By Timour Azhari
MUKALLA, Yemen/RIYADH - After pushing the United Arab Emirates out of Yemen late last year, Saudi Arabia is deploying political capital and billions of dollars in a bid to bring its southern neighbor more firmly under its control, a sign of Riyadh reasserting itself regionally after years of prioritizing a domestic agenda, six officials told Reuters.
It’s a formidable challenge. The wealthy Gulf kingdom is trying to bring together fractious armed groups and tribes while also propping
up a collapsed state through major cash injections, with an unresolved conflict with Houthi rebels in north Yemen held at bay by a fragile truce - just as Riyadh faces a budget crunch at home.
The kingdom is budgeting nearly $3 billion this year to cover salaries for Yemeni forces and civil servants, according to four Yemeni and two Western officials, who said it included roughly $1 billion earmarked for salaries for southern fighters once paid by Abu Dhabi.
"Saudi Arabia has cooperated with us and expressed its readiness to pay all salaries in full," Yemeni Information Minister Muammar Eryani told Reuters in an interview, without providing a total figure. Eryani said the Saudi support would allow Yemen to reorganise the armed factions and bring them under state authority.
Riyadh wants a success story in the parts of Yemen controlled by the internationally recognized government that it backs, which is in exile from the Houthi-controlled capital Sanaa, the officials said.
It hopes that will pile pressure on the Iran-aligned Houthis, who control roughly a third of the country, to come to the table for talks, while building up Yemen’s government forces in case a military confrontation is necessary, all the sources said.
The kingdom has also dangled political carrots, telling Yemeni secessionists that their long-held dream of a separatist state could become reality - once the conflict with the Houthis is resolved, three of the officials said.
Saudi’s overall financial package for Yemen and the openness it has signaled to a separatist state have not been previously reported. Most of the seven officials Reuters spoke to in the Yemeni port city of Mukalla and in the Saudi capital requested anonymity to discuss policies that have not been publicly announced.
The Saudi government media office, as well as the Yemeni government, did not respond to requests for comment, including about the financial numbers or conversations about a pathway to a new state. Reuters could not independently verify what Saudi officials told their Yemeni counterparts about these policies.
In response to Reuters questions sent to the UAE government media office, an official said the UAE had dedicated "signficant resources" over more than a decade to improving security and humanitarian conditions in Yemen. After withdrawing its forces from Yemen last year, the UAE "is no longer involved in the Yemeni file in any aspect," the official said.
As well as the new stance in Yemen, Riyadh is playing a more active role in post-Assad Syria and in Sudan, another arena for its rivalry with the UAE, a shift from years dedicated to Crown Prince Mohammed bin Salman's Vision 2030 domestic drive to modernise the Kingdom.
Although Saudi finances are already stretched – with low oil prices slowing down massive gigaprojects – it cannot afford a security risk next door, said Farea al-Muslimi, research fellow at Chatham House's Middle East and North Africa Program.
Instability in Yemen, with whom the Kingdom shares a 1,800km (1,000 mile) border, could derail its plans to attract foreign visitors and investment at home, Muslimi said. Houthi attacks on Saudi energy infrastructure in 2022 were quickly followed by the ceasefire.
AS 'SOLE OWNER,' SAUDI BUYS STABILITY IN YEMEN
Yasmine Farouk, Gulf project director at the International Crisis Group think-tank, said Saudi Arabia would prioritize the allocation of resources to Yemen because "it is now the sole owner of this problem.”
Saudi Arabia first intervened in Yemen in 2015, leading a loose coalition of Sunni states including the UAE against the Shi’ite Houthis, who had seized the capital the previous year.
Riyadh and Abu Dhabi both supported Yemen’s internationally-recognized government, as well as factions divided over whether their country should splinter into the northern and southern states that existed before a 1990 unification.
After years of fighting that triggered one of the world’s worst humanitarian crises, the 2022 truce has held, despite regional escalation tied to the Israel-Gaza war that saw the Houthis fire on Red Sea shipping.
In December, Emirati-backed separatists launched a surprise assault against Saudi-backed forces - a rare public display of an intensifying rivalry between the two Sunni powerhouses.
