* Yemen on brink of famine - aid agencies
* Nearly two years of war has left country devastated
* Graphic on food situation: tmsnrt.rs/2hacFyg
By Jonathan Saul and Maha El Dahan
LONDON/ABU DHABI, Dec 16 Yemen's biggest traders
have stopped new wheat imports due to a crisis at the central
bank, documents seen by Reuters show, another blow to the
war-torn country where millions are suffering acute
Nearly two years of war between a Saudi-led Arab coalition
and the Iran-allied Houthi movement has left more than half of
Yemen's 28 million people "food insecure", with 7 million of
them enduring hunger, according to the United Nations.
At the same time, aid agencies are warning that Yemen - the
Arabian peninsula's poorest country - is on the verge of famine,
although they have yet to declare one.
Trade and aid sources say the situation was compounded in
September when Yemen's exiled president, Abd Rabbuh Mansur Hadi,
ordered the central bank's headquarters moved from the capital
Sanaa, controlled by Houthi rebels in the north, to the southern
port of Aden, the seat of the new government.
This has led in effect to a de facto partition, with rival
institutions in the north and south.
Hadi's government said the Houthis had squandered some $4
billion on the war effort from central bank reserves; the
Houthis said the funds financed imports of food and medicine.
In a Nov. 30 letter addressed to Yemen's trade ministry in
Saana, which the company had dealt with before Hadi's decree to
move, leading trader Fahem Group, said: "We would like to inform
you that we have been unable to conduct any new contracts for
wheat as local banks cannot transfer dollars for the value of
any wheat cargoes."
Fahem Group said in the letter, seen by Reuters, that it
wanted to continue importing wheat to cover the population's
needs but was unable to open letters of credit.
Bread forms a major part of people's diet in Yemen.
Even before the move, the central bank, aiming to shore up
dwindling foreign currency, had stopped providing guarantees for
importers, leaving them to finance shipments themselves.
Saudi Arabia and allied Sunni Muslim Gulf states began a
military campaign in March last year to prevent the Houthis and
forces loyal to ex-president Ali Abdullah Saleh taking control
of the whole country after they ousted Hadi in late 2014.
Fahem Group imported an estimated 1.2 million tonnes of
wheat into the Red Sea port of Saleef between April 2015 and
April 2016, which accounted for between 30 to 40 percent of
Yemen's total wheat imports, according to trade estimates.
A separate letter, also addressed to the Houthi-run
authorities in Sanaa by major importer Hayel Saeed Group and
other large traders, said those firms had stopped new wheat
shipments and urged resolution of the financing problems.
Together, those groups accounted for almost all the rest of the
CENTRAL BANK CRISIS
A source with the central bank in the Houthi-controlled
capital Sanaa said it had no access to foreign reserves at all.
"Importers will have to turn to the Aden central bank for
access. This is something outside of its control," the source
said. "Wheat imports have stopped since a little less than a
month (ago) and the reserves are around two months now as some
prior deals are arriving."
The trade ministry in Sanaa did not respond to requests for
Monasser al Quaiti, the governor of the central bank in
Aden, and the trade ministry in Aden could not be reached for
comment. Quaiti, who was appointed by Hadi, has previously said
the bank has no money.
Jamie McGoldrick, U.N. humanitarian coordinator for Yemen,
told Reuters, when contacted about the letters: "With this
notification by these food importers, they are going to find it
challenging, difficult, and maybe even impossible to bring in
the wheat for a period of time now."
Aid agencies are bringing in wheat, but can only cover a
fraction of food import requirements, partly due to a lack of
When asked for comment, Brigadier General Ahmed al-Asseri,
spokesman for the Saudi-led coalition, said the Houthis were
deliberately blocking wheat and aid shipments, pointing to
cargoes being held up at the Red Sea port of Hodeidah.
"The Houthis try to play this card of the starvation of
people to gain more international media attention," he told
The rebel Houthis have accused Saudi Arabia and its allies
of imposing a blockade on Yemen. Representatives for the Houthis
could not be reached for comment.
Supplies are still reaching many parts of Yemen including
Hodeidah and Aden, but other areas particularly Ta'iz in the
south, Sa'ada in the north, Shabwah in the centre and Al Maharah
in the east have struggled to get deliveries due to fighting,
data from UN agencies showed.
More recently there were shortages of vegetable oil, wheat
flour and sugar in those areas, although precise details were
not available from any agency.
The price of wheat flour and sugar were about 25 percent
higher in November on average across Yemen than they were before
the conflict, the data showed. The volume of fuel imported in
November was only 40 percent of Yemen's monthly requirements.
U.N. children's agency UNICEF has said malnutrition among
children is at an all-time high with nearly 2.2 million in need
of urgent care - a spike of almost 200 percent since 2014.
Salah Hajj Hassan, representative in Yemen for UN food
agency FAO, said the decision to transfer the central bank to
Aden "will have a devastating effect on the already
deteriorating economic performance".
"Traders who are engaged in importing food are worried that,
unless, alternative arrangement is foreseen, this decision will
leave them financially exposed and make it harder to bring in
supplies in Yemen," Hassan told Reuters.
Aid group Oxfam warned this month that based on current food
imports, Yemen will run out of food in a few months.
"Yemen is being slowly starved to death," said Mark
Goldring, chief executive of Oxfam GB.
Shipping and aid sources said even ships that are prepared
to berth must wait in line to offload their cargoes. This,
together with mounting insurance costs and uncertainty about
exchange rates and accepted currencies at the ports, has led to
more delays, and higher and more volatile prices.
The United Nations say both sides are holding up aid
deliveries and set up its own verification and inspection
mechanisms at the start of this year to try to solve the
(Additional reporting by Mohamed Ghobari, William Maclean and
Tom Miles; graphic by Christian Inton; editing by William
Maclean, Veronica Brown and Philippa Fletcher)