
The halt in oil exports since October 2022 caused a 43% revenue loss for the Aden government, leading to a decline in the value of the Yemeni rial and a sharp rise in inflation rates.
In July 2024, the exchange rate in Aden areas reached a historic level of 1900 rials per dollar, compared to 1452 rials in September 2023. These factors led to the Aden government’s inability to provide essential services such as paying salaries, providing electricity and water, and education, often triggering public unrest and conflict.
The report also stated that political parties exploited these dire economic conditions, resulting in political confrontations within the Presidential Leadership Council in Aden, while the Aden government’s structure remained fragmented, thus threatening Yemen’s political stability. The lack of economic opportunities continues to drive individuals to engage in illegal activities, including joining armed groups or organized criminal networks.
Minting Coins and Printing Currency
“Regardless of their strong message regarding their sovereign right to issue their own currency, they adopted this measure to generate money without relying on external sources, allowing them to use these funds easily for military purposes without fear of exposure,” the report states.
It noted that the UN team observed three attempts by the Sana’a government to illegally bring printed banknotes and passports from abroad. Previously, the team had reported the seizure of forged promissory notes worth 35 billion Yemeni rials and counterfeit passports printed illegally abroad and smuggled into Yemen.
In August 2023, the Sana’a government attempted to print banknotes using a printing press in China, and contacted a company in Indonesia to supply security paper, ink, and printing supplies for banknotes, promissory notes, financial stamps, and passports.
The team contacted Indonesia and the relevant company for information, but received no response. It noted that the Aden central bank or the Aden government had never made such a request to this company.
In late March 2024, the Sana’a central bank announced the issuance of a 100-riyal coin to replace damaged paper currency. The team mentioned that old 100-riyal banknotes, amounting to 12 billion rials, are still in circulation.
The Sana’a government minted coins locally due to its inability to print paper currency in Yemen, which requires special security paper, threads, and ink that are difficult to obtain abroad. According to the team’s sources, the Sana’a government is expected to issue more of these coins or paper currency to fund war activities and establish its position as a center of power for an independent economy.
The report also mentioned that the Sana’a government is using social media platforms, which it considered a violation of the sanctions regime under resolution 2140. These platforms are used for selling weapons, soliciting financial support, and inciting violence.
Recommendations: Ban Social Media Platforms and Add Maritime Expert to the Team
In its first recommendation, the panel suggested that the Security Council condemn the Sana’a government’s use of social media platforms for violations and urge the relevant social media entities to take immediate measures to ensure that platforms are not used by any individual or entity violating the sanctions regime.
It also recommended that the Sana’a government refrain from arbitrarily freezing or seizing properties of individuals and entities using force, and that seized or frozen properties be immediately returned, with compensation provided to the rightful owners for any losses.
According to Boqash’s sources, the recommendations also called for regional armed groups to refrain from providing military and financial aid to the Sana’a government.
In light of the Red Sea crisis and its repercussions, the UN experts on Yemen requested that their team be expanded by adding an expert to monitor maritime activities, including smuggling, and to provide sufficient resources to strengthen the UN Verification and Inspection Mechanism to facilitate the clearing of commercial shipments and monitor possible violations of the arms embargo.
The panel also requested that Security Council members provide sufficient resources to enhance the Aden government’s ability to prevent and respond to potential oil spills in the Red Sea, as well as provide sustained international financial support to NGOs working on mine clearance.
Source: Boqash – Ahmed Al-Hamadi