Executive Summary

On May 6, the US abruptly suspended its air campaign against the Houthi group (Ansar Allah) as President Donald Trump announced a surprise ceasefire. Both sides reportedly agreed to stop targeting one another; each, unsurprisingly, declared victory. From its outset, the 52-day-long air campaign known as “Operation Rough Rider” was beset by problems when plans were accidentally leaked to a US journalist. A rumored ground offensive by anti-Houthi ground forces failed to materialize amid squabbling between domestic partners, Saudi Arabia, and the UAE, and limited commitment from the US. With high operational costs, rising civilian casualties, and domestic apathy, the campaign was wrapped up with little ceremony. Houthi military capacity, while weakened, appears to remain largely intact.

Despite the conclusion of US operations, the Houthis’ military confrontation with Israel remained active. The group’s missile and drone attacks on targets in Israel provoked outsized retaliation – Israeli airstrikes severely damaged several ports in Hudaydah, jeopardizing the delivery of humanitarian aid. In Sana’a, the main airport was rendered inoperable, all civilian aircraft at the airport were destroyed, and factories and energy infrastructure were also hit. The Houthis scaled back their operations during the 12-day Israel-Iran conflict in June, but hostilities have since resumed in earnest. The group also returned to targeting commercial shipping, sinking two vessels in deadly attacks in the first week of July. Whether this will provoke further US or international action remains unclear.

Yemen’s humanitarian situation continues to deteriorate as aid cuts, sanctions, and US and Israeli airstrikes take a toll on what’s left of the economy. The US, which funded over half of Yemen’s 2024 Humanitarian Response Plan, suspended nearly all aid in April, and cuts to USAID have affected a number of implementing partners and other organizations. Food insecurity is worsening across the country, and the cost of a Minimum Food Basket (MFP) increased by 37 percent in government areas as the government struggles to contain the ongoing devaluation of the rial, which has hit a succession of record lows amid a lack of foreign currency reserves.

US sanctions were extended to a number of entities, vessels, and individuals for supporting the Houthis. Many of the announced sanctions concerned the illegal sale of oil. The International Bank of Yemen, used by a number of humanitarian organizations, was sanctioned for providing financial support to the group. It is the second bank to be sanctioned following the Yemen Kuwait Bank for Trade and Investment in January. Banks are in a difficult position – remaining in Sana’a makes them vulnerable to devastating US and international sanctions, while moving to Aden invites retaliation from the Houthis. The Houthi-affiliated Central Bank of Yemen in Sana’a (CBY-Sana’a) ordered financial institutions to halt transactions with the Al-Kuraimi Islamic Microfinance Bank in late June, triggering a bank run at one of the country’s largest financial institutions.

Ahmed Awad bin Mubarak stepped down as prime minister on May 3, after just over a year in office. He was replaced by Finance Minister Salem bin Breik. Bin Mubarak had repeatedly clashed with the Presidential Leadership Council (PLC) over cabinet appointments. Bin Breik delayed his arrival in Aden until June, remaining in Riyadh to try and secure Saudi funding for his new government, but ultimately left empty-handed. His failure bodes ill for the new administration and political and economic conditions in government-controlled areas.

Women-led demonstrations erupted in Aden and neighboring governorates in early May, as protesters demanded that the government disburse unpaid public sector wages and address the broad deterioration of public services and unchecked inflation. New Prime Minister Salem bin Breik praised protestors’ courage and promised action, but the Southern Transitional Council (STC) has cracked down, dispersing sit-ins, arresting demonstrators, and banning marches in Aden. The demonstrations are embarrassing for members of the government coalition, who have been unable to provide reliable electricity for several years now.

Hadramawt saw rising political competition and calls for autonomy, as various actors tried to make inroads into local administration. Tribal leader and Deputy Governor Amr bin Habrish retained significant political momentum and was courted by the government, as well as Saudi Arabia and UAE-backed forces. A key issue remains control of the governorate’s oil and gas reserves, which are important for local and national electricity production. A new political group, the Change and Liberation Movement, was announced in April, led by Abu Omar al-Nahdi, allegedly a former Al-Qaeda operative.

The road through Al-Dhalea linking Sana’a and Aden was reopened in late May after a series of fits and starts. Coordination problems between the Houthis and government-aligned forces, as well as the hazardous task of demining the route, delayed the process. Reopening roads was a key provision of the UN-brokered 2022 truce agreement, and the route has become more significant for trade and aid delivery after Israeli airstrikes destroyed infrastructure at the key port of Hudaydah. The Houthis and STC quickly took advantage of the reopening. The Houthis set up new customs offices to extort money, and the STC quickly occupied checkpoints in northern Al-Dhalea to do the same.