The Significance of Hadramout's Decision to Stop Depositing Revenues at the Central Bank

On November 26, 2023 the Executive Office of Hadramout Governorate, in South Yemen, unanimously agreed to suspend depositing the governorate’s revenues as well as the tariff from the border-crossing of Al-Wadiah, adjacent to Saudi Arabia, at the Central Bank of Yemen (CBY) in Aden. 

This move came due to “the cessation of the financial allocation from the Finance Ministry to Hadramout which has been suspended by CBY”, according to the local authority’s statement. The local authority in its statement also accused the Yemeni government of manipulating Hadramout’s share of the oil revenue, which stood at around 20% over the past years.

The Hadramout local authority said that it decided against depositing the revenue at the Central Bank of Yemen (CBY) in order to meet the funds required for the growing services needs of the people, especially in view of the influx of thousands of displaced persons from other Yemeni governorates to Hadramout. 

The Presidential Leadership Council (PLC - the executive body of Yemen's internationally-recognized government) and the Yemeni government have not yet made any official statement on this development. However, the CBY leaders immediately took steps to press the local authority in Hadramout to undo their declaration. 

On November 28, the EU Delegation to Yemen met CBY Governor Ahmed Ghaleb Al-Maabaqi. In a statement on X (formerly Twitter), ’EUinYemen‘ said: “EU Ambassadors praised Al-Maabaqi’s efforts at maintaining currency stability in an extremely challenging context. They stressed the importance of sustained revenue deposits by all governmental institutions, including governorates, at the Central Bank, as per Yemeni legislation.”

On November 30, there was another Western stance supporting the CBY leadership. The U.S. Embassy to Yemen said on X: “We applaud CBY Governor Ahmed Ghaleb al-Maabaqi’s efforts to try to maintain currency stability at a very challenging time, and call on all governmental institutions, including governorates, to continue depositing all revenues at the CBY, consistent with Yemeni legislation.”

During a video call on December 6, Hadramout Governor Mabkhoot bin Mubarak bin Madhi discussed with the UK Ambassador to Yemen Abda Sharif the issue of the suspension of revenues to CBY. Bin Madhi explained to the ambassador the reasons behind this measure.

He said that “the governorate's decision to cease depositing revenues at CBY isn't a rebellion against the state. Hadramout's authorities are in harmony with the government, but it asks that its stance is assessed and it is given the same treatment as the other governorates, and also there is an end to the targeting of Hadramout by the CBY”, according to a statement issued by the Media Office. 

The Hadramout Governor denounced the “internal and external silence” toward the authorities of Marib Governorate, in North Yemen, that hasn’t deposited its share of revenue at the CBY for a long time. 

In the virtual meeting, bin Madhi implicitly threatened to resign if the government ignores the demands of the governorate. He added: “The local authority should provide the services for the people and ask for these be provided, or to leave office with their head held high.” 

Hadramout’s importance can be gauged from the fact that its geographical expanse accounts for more than one-third of Yemen’s total land area, Hadramout also represents a substantial part of Yemen’s economy. The Masila basin is home to 80% of Yemen’s known oil reserves, and in addition to oil, the governorate also generates revenues from trade and related fees, fishing, and remittances. Before the Houthis attacked it in November 2022, the al-Dhabba oil terminal in Hadramout was exporting just under 35,000 barrels per day.

Informed sources told ’South24 Center‘ that Hadramout’s local authority has not yet implemented its declaration regarding suspending the depositing of revenues. He added: “All the revenue from Hadramout is still regularly deposited at CBY.”

Hadramout’s local authority didn’t answer calls by ’South24 Center' to comment on this information. However, an informed source who requested anonymity as he isn’t authorized to speak to the media, claimed that the decision has already been implemented from the moment it was announced. 

The source told ’South24 Center‘ that the “decision to suspend depositing revenues was carefully examined and was preceded by repeated calls to PLC Chairman Rashad al-Alimi and Prime Minister Maeen Abdulmalik Saeed to highlight the ignoring of demands of Hadramout and its people”.

He added: “The declaration was issued after months of studying its dimensions before applying it. It will be revoked immediately if the government fulfils its promises and carries out its pledged projects in the governorate.”

Regarding the international stance in this regard, the source said: “Officials in the Yemeni government and CBY submitted misleading information to the countries that initially intervened in the matter and criticized the decision (of suspending revenue deposits). However, these states understood the situation after listening to the reasons behind it from Governor bin Madhi.”

The source believes that the Yemen government’s leaders are deeply concerned that the Hadramout Governorate’s latest step will include the oil revenues in case exports are resumed. This pushed the officials to contact ambassadors of major countries and urge them to press Hadramout's authority to revoke its decision on suspension of revenue.

In practical terms, the governorate’s latest decision doesn’t apparently pose any big pressure on the CBY and the government in view of the suspension of oil revenues, most of which come from Hadramout, for over one year as a result of the Houthi attacks on oil exporting ports last November.

In this regard, journalist Emad Al-Dayani, Editor in Chief of the ’Akhbar Hadramout‘ newspaper said: “The decision was taken randomly without considering its possible repercussions. The current non-oil revenues in the governorate aren’t even enough to pay the salaries. Thus, this decision isn’t in the interest of Hadramout. It harms the governorate and deprives it of the central revenues necessary to meet its needs.” 

Al-Dayani doesn't prefer to term the latest international stance regarding the issue as “pressure”. He told ’South24 Center‘ that “these interventions aren’t necessarily international pressure, but attempts to unify the Yemeni perspectives toward arranging the political conditions in Yemen as part of the comprehensive settlement.” 

Although the Yemeni government hasn’t officially commented on the local authority’s declaration in Hadramout, Yemeni Defense Minister Mohsen Al-Daeri said - during a meeting with the Security Committee in Hadramout headed by Governor bin Madhi two days ago -: “After we sat with the Hadramout Governor, we understood his justification for taking the decision. The central authority has to address the reasons that led to taking it.”

As for the position within the PLC, an informed source inside it said: “This issue hasn’t been discussed so far. The stances of the eight PLC members toward this move aren’t clear yet.”

Exclusive sources told ’South24 Center‘ that “the Southern Leadership Council (STC) endorses this measure in principle”. However, it hasn’t issued any official statement in this regard. In an attempt to mobilize local support, the Hadramout Governor held meetings with tribal leaders in Hadramout to back the move to suspend the revenue.

On November 3, Hadramout’s Media Office said that the leaders of the ’Al-Awabtha‘ Tribe, on the coast of Hadramout, announced their support for bin Madhi’s decision. On November 5, the Governor met with the leaders of the ’Nahd‘ Tribe who expressed their support for the decision. 

The Media Office released documents, diaries and letters that, according to it, show the support by the local authorities in Hadramout’s districts, entities and sectors for the decision to stop depositing the revenues at CBY.

On December 2, during a meeting of the commanders of military brigades, divisions and units - led by the 2nd Military District, Governor bin Madhi briefed them about the latest developments, including on the conditions within the governorate as well as the local authority’s efforts to provide services for the people. 

It is worth mentioning that the local authorities in Aden and Shabwa had given instructions in June for taking similar measures in response to the government’s unfulfilled promises toward the people, before it retracted these steps later.

In Hadramout, the coming days will show to what extent the local authority is serious in adhering to this step as a real strategic move to extract the rights of the people of the governorate that suffers from deteriorating services, especially the provision of electricity. This comes amid concerns that it could be just a political manoeuvre for other purposes.