Catching Up on the Back-channel Peace Talks in Yemen

What is the status of the discussions?

Talks between Saudi Arabia and Houthi insurgents who seized power in Yemen nine years ago are proceeding, albeit at a deliberate pace. The two parties have been in conflict since March 2015, when the Saudis led a coalition of mainly Gulf Arab states to unseat the Houthis, who months earlier had ousted Yemen’s internationally recognised government. Back-channel talks began in April 2022, when the UN mediated a two-month ceasefire between the parties, which they renewed twice. Despite having formally lapsed, the truce has largely held, bringing welcome respite in the conflict. But the talks have not moved as quickly as first hoped.

On 14 September, in the latest high-profile contact, Houthi representatives paid a visit to Riyadh, where they met with the Saudi defence minister, Prince Khaled bin Salman. It was the first announced trip by Houthi representatives to the Saudi capital since the Houthis removed the internationally recognised government from power in 2014. Yemen has been divided since then, with the Houthis controlling most of the populous north, the government operating from the port city of Aden in the south, and various other armed factions pursuing their own interests.

The Saudis and Houthis clearly want to avoid a resurgence in the fighting: they have (with some exceptions) both kept observing the ceasefire even though it formally expired a year ago. It is plain as well that both sides are interested in reaching a deal beyond an informal ceasefire. But as the talks have dragged on, it has become equally apparent that major differences separate the sides. Hopes surged in early April, when the Saudi ambassador to Yemen, Mohammed al-Jaber, visited Sanaa, where the Houthis hold sway. Word leaked out that Jaber’s discussions with the Houthis were focused on a deadline for announcing an agreement, perhaps as early as the third week of April, which marked the end of the Muslim holy month of Ramadan. There was no accord. Statements that month made clear that the gaps between the two sides remained significant.

Omani diplomats have long been trying to bridge the divide by communicating continuously with the two sides. Some four months ago, a series of tacit understandings emerged suggesting incremental progress. The Saudis suspended restrictions on ships entering the Houthi-held Red Sea port of Hodeida and agreed to allow more flights between Sanaa and Amman, Jordan. The two sides also exchanged the bodies of fighters killed in battle. Riyadh later facilitated direct flights from Sanaa to Jeddah on Saudi Arabia’s Red Sea coast and hosted Houthi leaders during the hajj, the main pilgrimage to Mecca, with some of them staying in Saudi Arabia for further discussions with Saudi officials. The Houthi delegates included Yahya al-Razami, the powerful head of the movement’s military negotiating committee.

But the gaps have persisted. The Houthi delegation’s mid-September sojourn in Riyadh was a disappointment like the Saudi ambassador’s April trip to Sanaa. Both sides expressed optimism about the talks, but they produced no concrete results.

Meanwhile, the Houthis are taking actions in a seeming effort to bolster their negotiating position that, while falling short of sparking renewed major fighting, threaten to erode the fragile calm. These include frequent attacks on their Yemeni adversaries in the centre of the country, and in particular, a 25 September drone strike on Bahraini soldiers stationed at Saudi Arabia’s southern border, which killed four and injured others. The insurgents said this last attack came in response to Saudi violations against them in the border area.

What does Saudi Arabia want to get out of the talks?

By all appearances, Riyadh has come to view its long-running military intervention in Yemen as having failed in its original goals. The intervention has not removed the Houthis from the scene. Nor has it restored the internationally recognised government’s writ or dispelled Iran’s influence in Yemen, which the Saudis hope to curb. Indeed, it has arguably pushed the Houthis closer to Tehran. Moreover, the intervention has damaged the kingdom’s reputation abroad. It has become an impediment to Saudi Vision 2030, Riyadh’s ambitious project to achieve economic diversification as the fossil fuel era chugs to a close. That project’s success hinges upon progress in stabilising the country’s neighbourhood.

Against this backdrop, Saudi Arabia now wants to rely on diplomacy to achieve a somewhat revised set of objectives. It has two primary aims for a settlement with the Houthis. First, it seeks to safeguard its 1,400km southern frontier. Long stretches of the Saudi-Yemeni border abut Houthi-controlled areas. Riyadh wants not only to put a halt to Houthi military threats but also to maintain lines of communication with the de facto governing authority (even if that is the Houthis) on the other side of the border to foster cooperation in keeping it secure and curtailing smuggling and human trafficking.

