In 2022, Yemen’s internationally recognized government replaced then-President Abdo Rabbu Mansour Hadi with a Presidential Leadership Council (PLC), which was tasked with serving as the country’s new executive political and legal authority. While the transition was framed as a response to growing domestic demand for change, it was primarily driven by external influence, most notably from Saudi Arabia. The Kingdom’s urgency to extricate itself from its costly military entanglement in Yemen led to efforts to secure a negotiated settlement with the Houthis, culminating in what became known as the roadmap for peace. The roadmap has since stalled amid regional transformations following the events of October 7. The turmoil that ensued has underscored an important reality: despite its weakness and marginalization, reforming Yemen’s government is essential for containing the growing Houthi threat and preserving the state’s legal and institutional foundations; its collapse would risk deeper national fragmentation and regional instability.
Widespread protests across government-held areas, driven by the collapse of basic services and unpaid salaries, underscore the government’s dysfunction and the urgent need for reform. This article provides a detailed examination of the steps required to address the Yemeni government’s systemic flaws, broadly centered around four key pillars. These include formulating a framework for political cohesion, implementing institutional reform, completing the economic reform program, and establishing a national defense strategy.
Wasted Opportunities
Since the launch of the Houthis’ Red Sea campaign, there have been growing signs of a shift in international thinking. In political and diplomatic circles, there is a belief that curbing the Houthis’ cross-border activities may require increased pressure rather than further incentives. It has become clear that achieving lasting peace in Yemen will require a power rebalancing and the freezing of a roadmap that prioritized external interests over a sustainable peace framework.
The pause in Saudi-Houthi diplomacy gave the Yemeni government precious time and room to maneuver, having previously been pressured into accepting a largely unbalanced settlement. However, the political forces opposing the Houthis overestimated the strategic opportunity presented before them and failed to establish credibility by addressing their internal weaknesses. Instead of strengthening their position, they wasted much of 2024 appealing to the international community for support in the hope of achieving a military resolution.
In the first half of 2025, government ambitions turned to fantasy amid talk of the Syrian regime’s collapse and the possibility of replicating that scenario in Yemen. The arrival of President Donald Trump brought with it a sense of optimism as he began his new term by designating the Houthis as a Foreign Terrorist Organization in January, followed by the intensification of military strikes against the group in March. Political leaders in Yemen’s government were busy discussing potential scenarios for “the day after” and the liberation of Sana’a and Hudaydah. They were shocked when Trump announced a halt to operations in Yemen, stating that he had reached a special understanding with the Houthis, whom he described as “brave.”
This served as a wake-up call for the government’s leadership, which abandoned illusions of an external military miracle and began to seriously consider how to bridge internal divides and emerge as a unified front against the Houthis. Their strategy shifted to focus on the political and economic tools available, while keeping their military options on the table.
Echoes of Reform
In mid-2025, newly-appointed Prime Minister Salem bin Breik successfully ensured the regular convening of the Cabinet in Aden. Members of the PLC increased their presence inside the country and approved a program of economic reforms. In July, the Yemeni rial made a remarkable recovery, regaining 50 percent of its value against the dollar. This was accomplished through the establishment of a committee to regulate and finance imports, along with the relocation of commercial banks’ headquarters to Aden, which enabled the Central Bank to exercise control over foreign currency and curb speculative trading. On the security front, local forces carried out significant operations, including the seizure of weapons shipments along the West Coast and at the port of Aden. Security forces arrested several Houthi-affiliated figures who attempted to flee the country through Aden’s airport and Al-Mahra governorate.
But by the autumn, there were setbacks. Salem Thabet al-Awlaki, head of the State Land Authority and a senior figure in the Southern Transitional Council (STC), resigned in protest against the obstruction of his efforts to register state properties and dismiss officials accused of corruption. His resignation highlighted the persistent issue of quota-based politics and the absence of political will to support governance and anti-corruption policies. Escalating disputes between Prime Minister Bin Breik and Central Bank Governor Ahmed Ghaleb al-Maabqi deepened the government’s financial paralysis, contributing to the slow implementation of the economic reform agenda. A series of unilateral decisions made by STC president and PLC member Aiderous al-Zubaidi led to pushback and controversy. The STC framed the moves as both a protest against the flawed decision-making mechanisms within the PLC and a call for improving political partnership. Lastly, the assassination of Iftihan al-Mashhari, Director of the Sanitation and Waste Management Fund in Taiz, underscored the devastating trend of powerful, entrenched groups resorting to criminal methods to resist governance reforms.
Toward A Different Approach
There is consensus that Yemen’s government is not functioning as it should. It is politically frail, lacks a clear strategic direction, has weak institutions, and is divided among its various components. The pressing question is how to address these issues. Two potential solutions have been floated.
The first, discussed quietly within political and diplomatic circles, is reducing the number of members on the PLC. Some have proposed replacing its eight members with just four, while others have suggested reverting to the earlier model of a president with two deputies. A second proposal emerged during a PLC meeting in Riyadh on September 18, calling for all decisions made by the PLC since 2022 to be referred to the Legal Committee, based on the outcomes of the 2022 Riyadh consultations. But such reconfigurations have been tried before, and have proven inadequate in achieving even their short-term goals.
