Iran's support for the coup staged by the Houthis (Ansarallah) against Yemen's legitimate government has laid waste to the country's economy and sent the value of its currency into a tailspin, experts told Al-Mashareq.
The recent exposure of an Iranian network involved in a scheme to help the Quds Force of Iran's Islamic Revolutionary Guard Corps (IRGC) counterfeit Yemeni currency has further harmed Yemen's financial standing, they said.
The Yemeni riyal has lost more than half its value against foreign currencies in the exchange market since the coup of September 21st, 2014.
The Houthis seized control of the Central Bank, and have since squandered more than $4 billion in foreign currency reserves, contributing to a nation-wide economic decline, economists said.
Yemen's gross domestic product (GDP) has contracted by a third as a consequence of the war, which has caused large-scale damage to the industrial sector, Minister of Industry and Trade Mohammad al-Maitami said last month.
Since the Houthis' staged their coup, he said, "more than half of all industrial enterprises were destroyed or have stopped operating, and more than 65% of all workers in private sector enterprises were laid off".
At present, 70% of Yemen's labour force is out of work, he noted, with youth and women being the hardest hit by the labour market's decline.
Foreign currency reserves depleted
The political turmoil in Yemen has led to a decline in the riyal's value, depletion of the foreign currency reserve, the stoppage of oil exports and currency speculation, said Studies and Economic Media Centre president Mustafa Nasr.
"The depletion of foreign currency reserves is one of the most important direct causes for the decline in the value of the Yemeni riyal against the dollar and the rest of the hard currency," he told Al-Mashareq.
This has led to the suspension of oil exports, currency speculation, currency smuggling and money laundering, Nasr added.
"The Houthis’ detrimental practice of using foreign currency to finance the war effort is a direct cause for the decline in the value of the Yemeni riyal," National Bank chairman Mohammed Hassan Halbub told Al-Mashareq.
"The Houthi government in Sanaa issued bad cheques to buy dollars from the market and engaged in currency speculation to finance its activities," he said, noting that this inflated the public debt to over five trillion riyals ($20 billion).
The "proliferation of unlicensed currency exchange shops and companies in Sanaa" has contributed to the riyal's decline, said economist Abdul Jalil Hassan.
These shops contribute to increasing speculation in the black market in Sanaa and areas controlled by Houthis, he told Al-Mashareq, noting that this is one of the main causes for the collapse of the national currency.
Sanctions on counterfeiting network
On November 20th, the US Treasury imposed sanctions on a network of individuals and entities involved in a large-scale scheme to help the elite Quds Force of the IRGC counterfeit currency to support its destabilising activities.
According to the Treasury, "this network employed deceptive measures to circumvent European export control restrictions and procured advanced equipment and materials to print counterfeit Yemeni bank notes potentially worth hundreds of millions of dollars" for the IRGC's Quds Force.
"This scheme exposes the deep levels of deception the IRGC-Quds Force is willing to employ against companies in Europe, governments in the Gulf, and the rest of the world to support its destabilising activities," the Treasury said.
"Counterfeiting strikes at the heart of the international financial system, and the fact that elements of the government of Iran are involved in this behaviour is completely unacceptable," said Treasury Secretary Steven Mnuchin.
"This counterfeiting scheme exposes the serious risks faced by anyone doing business with Iran, as the IRGC continues to obscure its involvement in Iran's economy and hide behind the façade of legitimate businesses to perpetrate its nefarious objectives," he said.
Curbing Iran's expansionist agenda
Bahraini political writer and researcher Abdullah al-Junaid said he supports the sanctions and hopes the US will adopt further decisions "that will help drain the sources of terrorism, eliminate Iran’s extremism, and put an end to its expansionist project".
"The fact that IRGC organisations have been involved in counterfeiting the Yemeni riyal or other currencies indicates the extent of Iran's interference in the Yemeni crisis," he told Al-Mashareq.
It also points to the likelihood that the IRGC and its affiliates are engaged in similar criminal activities to finance their activities in Syria, Iraq and even Lebanon, he said.
The US sanctions are a positive step towards curbing the Iranian intervention in the internal affairs of Yemen and other countries in the region, said Watani al-Emarat director-general and UAE political analyst Darar Albu Falasa.
"Iran’s actions have been known for a long time, and collective international action must be taken to confront them seriously and firmly," he told Al-Mashareq.
*Mohammed al-Jayousi contributed to this report.