Studies Center: Houthi attacks on ports have reduced government revenues

English - Thursday 17 November 2022 الساعة 05:06 pm
Aden, NewsYemen:

The Sana'a Center for Strategic Studies said that the attacks of the Houthi militia - the Iranian arm in Yemen - on oil facilities in the governorates of Hadramout and Shabwa led to the temporary suspension of oil exports, which reduced the revenues of the Yemeni government.

The center stressed that targeting the oil and gas sectors by the Houthi militia may amount to a war on Yemeni citizens, as it will only bring more pain and suffering to the population in all regions of Yemen.  The situation will become critical if the failure to reach an agreement on the resumption of oil exports during the next two months.

And he warned in a recent report that if the attacks achieve the goal of preventing oil sales, the internationally recognized government may find itself unable to meet its urgent financial obligations.  Including the payment of salaries that support the population to cope with difficult living conditions and the financing of food imports flowing to areas under its control and areas under the control of the Houthis alike.

He said, "The recent Houthi attacks by drones did not cause damage, but led to the temporary suspension of oil exports, which reduced the revenues of the government, which is already suffering from financial hardship."

He pointed out that the timing of the attack came at a difficult stage the country is going through.  In light of the worsening economic deterioration due to the repercussions of the ongoing war in Ukraine and its impact on global food supply chains and the provision of public services.

He explained that the rise in oil prices in the global market was promising a way out for the government from its economic problems, as oil and gas revenues are used primarily to pay the salaries of public sector employees in areas under its control, although part of the salary payments are distributed to civil servants in areas controlled by the Houthis or  Goes to support family members of government employees residing in the North.

He stated that the salaries of employees working in the energy sector may be affected: the two state oil companies - Safer and Petro Masila - manage the most important production fields in Hadramout, Shabwa and Marib, and have continued to pay salaries regularly to thousands of employees and their dependents in Houthi-controlled areas.

The report said that the Houthis have reason to worry about the final consequences of these arrangements: They rule over a distressed population and have shown a growing willingness to criticize them publicly in light of the deteriorating economic conditions, which is mainly what prompted the group's leader, Abdul-Malik al-Houthi, to warn against organizing protests and disobedience.

He added that if the government is unable to bear the costs of organizing more auctions for the sale of foreign currency, the indirect repercussions will extend throughout the country.  Because allotment-funded essential imports are sold at nationwide auctions.

He stressed that there are no allocations to finance imports.  Food prices will rise, especially in areas under government control, which will be affected more deeply by the depreciation of new banknotes again.

The gradual recovery in oil and gas exports - during the period of the conflict - provided an opportunity for the government to resume paying part of the outstanding external debt and begin to restore the confidence of external creditors, according to the report.

The report warned that the loss of revenues from exports of natural resources may lead to undermining the progress achieved so far and increase the country's vulnerability to external crises and capital flows outside the country.