What is required this time is a proactive and inclusive approach to address the government’s structural weaknesses, strengthen its internal cohesion, and enhance its strategic effectiveness to rebalance power in Yemen away from the Houthis. This will not come without challenges and will take time. Still, gradual, cumulative reform remains the optimal choice and is vital for securing national, regional, and international interests in both the short and long term. Reform should be pursued through work along four main pillars:
A Framework for Political Cohesion
To achieve coherence and unity within the internationally recognized government, a comprehensive framework for political cohesion is proposed, consisting of four key components.
First, a declaration of principles should be established to create a shared vision among the different components of the internationally recognized government. These guiding principles will lay the groundwork for renewing the spirit of political consensus. They will provide direction for the future, regardless of whether Yemen moves toward peace or continues to face the challenges of war.
Second, a regulatory framework for the presidency is necessary to legally define the rules governing decision-making within the PLC, as well as to establish the Council’s relationship with the government and other state institutions. Earlier this year, President Rashad al-Alimi received the draft bylaws submitted by the government’s Legal Committee that would regulate the PLC’s work. Two key actions are needed: first, to ensure that these bylaws include provisions that safeguard the independence of the cabinet’s work and prevent any obstructive interference by the PLC, and second, to have these bylaws formally and bindingly approved by both Parliament and the Consultation and Reconciliation Commission, thereby preventing the recurrence of unilateral decision-making crises in the future.
Third, the government must adopt a strategic vision to serve as a unified compass for collective leadership. This means reviewing and updating the government’s objectives to align with current realities, clearly defining priorities for resource allocation, and outlining the means by which these goals are to be achieved. Such a vision would overcome the current state of strategic drift, unify the political narrative, and generate public policies to be implemented by executive bodies. It would encourage PLC members to divide tasks and responsibilities rather than compete over privileges and powers. Last year, the Council made progress by formulating a “Deterrence Strategy.” The Consultation and Reconciliation Commission could be tasked with updating this vision and resubmitting it for approval by the PLC, after which it would be adopted across all institutions and their components.
Fourth, based on the above foundations, the government should articulate a unified negotiation policy. This would include the formal announcement of a negotiating team in anticipation of any potential settlement talks in the near future.
2. Institutional Reform
In 2026, the government must refocus its institutional reform efforts, prioritizing capacity building in key institutions that are central to the strategic balance of power. Reform is essential across all areas, but focusing efforts will prevent the dispersion of attention and resources. The institutions that should be prioritized include the Prime Minister’s Office, the Central Bank, the Ministry of Defense, the Joint Operations Authority, the Judiciary and oversight bodies, as well as the National Security Agency and Counterterrorism Unit.
Improved governance requires better collaboration. One of the most contentious issues within the PLC is the process of presidential appointments to public office. To address this conflict, a national committee could be established that includes the Prime Minister, the Central Bank Governor, and members of the Consultation and Reconciliation Commission. This committee would be tasked with identifying vacant or potentially changing positions within state structures and categorizing them into two types: political positions based on partnership and technical positions based on expertise and specialization. The committee would also establish clear selection criteria and mechanisms for nominations.
In parallel, strengthening local governance will be crucial. Governorates should be granted greater financial and administrative autonomy, provided that this does not conflict with the broader national interest or undermine the central government’s ability to fulfill its responsibilities. The launch of a national digitization program for both the central government and local authorities will help reduce bureaucracy and limit corruption. The pioneering experience of the local authority in Aden can serve as a model.
To ensure the success of the above, the adoption of a national anti-corruption program will prove key. This initiative should be implemented nationwide and conducted in collaboration with civil society, the judiciary, oversight bodies, and the international community.
3. Completion of the Economic Reform Program
The government must provide a time-bound action plan to complete the implementation of the reform agenda requested by the World Bank, the Arab Monetary Fund, and the government’s allies in Riyadh and Abu Dhabi.
The adoption of a state budget is a pressing priority. In July, the Prime Minister issued a decision to establish the Supreme Committee for the State Budget for the 2026 fiscal year. The urgent task now is to accelerate the completion of its mandate.
The consolidation of government revenues is also critical. All government economic authorities and local administrations must deposit their revenues into the government’s account at the Central Bank. At the same time, structural imbalances in sovereign revenue institutions — foremost the Customs and Tax Authorities — must be addressed. This requires activating oversight bodies, reorganizing collection mechanisms, and expanding both local and sovereign revenue bases.
Another crucial key reform will include the liberalization of the customs dollar rate. Essential goods such as food and medicine are excluded and will continue to be subsidized. However, it is unreasonable for the state to subsidize the exchange rate differential for car dealers or luxury furniture importers while it struggles to pay the salaries of its own employees.
4. A National Defense Strategy
Finally, a cohesive defense strategy is essential for maintaining state sovereignty and deterring aggression. This should ensure four objectives: a) strategic and operational integration, as well as institutional coordination among the various branches of the armed forces affiliated with the government, b) strengthen strategic partnerships with international allies to build institutional and armament capacities within the security and defense sectors, c) guarantee the government’s ability to deter Houthi aggression with its own capabilities and d) secure its capacity to conduct offensive operations in partnership with the Arab Coalition and international allies.
This analysis was produced as part of the Supporting Political Dialogue for Peace in Yemen program, implemented by the Sana’a Center for Strategic Studies and CMI-Martti Ahtisaari Peace Foundation and funded by the European Union.