Secondly, Saudi Arabia aims to prevent other regional actors – Iran, the United Arab Emirates and even Türkiye – from finding or expanding footholds in Yemen, lest the country become a theatre of operations aimed at harming Saudi interests. Riyadh is especially hoping to convince the Houthis to sever or at least scale back their ties with Iran, which would reduce a source of friction between the Saudis and their regional rivals. Some progress toward this goal seems within reach. The Houthis will probably not break with Iran, but they might accept reducing their dependence on it as a tactical measure, if only in coordination with Tehran. While the Houthi-Iran alliance has grown stronger, as is evident in Iranian arms transfers to the movement, as well as convergences in media coverage and foreign relations, it is not a typical patron-client arrangement. The Houthis are financially independent, with revenue streams from taxation, customs and service fees as well as smuggling.

What about the Houthis?

The Houthis’ first objective is to strengthen their military and political position in Yemen. They are actively pursuing international recognition as the sole legitimate voice of the Yemeni people. They view the political and armed factions opposing them, including the government, as part of the Saudi-led coalition and as subordinate to Riyadh and Abu Dhabi. Viewed through this lens, they regard the Saudis’ willingness to talk to them – to the exclusion of the government and the other Yemeni factions – as an acknowledgment of their authority. They also are promoting the notion that the perceived Saudi wish for a swift resolution signals their triumph in the war, a narrative aimed at winning the public’s allegiance in the areas they control.

A second major Houthi objective is to bring the Saudi military intervention to an end in order to establish their military and political dominance in Yemen. In tandem with this goal, the Houthis call for the withdrawal of all foreign forces from Yemen. (In reality they mean only those allied with the Saudi-led coalition, not the Iranian and Lebanese Hizbollah experts who, according to the Yemeni government, are advising the Houthis.) The Houthis also demand a halt to Riyadh’s financial support for their political foes affiliated with the Saudi-installed Presidential Leadership Council (PLC), which now leads the government.

Thirdly, the Houthis want to secure economic aid, which they view as vital to consolidating their authority. This issue is particularly salient given the mounting calls from public-sector employees in areas under Houthi control for prompt payment of overdue salaries. A significant number of these employees have gone without pay for over seven years, since the government decamped to Aden and set up a parallel central bank there. That bank has not paid the salaries of public-sector employees in Houthi-held areas. The internationally recognised government alleges that the Houthis exhausted the foreign reserves held in the Sanaa central bank to fund their war effort (and thus prompting it to establish one in Aden). The Houthis are apprehensive that economic pressures could foment street protests. The movement has repeatedly assured these employees that they will receive their salaries once the war comes to an end.

What are the main points of contention in the talks?

The negotiations aim to move toward a settlement in three phases: addressing humanitarian concerns; resolving military and economic arrangements; and holding political dialogue. But just working through the humanitarian phase – which encompasses resolving the salaries issue, fully reopening Sanaa airport and Hodeida port, and facilitating the exchange of prisoners – has absorbed significant time and effort.

A threshold point of contention is that Saudi Arabia, which professes to be a mediator rather than a party to the conflict, contends that as such it cannot and will not sign a settlement agreement, notwithstanding its talks with the Houthis. Riyadh says Yemen’s internationally recognised government should sign alongside the Houthis.

The Houthis, by contrast, view Saudi Arabia as the main party to the conflict since 2015 and thus insist that Riyadh strike a deal with them directly. After such a deal, sources tell Crisis Group, the Houthis would be willing to agree to a ceasefire, under UN auspices, with forces under the Yemeni government’s command. But, at least for the time being, they refuse to talk with neither the government nor other Yemeni opponents as a group: they will only engage with select Yemeni parties one on one – an approach rooted in their self-conception as Yemen’s sole legitimate government. The result is that the Saudis are often, in effect, negotiating on the Yemeni government’s behalf, including over questions that concern only the government and the Houthis. The government is frustrated, because the Saudis give them very little insight into what is happening at the negotiating table, where issues of key importance to them are being discussed.

Take, for example, the knotty question of public-sector salary payments in Houthi-controlled areas of Yemen. As noted, these salaries have gone unpaid since 2016. The Houthis argue that payment should be made using revenue from the country’s oil and gas exports, which all come from government-controlled regions. In November, the Houthis attacked oil facilities in two of those regions, Shabwa and Hadramawt, bringing exports to a halt. They have threatened to repeat the strikes if the government does not meet their demands regarding salary payments. (In the meantime, the government has suspended exports as a precaution.) But the government notes that its revenue from oil sales is insufficient to cover its own expenses; it has been running a deficit for several years. Instead, the government wants to use revenues the Houthis collect from the Hodeida port as well as from telecommunications services and taxes in the areas they hold to pay the salaries. The Houthis refuse.

