Yemen Monitor / Reports Unit / Special:
On Wednesday, March 5, the U.S. Treasury imposed broad sanctions on Ali Al-Hadi, the head of the Chamber of Commerce and Industry in Sana’a, the largest commercial chamber in Yemen. This came a day after the implementation of the decision to designate the Houthis as a Foreign Terrorist Organization came into effect. The sanctions targeted seven leaders and traders affiliated with the armed group and a commercial company linked to them.
This directly affects the Chamber of Commerce led by Al-Hadi. Although the chamber itself is not listed on the U.S. terrorism lists, the presence of a sanctioned leader could prompt international commercial and financial institutions to be cautious in dealing with the chamber and its members. This could impact imports in a country that relies on imports for 80% of its needs, thereby affecting the economy in Houthi-controlled areas specifically and Yemen in general.
The Situation in Sana’a
The atmosphere in Sana’a seems to be one of shock and confusion among businessmen and private sector leaders. They describe it as a turning point that could lead these Houthi-controlled areas to a state similar to the years just before the fall of Bashar al-Assad in Syria.
Amid the confusion, the Houthis have not announced any measures to reassure the market—on the contrary, they have pushed their loyalists and revenue institutions to collect funds since the start of Ramadan, including zakat amounting to hundreds of millions of dollars.
A businessman in Sana’a told Yemen Monitor that they do not expect the Houthis to take any steps to mitigate the impact of the sanctions. Traders anticipate that the Central Bank in Aden might intervene to alleviate the impact on the private sector, which is already collapsing in Houthi-controlled areas.
He also expressed concern about the potential suspension of banking operations in Houthi-controlled areas and their ability to conduct international transactions in the near future.
Halting International Transactions
At least one bank in Sana’a has informed businessmen that their international transactions have been suspended pending clarification from Aden and Sana’a and any exemptions that might apply.
The notification was reportedly made via email and phone, according to two businessmen dealing with the bank in Sana’a, according to Yemen Monitor.
This has raised fears within the banking sector and among businessmen about the possible suspension of the SWIFT code for six major commercial banks, according to a source at a second bank who spoke to Yemen Monitor on condition of anonymity due to the sensitivity of the issue.
Broad Sanctions
The sanctions on Ali Al-Hadi also targeted another leader, Abdulwali Al-Jabri, one of his relatives, and Al-Jabri’s company, which has been accused of recruiting Yemeni mercenaries to fight in Russia against Ukraine. The U.S. intelligence has repeatedly warned about these connections.
A few weeks ago, the U.S. also imposed sanctions on the Yemen and Kuwait Bank, one of Yemen’s largest private banks, which the Houthis allegedly used for financing, armament, and maintaining relations with Iran.
It’s Premature to Discuss US Approach to Houthi-Controlled Yemeni Private Sector, but Designation Texts Appear Stronger Than 2021 Decision, Says Majid Al-Madhaji. It’s Broad and Doesn’t Exclude Anyone Who Might Support the Houthis, Even Indirectly, Such as Forced Tax Payments.
For years, the Yemeni private sector has been subjected to comprehensive erosion by the Houthis, through the judicial guardian, the Zakat, Endowments, Tax, Customs, Trade, Industry, Public Works, and Municipal Authorities, and most government institutions have been forcibly turned into revenue-generating entities with the power to close and confiscate. Every Houthi can now collect money at will from any merchant, regardless of size.
Most businessmen in Sana’a, who spoke to “Yemen Monitor,” believe that the Houthi takeover of the Chamber of Commerce, an independent syndicate, could lead to sanctions that affect food provision for the population and drive a greater exodus of remaining national capital.
Figures and data indicate a decline in the number of industrial, commercial, service, and other establishments. The latest businessman to announce his departure was Yasser Al-Lawzi, who announced the offering of all his real estate, commercial, and investment properties at the beginning of Ramadan due to Houthi violations and levies.
The Chamber of Commerce Under Threat
What’s new is that the sanctions targeted Ali Al-Hadi, the head of the Chamber of Commerce in the Capital Secretariat, due to his role in supporting the Houthis. Previous reports revealed Al-Hadi’s partnership with the missile force, drone units, the Houthi Zakat Authority, the Endowments Authority, and the Economic Committee. His services to the Houthis were not limited to establishing companies and economic partnerships inside and outside Yemen, including arms transfers, but also involved restructuring the Chamber of Commerce in the Capital Sana’a.
Over the two years since Al-Hadi seized control of the chamber, he shifted its role to demanding taxes from traders instead of defending them, as seen in the case of imposing taxes on the clothing and textile sectors without any legal basis.
He also restructured the divisions of the Chamber of Commerce in the Capital Sana’a, appointing his loyalists—most of whom are new traders previously unknown—and worked to buy the loyalty of some established traders.
Abdulwahid Al-Obali, a financial and economic expert, told Yemen Monitor that the design of the U.S. sanctions this time aims to prevent the financing of the Houthis and to stop them from smuggling funds abroad and reinvesting them.
A Clear Message
Dr. Abdulqader Al-Kharraz, from the campaign “We Will Not Be Silent: Where Is the Money?”, said that sanctioning the head of the Chamber of Commerce sends a clear message to Yemen’s private sector. He noted that the Houthis have created fake companies and businessmen with deceptive means to cover their tracks.
Al-Kharraz also warned that the private sector not directly linked to the Houthis could still end up serving them indirectly—especially exchange companies, which might be the next to face sanctions.
Wafiq Saleh, an economic journalist, told Yemen Monitor that U.S. sanctions place Yemen’s private sector in a difficult situation with limited options. He added that the Houthis have systematically eroded the private sector over the years, driving capital worth billions of dollars out of the country, primarily to Saudi Arabia, Egypt, Turkey, and the Gulf states.
A Real Challenge
The real challenge for the private sector now is how to minimize the impact of the sanctions amid a firm U.S. stance aimed at drying up Houthi revenue sources. Meanwhile, the internationally recognized government in Aden seems unable to implement effective measures on the ground.
Wafiq Saleh pointed out that the government lacks a clear plan to turn the U.S. sanctions into an opportunity to strengthen its own resources through partnerships with the private sector.
Mustafa Noman, Yemen’s Deputy Foreign Minister, confirmed that there is close cooperation and information exchange with the US, but no formal coordination regarding the sanctions list, as he told Yemen monitor.
Noman pointed out that the government and a special high-level committee on the matter, which includes the governor of the central bank, are studying the effects of the classification. He added that it cannot put the entire country at risk of falling under sanctions.
Exploring Alternatives
Wafiq Saleh suggested that one of the options available might be for businessmen to form new commercial alliances independent of the Chamber of Commerce, which is under Houthi control.
When Yemen Monitor spoke to two businessmen in Sana’a about this possibility, one of them responded pessimistically: “As if the Houthis would allow us! They will confiscate our businesses and sell them to the new financial centers that have taken control of everything.”
Additionally, some traders might consider providing the U.S. with information to avoid the pressures they are facing and explore opportunities for cooperation to strike a blow to the Houthis’ financial network in exchange for protection.
The US has also offered a reward of up to $15 million for information about the Houthi financial network.
Al-Kharraz in his statement to Yemen monitor, emphasized that commercial institutions will likely seek ways to protect themselves, even if it means sharing information about Houthi financial sources—not necessarily for the U.S. reward, but as a means of self-preservation.
Al-Kharraz requires the provision of details, often comprehensive, about Houthi financial sources to obtain protection.
