Saudi Arabia announces $2 billion bailout for Yemen government following desperate calls for funding

Saudi Arabia announces $2 billion bailout for Yemen government following desperate calls for funding
Saudi Arabia announced on Wednesday it will transfer $2 billion to Yemen's central bank, following desperate calls for funding from the war-torn country's president and prime minister.
4 min read
17 January, 2018
The United Nations has listed Yemen as the world's number one humanitarian crisis [Getty]
Saudi Arabia announced a $2 billion bailout for Yemen’s government on Wednesday after earlier pleas to save the local currency from "complete collapse".

"To address the deteriorating economic situation faced by the Yemeni people as a result of the actions of the Iranian-backed Houthi militias, King Salman bin Abdulaziz has issued a directive to transfer a $2 billion deposit to the central bank of Yemen, in continuation of the kingdom's support of the Yemeni people," the interior ministry said.

Saudi Arabia is leading a military coalition battling the Houthi rebels in support of Yemen's beleaguered government. But the 2015 intervention has triggered widespread criticism from the international community.

More than 10,000 people, mainly civilians, have been killed and more than three-quarters of Yemenis are now in need of humanitarian aid, while some 8.4 million are at risk of famine. In addition to this, over 50,000 have been wounded and millions have been displaced from their homes. 

As it nears its fourth year, the government's authority is still largely confined to the south, with the rebels in control of the capital Sanaa and much of the north.

'Act now, not tomorrow'

In a post on Facebook on Tuesday, Yemen's Prime Minister Ahmed bin Dagher shared a letter urging the government's backers to transfer cash to the central bank to "save Yemenis from famine," urging them to "act now, not tomorrow." 

President Abedrabbo Mansour Hadi also reached out to Saudi Crown Prince Mohammed bin Salman over "the economic challenges Yemen faces" in a telephone call on Tuesday, government-run Saba news agency said. 

Since the Saudi-led coalition went to war against the Houthi rebels, the Yemeni rial has lost half its value and is now trading at 500 to the dollar.

Food and fuel prices have soared, pushing many to the brink of famine.

Protests have broken out across the country as economic woes overwhelm Yemen. On Tuesday, people demonstrated in the city of Taiz which has been split between the Houthis and pro-government forces for the past three years.

Hundreds of protesters on the government-held side set fire to pictures of Daghir and the central bank governor, chanting against the coalition.

Food: A weapon of war

Late last year, the Saudi-led campaign imposed a blockade on Yemeni ports and airports in response to a missile fired by the Houthis that was intercepted near Riyadh airport.

Despite easing up since, the situation remains dire.

"The continuing blockade of ports is limiting supplies of fuel, food and medicines; dramatically increasing the number of vulnerable people who need help," said Jamie McGoldrick, the UN humanitarian coordinator for Yemen.

"The lives of millions of people, including 8.4 million Yemenis who are a step away from famine, hinge on our ability to continue our operations and to provide health, safe water, food, shelter and nutrition support," he added.

The UN's World Food Programme has previously declared that food is being used as a weapon of war in Yemen.

"Yemen is on the brink of famine. Cholera is compounding a dramatic food crisis. Food is being used as a weapon of war," said Elisabeth Rasmussen, WFP assistant executive director. 

An investigation covered by The Guardian found that Saudi Arabia is targeting Yemen's food supplies. Coupled with the harsh restrictions imposed on the imports, the siege tactics have resulted in the collective punishment of the population, it said.

The report highlighted how the Saudi-led coalition has "declared war on fishermen" – a major lifeline for a country suffering the world’s worst humanitarian crisis – in trying to bomb the Houthis into submission.

The United Nations has listed Yemen as the world's number one humanitarian crisis. A total of 22.2 million people, or 76 percent of Yemen's population of 29 million, are dependent on some form of assistance, an increase of 1.5 million people over the past six months.

As Yemen's health care system has been brought to the brink of collapse, more than one million people have been infected with cholera, of whom more than 2,000 died, according to the International Committee of the Red Cross.