A related issue pertains to which entity should take charge of disbursing salaries and to whom it should pay them. The Houthis insist that the required funds be deposited in the central bank in Sanaa, which they control, and that they oversee disbursement. By contrast, the government wants the funds deposited in the parallel central bank in Aden, which would then disburse them directly to the beneficiaries based on the 2014 payroll that was in place before the Houthis took power. The Houthis say no, because that payroll excludes all the employees they have recruited subsequently.

The two sides also disagree about how much each should get to cover salary payments. The Houthis are banking on the Saudis eventually convincing the government to pay the salaries out of oil and gas revenues. They have thus stipulated that, when the government does consent, it should deposit 75 per cent of its oil and gas revenues in the Sanaa bank, on the grounds that 75 per cent of public-sector employees are in Houthi-held areas. The government, which has not agreed to pay the salaries at all, naturally rejects this idea, too. The sides likewise quarrel over the currency in which the payments should be made. The Houthis insist they should be in foreign currency, not the Yemeni riyal – yet another demand the government cannot abide.

But although it is front and centre, the salaries issue is not even the most challenging one between the parties. The Houthis are adding further conditions to a prospective settlement with Riyadh, such as compensation for the families of people killed in the Saudi-led coalition’s military operations and money for post-war reconstruction. Other points of contention also loom, such as arrangements for more regular flights in and out of Sanaa and the unblocking of roads in several governorates. The roads issue is particularly important in Taiz, a city in the country’s centre that the Houthis have kept under siege since 2016. While these are urgent humanitarian concerns, both sides are treating them as security matters. For the time being, however, they are squaring off over the salaries issue, each hoping thereby to gain political advantage over the other. Only once they agree on the salaries, it appears, will they be able to discuss other matters.

If the talks are successful, will they end the war?

For all the obvious challenges, there are grounds to be hopeful that the Saudis and Houthis will reach a political settlement eventually, based on their mutual interests. Positive statements from both sides and active Omani mediation reinforce this notion. The restoration of Saudi-Iranian relations has played a central role in sustaining the negotiations.

Yet a bargain between Saudi Arabia and the Houthis will not necessarily spell an end to the war. By excluding other key parties to the conflict, chiefly factions affiliated with certain PLC members (although the talks are also notably marked by the exclusion of groups including women and youth), the talks could yield an agreement that the parties who are left out will start actively undermining the moment the Saudis and Houthis sign it. Such a deal can only perpetuate the conflict, but in a different form.

In their official statements, most of the Yemeni factions opposed to the Houthis back the Saudi-Houthi talks. But the expressions of support should not be construed as full-throated endorsements. These parties are rather anxious not to alienate Saudi Arabia. In private, many of the factions’ leaders articulate reservations about the talks and register discontent at being shut out. This sentiment is particularly pronounced among entities aligned with the PLC, notably the UAE-backed secessionist Southern Transitional Council. This group is advocating for an autonomous negotiating team separate from the one representing the Yemeni government.

The pivotal question is: how can an agreement between Saudi Arabia and the Houthis contribute to a broader settlement that includes the other Yemeni factions? For the agreement to lead to a sustainable end to the conflict it would need to support, not sabotage, a follow-on inclusive peace process. An accord that excludes the non-Houthi factions can serve as a starting point if the Houthis and Saudis agree to defer the final decisions on issues that the local groups care most about – including governance and military arrangements for the areas in which they operate – to broader discussions within a UN-led framework. In that scenario, the situation in Yemen might calm down and real peace talks begin. Conversely, an agreement that disregards the interests of other stakeholders could easily reignite the war.

What may happen if talks fail?

In that unfortunate case, the risk of an immediate resurgence of hostilities will increase dramatically. Over the past year and a half, even as the closed-door talks proceed and the informal ceasefire holds, both the Houthis and their Yemeni adversaries have been rearming and recruiting at alarming rates.

If war erupts again, the lines of confrontation could very well be different. Whether Saudi Arabia would stay out or be dragged back in would then be an open question. Riyadh might choose not to take part in the factions’ battles with the Houthis, suspending its airstrikes in exchange for the Houthis ceasing missile fire at targets in the kingdom. At the same time, a possible lessening of ground fighting could coincide with an uptick in drone and missile strikes by the Yemeni factions, including the Houthis, perhaps hitting economically sensitive areas. Either would be a tragedy for a country that has been torn by conflict for far too long.