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Yemenis fear cuts to imports, remittances after U.S. blacklists Houthis

Storyline:National News, World

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SANAA/DUBAI (Reuters): Yemenis fear a U.S. decision to blacklist the Houthi movement could further isolate them from the global financial system, depriving the war-battered country of vital remittances and hampering the flow of imports.

Yemen’s war and the ensuing economic collapse has left 80% of the population reliant on aid. On Thursday, the United Nations’ aid chief warned that U.S. sanctions would push the country into a famine on a scale not seen for nearly 40 years.

The World Bank estimates one in 10 Yemenis rely on remittances, already down sharply due to the coronavirus pandemic. Severe inflation has put many basic goods out of reach, foreign reserves have dwindled and a divided central bank has struggled to pay public-sector salaries.

“I live in a state of fear. I heard if the American decision is implemented, my brother won’t be able to send money. I will lose my family’s only source of food,” said government employee Ahmed Hassan, 43, who has not received wages for four years.

Yosra Abdullah’s family, who also live in Houthi-controlled northern Yemen, rely on relatives living in Saudi Arabia and the United States to survive.

“If the decision is enacted, it will hit remittances, the family situation will deteriorate,” she told Reuters while shopping at a supermarket in the capital Sanaa.

There was no sign of people rushing to stock up on goods at markets and shops in Sanaa visited by Reuters on Thursday ahead of the designation of the Iran-aligned Houthi group as a foreign terrorist organisation going into effect on Jan. 19.

But many fear trade and commercial operations will be paralysed in a country that imports 90% of its food.

Foreign banks were wary of dealing with Yemen before this designation, which will penalise institutions with links to the United States should they deal with Houthi entities.

“The biggest problem since the conflict began is money transfers into Yemen … We try to get it from some Arab countries, but from Europe it is largely banned,” said Adnan Shiban, who runs a charity kitchen supported by foreign donations. “It will get worse.”

Washington sees the Houthis, who ousted the internationally recognised government from power in Sana in late 2014 and now hold Yemen’s most populated areas, as an extension of Iranian influence in the region. The Houthis deny being puppets of Tehran and say they are fighting a corrupt system.

“IN THE DARK”

The U.N. and NGOs are lobbying Washington to reverse the designation. Neither aid groups nor importers have been informed officially about details of the sanctions or planned measures to ensure essential imports and aid flows.

The flow of imports is already painfully slow: once funds and ships are secured, vessels entering Houthi-run Hodeidah port must be cleared by a Djibouti-based U.N. inspection mechanism, and then by the Saudi Arabia-led military coalition that has been battling the Houthis since 2015.

Yemen’s humanitarian response plan for 2020 received half of the $3.38 billion needed and aid agencies fear the designation may further discourage donors.

The head of the World Food Programme warned on Thursday that the Houthi designation “is going to be a death sentence to hundreds of thousands, if not millions of innocent people in Yemen”.