The 40th session of the United Nations Human Rights Council (UNHRC) AT THE PALAIS DES NATIONS, IN GENEVA, SWITZERLAND TUESDAY, MARCH 19TH, 2019 BY BUSHRA NASR KRETSCHMER Transcript of the speech
The Houthis are waging a fierce economic war that is deepening the humanitarian crisis and famine in Yemen. Following an investigation of four banks and three telecommunication companies in Yemen by the author and a local organization, we have found that since the war erupted, Houthis have imposed prejudiced policies against the financial and private sector.
The Houthis manage to gain revenues to sustain their war by taking excessive taxes from the telecommunications sector, a one billion YR sector, by imposing double and triple customs on all goods coming from the southern ports, and a monopoly on oil derivatives in its areas of control, which mainly originate from Iran. Additionally, they have caused speculation on the prices of currencies, and speculation on the UN Humanitarian Assistance Bank transfers, which are not transferred through the Central Bank and go to the banks directly without being subject to supervision and central control. Even aid is not spared from their thefts, as they confiscate 60% of the aid, according to a spokesperson for the World Food Programme (WFP). The details of the piracy and looting of relief aid alone reveal the ugliest aspect of the Houthi militias' coup and ideology.
Houthis have imposed prejudiced policies against the Financial and Private Sector. All these practices in Sana’a stimulate the war, creating black and parallel markets.
Nevertheless, they enforce excessive taxes up to 30% above the state’s income tax, for war efforts and/or Aal Albayt Zakah, which is part of their supremacy ideology, which states that a superior Hashmi group should receive 20% of the people’s income as per their own interpretation of the religion.
The Houthis formed an economic committee that traces and investigates those who fail to make payments, sometimes involving kidnapping and this committee reports directly to the head of the Houthis. Their actions have varied from looting, blackmailing, closing businesses and kidnapping business owners outside the juridical and state system. This is evidenced by the new wealth distribution of the people in the north, the flourishing real estate market and the supply of food to the Houthi fighters on the war frontlines.
The Houthis created a business environment that repelled the financial and private sector, forcing companies to move to Aden or leave the country. But some are still in Sana’a resisting and trying to cope with this economy of war that the country has found itself in.
Since the assignment of the new prime minister Dr. Maeen Abdul Malik, some improvement has been seen in the economy, especially after signing the agreement of the $2 billion deposit from Saudi Arabia. This helped the financial and economic situation of Yemen, especially the Yemeni riyal exchange rate, which reflected positively in the economy and the living conditions of citizens. The government paid salaries to retired people, to Houdidah, the health sector and aim to cover all sectors.
Meanwhile, the $2 billion deposit supported the Central Bank in providing the main food importers with the foreign currency they need and facilitate the purchase of the dollar at a lower rate than the market price. Seventy percent of businessmen are based in Sana’a and the Houthis are conducting a fierce war against the commercial banks. They are preventing commercial banks from issuing letters of credit to traders to import foods via the Central Bank of Aden, which would allow them to benefit from the lower currency exchange rate that the Central Bank is providing unless they pay half of the value of the funds to the Houthis in Sana’a. This will negatively affect the prices of food and the size of food stocks.
According to information gathered by the author during an investigation into the banking sector in Yemen, the Houthis have threatened banks that violate their instructions, with substantial penalties that could lead to the liquidation of banks that do not comply with their instructions.
Furthermore, Houthis are arresting and detaining employees and managers of the banking and telecommunication sector. There are no grounds for the detention of employees and managers of banks since the banks operate under the supervision of the Central Bank. Any problems should be resolved within the framework of the Central Bank Aden and the laws governing the banking activity.
The Houthis are also preventing the banks in Sana’a to invest their surplus money in public debt instruments that are announced by the Central Bank of Aden. This is a measure by the Central Bank, as part of a move to re-establish the initiative to control the monetary process in the country despite the circumstances of the war. The Houthis exploit the existence of the headquarters of the banks and commercial companies in Sana'a, to dictate their terms.
In one day, they arrested 25 banking staff. They have already arrested officials in Yemeni banks, such as Al Bahrain Al Shamil Bank, Al Tadhamon Bank and Al-Kareimi Bank, as well as the deputy director of the Yemen International Bank and an official at CAC Bank.
It is believed that if the problem is not resolved, it will further complicate the economic and humanitarian situation in Yemen.
