UN envoy says top priority in Yemen is fixing the economy

ABU DHABI — The best way to resolve Yemen's humanitarian crisis is to fix the economy so stemming a slide in the riyal currency is the top international priority, the UN special envoy said on Thursday.

Martin Griffiths said the United Nations is discussing an emergency plan to stem the riyal's fall and restore economic confidence. Yemen is the poorest Arab nation and faces the world's worst humanitarian crisis, exacerbated by a war that begin in 2015.

Three-quarters of its population, or 22 million people, require aid and 8.4 million people are on the brink of starvation.

"There's no doubt in my mind whatsoever that this economic issue is now the overwhelmingly most important priority," envoy Martin Griffiths told Reuters.

"Within the UN we're talking about the need for such a master plan ... an immediate set of measures over weeks which the World Bank, IMF, UN agencies, the Gulf obviously, the government of Yemen could come together to discuss," he said.

The riyal has lost more than half its value against the US dollar since the start of the war. Authorities sought to boost liquidity last year by printing money, but it plunged from 250 to the dollar after the first batch of notes was rolled out. It was trading at around 700 on Thursday.

Soaring prices have put some basic commodities out of reach for many Yemenis and the central bank has struggled to pay public-sector salaries on which many depend as foreign exchange reserves dwindle.

Griffiths said that by November the United Nations hopes to resume consultations with the warring sides. These are the Houthis who are aligned with Iran and the internationally-recognised government, which is backed by Saudi Arabia, the United Arab Emirates and the West.

The first attempt in three years at talks collapsed a month ago after the Houthis failed to turn up.

The Houthis, who control northern Yemen and the capital Sanaa, accused the coalition of blocking their delegation from travelling to Geneva. The government blamed the Houthis for sabotaging the negotiations.

Central bank

Griffiths, who took up his post in February, said he was close to securing a solution in order to avoid more “last minute surprises”.

“What I’d like to see happen is within the next couple of weeks maximum we could have resolved those issues so that we can then say, ‘OK, we now know the logistical basis that we have, let’s go back to the table,” he said in the Emirati capital Abu Dhabi.

“I’d like it to happen in November but I’m not predicting at the moment because we’ve got to get these logistical issues out of the way.” He said the talks would probably happen in Europe but declined to confirm a specific location.

The coalition intervened in Yemen’s war against the Houthis in 2015 with the aim of restoring the government of President Abed Rabbo Mansour Hadi.

Saudi Arabia donated $200 million to Yemen’s central bank this week to help shore up the riyal, following earlier deposits of nearly $3 billion, but Griffiths said a more comprehensive approach was needed.

“I don’t think we can always rely and shouldn’t always rely on Saudi generosity to put money into the system,” he said.

The central bank has been considered the last bastion of Yemen’s financial system, and is effectively running the economy, according to central bank officials, diplomats and Yemeni political sources on both sides of the war.

Hadi’s government moved it from Sanaa to Aden in 2016, placing it in the crossfire. The government has accused the Houthis of squandering some $4 billion in reserves on the war effort, but the Houthis say the funds were used to finance imports of food and medicine.

Griffiths said the UN and International Monetary Fund were working to reunite the rival branches and de-politicise their activities within two weeks, though he gave no details.