It has been reported by the Israeli newspaper Israel Hayom that Saudi Arabia has been exploring a $1 billion financial arrangement with Yemen’s Houthi movement to prevent attacks on the kingdom and cool tension between the country and the region.
According to the report, the arrangement would be to transfer the money through Iran, which has close ties with Houthis. But the offer has not been independently confirmed and there is no verified information that a payment has been made or that a peace agreement has been reached.
The report comes at a time of rising tension in the Middle East, with attacks on Saudi infrastructure and diplomatic efforts by more than a dozen regional powers.
Why is Saudi Arabia taking up the offer?
Following Houthi attacks on airports and oil infrastructure, security concerns of Saudi Arabia’s growing threat of attacks on airports and oil facilities have increased with the rising number of Houthi attacks as well as Yemen’s new threat to its energy operations and domestic oil infrastructure.
The $1 billion proposal is linked to earlier understandings to end the conflict in Yemen. Saudi financial assistance was expected to support public sector wages and reconstruction in Houthi-controlled areas.
And, in return, the Houthis would have to abide by ceasefire agreements and cease attacks on Saudi territory. The new report also notes that funding and implementation of previous understandings remain key issues in reducing hostilities and the implementation of them is still important for reducing hostilities.
But Riyadh has repeatedly declared publicly that it does not want to make concessions under military pressure. The exact terms of the alleged proposal are not clear.
Iran's role in the reported peace initiative.
Iran is central to the diplomatic developments because it has close relations with the Houthi movement and has offered to help facilitate dialogue.
On October 26, senior representatives from Saudi Arabia, Pakistan and Turkey held talks with Iranian officials in Tehran. Saudi Arabia described the visit as part of efforts to reduce tensions, encourage dialogue and support diplomatic solutions.
The meeting came as the wider regional conflict threatened energy infrastructure and shipping routes. Pakistan and Qatar have also been involved in mediation efforts.
The reported economic proposal would make Iran a possible intermediary in Riyadh and the Houthis’ negotiations. But as we know from the diplomatic agenda, a $1 billion transfer was not made.
Who are the Houthis?
The Houthis are an armed political movement that control much of Yemen, including the capital, Sanaa. The group has been fighting Yemen’s internationally recognised government, which has received help from Saudi Arabia.
Saudi Arabia intervened militarily in Yemen in 2015 and there has been extensive destruction and a humanitarian crisis as a result. A ceasefire in 2022 reduced the amount of major fighting but a lasting political settlement has not been reached.
The movement’s attacks on Saudi territory and regional shipping have raised fears that the conflict will spread through the Middle East.
What could a $1 Billion Deal mean for the region?
If a financial agreement were confirmed and related to a lasting ceasefire, it could reopen diplomatic channels and reduce security risks for Saudi Arabia. It could also provide opportunities for salaries, reconstruction and humanitarian needs in Yemen.
However, any agreement would depend on its conditions, implementation and the parties’ willingness to stop attacks.
For now, the alleged $1 billion offer is a media report. Saudi Arabia’s confirmed diplomatic engagement with Iran and other regional powers shows that efforts to ease tensions are continuing, but it is too early to conclude that a peace deal has been reached.
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