In response, Riyadh bombed an Emirati military shipment in Yemen, ordered Emirati forces to leave the country and supported a counter-attack against the UAE-backed separatist Southern Transitional Council.
Riyadh then shifted to a charm offensive, inviting STC figures to Riyadh for talks in early January. At first, Saudi officers confiscated their phones and questioned them for two days about the attack, according to three people familiar with the events.
But in the weeks since, Riyadh moved the separatists into five-star hotels in Saudi Arabia, paying their expenses and offering to fly in some of their families, the three people said.
"It's good to be on the winning side, even if you were the loser," one separatist official told Reuters.
The Saudi government did not answer Reuters questions about the sources' accounts of these events.
The Kingdom already paid Saudi-aligned fighters. It recently began funding hundreds of thousands of state workers and tens of thousands of STC fighters, the same men who attacked Saudi-backed forces in December and were paid by Abu Dhabi, according to the six officials.
Saudi's total bill for salaries, other development projects and energy support to Yemen could exceed $4 billion this year alone, two of the officials said.
"There is now one captain for this ship instead of multiple. That should mean it is less likely to sink," said one of the Western officials, who is familiar with the developments.
The official said Riyadh was now “buying loyalty and stability, but everyone is wondering whether they will sustain it.”
POLITICAL CARROTS - AND STICKS
The Kingdom wants to unify southern Yemen’s divided factions into a single Saudi-led military structure to prevent state fracture. It would also serve to build pressure on the Houthis, the six officials said.
"Saudi Arabia is seeking a better internal ordering within the anti-Houthi coalition—an ordering that would allow the Kingdom to present a stronger front in negotiations with the Houthis. This is why the stakes are so high," said Farouk, the analyst.
To incentivize support, Saudi Arabia has told secessionists that they can have their own state so long as other Yemenis agree - likely via a referendum - and they deal with the Houthi problem first, two of the Yemeni officials and one of the Western officials said.
A Yemeni separatist official said Riyadh told them the south’s fate was up to them. “But nothing can happen till the Houthis are dealt with," that official said.
Riyadh hosted a January conference of southerners where they flew the separatist flag, according to a Reuters reporter at the event. The move was seen as a magnanimous gesture by Saudi designed to draw the cause away from Abu Dhabi, Yemeni officials in attendance told Reuters.
Saudi Arabia has also used sticks.
It found Yemeni Defense Minister's Mohsen al-Daeri's perceived lack of opposition to the STC's offensive as tantamount to betrayal, according to three people briefed on Saudi's view of him. Daeri was dismissed and Saudi authorities detained him in Riyadh for weeks in January, two of those people said. He has since been moved to a hotel and has been welcoming some visitors, they said.
The Yemeni government, and the Saudi government’s media office did not respond to requests for comment about the allegations made by the sources. Reuters could not immediately reach Daeri for comment.
A LONG ROAD AHEAD
Riyadh has told some interlocutors it hopes to see the conflict in Yemen resolved by the end of this year, according to two Yemeni officials. Information Minister Eryani told Reuters he hoped military operations would cease by the end of 2026.
But Muslimi, the Chatham House expert, sees the deadline as ambitious and aimed at applying pressure on Yemeni forces to get their house in order.
Yemenis remain divided over visions of a single or divided state, and there is resistance among various separatist factions to Saudi plans to create a unified military command.
Muslimi said it could take up to five years for parties to negotiate and hold a referendum on the south’s fate.
Dismantling an entrenched, decade-old war economy in one of the world’s poorest countries could take even longer.
For a decade, Yemeni teacher Mohammad Al-Akbari has watched co-workers and students alike leave school to join armed groups backed by either Abu Dhabi or Riyadh.
Akbari’s monthly salary remains about $30. An 18-year-old fighter still earns at least $250.
"When we teach the kids, they say, what am I supposed to do with this education?" he told Reuters in the Yemeni port city of Mukalla.
"The most dangerous thing facing Yemen today is the impossibility to imagine a peaceful life outside of militarism and war and fighting," Muslimi said.
(Reporting by Timour Azhari; Additional reporting by Maha El Dahan; Editing by Maya Gebeily)
