Event

On 21 February, Yemeni president Hadi escaped from the presidential palace in capital Sanaa – where he had been held under house arrest – and fled to the southern city of Aden. The event is one of the latest in a series of confounding developments since September 2014, when Shia Houthi rebels advanced south from their stronghold in the north of the country and gained de facto control over Sanaa. Despite their  subsequent pledge to withdraw troops as part of a UN-brokered peace deal (see this article from the newsletter of October 2014), the Houthis instead reinforced their grip as of late January in rejection of a government-proposed draft of a new constitution (and of the plan to transform Yemen into a federation of six regions in particular). President Hadi was placed under house arrest (prompting his resignation, which he retracted upon arrival in Aden) and in later days, the Houthis dissolved parliament, installed a 'transitional presidential council' and clashed with Sunni tribal groups as they advanced further south. The turmoil urged – among others – the US, France, Germany, Turkey and Saudi Arabia to close their Sanaa embassies.

Impact on country risk

The increased political chaos in Yemen is clearly a risk negative. That is the case not least because, apart from the Hadi government and the Houthi rebels, various other groups are also vying for political influence. These include southern separatists (North and South Yemen had been two different countries until 1990), northern opposition parties, various Sunni tribes and Al-Qaeda in the Arabian Peninsula. In order to reconcile the diverging aspirations of the different groups in society, a National Dialogue Conference was launched after widespread violent protests provoked the departure of long-serving former president Saleh in 2011. Yet this laudable initiative has subsided with the Houthi power grab and the question on what a viable power-sharing agreement may look like thus remains unanswered. What seems certain, however, is that the present situation is unsustainable. As a matter of fact, the Houthis will find it very difficult to consolidate power in light of their limited domestic popularity (as illustrated by mass demonstrations) and fierce Saudi opposition against their rule (inspired by alleged links between the Houthis and Saudi Arabia's arch-rival Iran). In this context, Credendo Group is likely to further restrict its cover policy for Yemen if no political solution is hammered out in the coming weeks or if violence escalates.

Analyst: Sebastian Vanderlinden, s.vanderlinden@credendogroup.com