Statistics from the U.S. Treasury Department point to a Houthi movement that brings in around $2 billion annually from oil sales, proving surprisingly resilient against a global web of sanctions. Despite such shadow-market wealth, the rebels requested that their longtime Saudi adversaries cover the payroll of civil servants in the north.
Last week, Yemen’s Prime Minister confirmed a $90 million commitment from Riyadh for employee compensation. Such financial manoeuvring telegraphs a rebranding of Saudi strategy: the Kingdom has adopted economic statecraft as its primary tool for managing Houthi reach.
Cash as a New Tool
The salary matter offers a window into Riyadh’s current perspective. By funneling direct financial support to government institutions, Riyadh pursues a policy of strategic accommodation. Saudi leaders are prioritising the preservation of a unified Yemeni state, viewing shared governance as the most viable way to avoid a permanent regional vacuum where Emirati reach might expand.
A Model from Beirut
The regional environment thawed in March 2023 following a Beijing-brokered deal that reestablished diplomacy between Riyadh and Tehran.
The fruits of that accord appear in Yemen, where Saudi strategists explore an arrangement that integrates armed, Iranian-backed factions into the formal state bureaucracy. Such a “Lebanese” template treats the Houthis as a permanent fixture of the Yemeni state, much like Hezbollah maintains armed weight even as it participates in civil government.
Reports even note that Saudi officials discouraged American military strikes against Iranian targets, preferring to insulate their own oil infrastructure from the blowback of proxy warfare.
Aden’s Final Moves
Even as financial accords take form, government forces based in Aden may attempt to calibrate the final peace terms through eleventh-hour military operations. Battlefield movements often serve to refine a group’s ultimate bargaining position, and for Riyadh, limited clashes may be useful if they temper Houthi ambitions without causing a total collapse of the peace process. The salary payments themselves solidify a financial bond. Sanaa’s bureaucracy receives immediate relief, but the arrangement cements Riyadh’s role as the indispensable architect of Yemen’s economic functionality.
The Emirati Variable
The United Arab Emirates remains a wildcard. As its proxies hold strategic ports and energy hubs, any permanent peace requires Abu Dhabi’s cooperation. However, the goals of the two Gulf neighbours have pulled apart.
Riyadh focuses on border security as the UAE stays committed to its hold over southern maritime trade routes. The Southern Transitional Council, backed by Emirati support, has already broadcast aspirations for self-rule that contest Riyadh’s preference for a singular Yemeni sovereignty.
Money over Sanctions
The ability of the Houthis to bring in billions through oil sales as they accept Saudi salary assistance exposes the limitations of modern sanctions. Despite international efforts to starve their revenue, the Houthis have developed a degree of financial autonomy, navigating shadow markets and unofficial networks that bypass traditional banking.
Such economic durability bolsters the Houthi position at the table. Because they do not lean solely on external patrons for survival, they negotiate with the leverage of a self-funding entity, even as they join a Saudi-funded civil structure.
The Risk of a Neighbour
For Saudi Arabia, Yemen’s proximity makes its stability a domestic security priority. Instability on the southern border directly threatens
Saudi population centres and the Kingdom’s economic heart. Houthi forces have already proven their capacity to strike far into the Kingdom, as seen in the 2019 attacks on the Abqaiq and Khurais oil facilities. Such liabilities have incentivised Riyadh to seek a sustainable settlement, acknowledging that a solvent Yemeni state is the surest way to reduce the desperation that drives cross-border conflict.
Power Brokers and Regional Geometry
Any lasting settlement must account for a dense geometry of power. China’s role in facilitating the Saudi-Iran rapprochement depicts how external powers can bridge regional divides in cases where their own energy security is at stake. Similar external mediation will likely be required to manage the conflicting interests of the Houthis, the UAE-backed southerners, and the government in Aden.
Ultimately, the goal is a state of permanent, if uncomfortable, coexistence. Much like the arrangement in Lebanon, Yemen’s future may rest on all factions accepting a power-sharing formula born of mutual exhaustion: a peace where state resources are shared among rivals who have simply run out of other options.
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