As a result of the war, hunger and humanitarian needs are exacerbated, with more than half of Yemenis threatened by famine. In light of these reports and the illegal interference in the operations of a number of local banks in Sana’a and the arrests of banking staff, the four quad nations of SA, UAE, USA and UK met a few times lately, and they strongly condemned these and other illegal acts carried out by the Houthis that pose a threat to civilians and the economy of Yemen. The four nations firmly request lifting the imposed regulations on the local banks in Sana’a, which impede commercial imports and desperately needed humanitarian assistance. Furthermore, they encourage the stabilization of the Yemeni Riyal and the strengthening of Yemen’s economy by consolidating revenues, paying all public salaries, and continuing to strengthen the Central Bank of Yemen.
When interviewees were questioned on violations on the ground, for the purpose of this paper, we received the following answers:
1. The Banking Sector
While all banks implied being subjected to extortion to various extents, one bank explicitly stated they were subject to extortion by the Houthis and legitimate government with no clarification of what type of extortions by the legitimate government.
- The issuance of orders to restrict the banks from carrying out transactions, withdrawals and deposits, such as the suspension of a direct sale and the suspension of withdrawals from foreign currencies without the authorization of the security authorities.
- Banks being extorted by the Houthis and forced to sell foreign currency to certain traders at a lower price and they are forcing them to withdraw foreign currencies from their reserves in order to cover certain needs.
- Banks are forced to freeze and reveal to the Houthis some of the accounts of their opponents and if they refuse, they are subject to penalties or kidnapping.
- Issuance of circulars to the banks not to comply with the Central Bank's bulletin in Aden or benefit from the credits supported by the Saudi Depository. In case they do, they pay the difference in the currency exchange price to the Houthis Authority.
- Unlawful arrest and investigation of the bank's leadership in the national security services because of accusations of facilitating customers to withdraw their bank accounts, which the Houthis are seeking to confiscate.
- The security services of the Houthis demand the assets of the major commercial companies to be revealed, in order to blackmail them.
- Houthis impose on the banks fictional fees and double taxes in violation of the laws.
- A bank stopped working as a result of the kidnapping of some of the bank's employees from the public administration who were taken to an unknown destination for investigation.
- Provisions of tax files regarding late tax benefits on the bank.
- Thirty percent profit tax determination and no reliance on bank statements.
- Banks are prevented from dealing with the Central Bank of Aden in any manner or from transferring the currency to and from the bank's branch in Aden and this causes a shortage of liquidity.
- Banks are forced to convert the price of the dollar at the Central Bank of Sana'a and hand over the currency to the concerned parties in Sanaa in hard currency, including organizations and others, while the Government of Houthi take advantage of the difference.
- Interventions with the bank's policy with customers and cancelling of commercial transactions or bank transfers without the permission of the relevant security authorities.
- Interbank transactions are stopped so that funds cannot be transferred from one bank account to another due to lack of liquidity from the Central Bank, mainly to their branches in Aden.
2. Telecommunication Sector
All interviewees replied that the violations, as described below, were carried out by the Houthis:
- Large sums of money have been paid in exchange for allowing the company to maintain the equipment and some of the war zones in the provinces.
- Closure of the Y-Telecom company in IBB and Hodidadh.
- The telecommunication companies cannot work at the present time or protect its facilities, especially in remote areas, because of the large amounts imposed by some parties, especially the Houthis. In return for protection they ask the company to pay amounts to multiple government bodies beyond taxes and outside the laws, randomly and sometimes without official documents of the amounts collected and with the threat of closing branches and offices. Otherwise, the equipment will be looted and sold or branches will be closed.
- They receive security requests, such as disclosing customers’ information and data.
- The working teams in the governorates, especially in the war zones, are suspended from any maintenance of the installations and the antennae equipment, which causes the interruptions of the network to large areas that can last for days and months.
Furthermore, the Houthis have been hacking a list of web pages of Yemenis, taking advantage of their control of a telecom company in Sana'a.
These hacks are not random but systematic; it was noted that it happened in conjunction with the Al-Houthi militia trying to penetrate the southern border in Dali and they were targeting the southern media covering these areas.
Globalization governs the world we live in today. Investments, trade and financial transactions are governed by international laws and standards, where people, banks and states are governed by international economic laws for many reasons, but mainly to combat money laundering and terrorism. However, the Houthis, as war-driven militants (from the caves) don't comprehend any current global rules and do not abide by any economic nor human rules, even if the whole country ends up in starvation, as long as they are not hungry!