Yemen’s internationally recognized government in Aden has suspended payment of salaries to retirees, university professors, judges, members of the Ministry of Health and others in Houthi-controlled areas due to a currency dispute between the government and the rebels, according to the Aden-based office of Yemen’s Prime Minister Maeen Abdulmalik Saeed.

The government normally pays these salaries in cash using currency exchange firms that operate in the Houthi-controlled areas. But on Dec. 18, the Houthi-run branch of Yemen's central bank in Sana'a banned that newly-minted currency from the central bank's Aden branch. Merchants, money changers, banks and citizens were given one month to hand over the new banknotes to the Houthi authorities. 

Past bans of Aden-printed banknotes, combined with other measures the warring central banks have taken to weaken each other, have fueled a strong financial black market in Houthi-controlled areas. 

After the most recent ban, currency exchangers informed the government that they can no longer deliver the salaries without considering a larger commission–between 15 and 20 percent–to meet the black market exchange rates required to swap the new banknotes for the older bills accepted by Houthi authorities.

By halting the salary payments, the Prime Minister’s office seeks to punish the Houthis for the ban and pressure them to make concessions in the economic war. 

The head of the Civil Alliance for Peace, Dr. Hammoud Al-Oudi, told Almasdar Online that he regretted the repercussions. He has been working as part of a mediation team for a week trying to convince the Houthis to reverse the decision.