Why are Yemen’s Houthis demanding $51 billion from Saudi Arabia to end the war?

Dubai: Yemen’s Iran-backed Houthis have demanded $51 billion and formal recognition as the country’s rulers in exchange for ending hostilities with Saudi Arabia, presenting Riyadh with a difficult choice as renewed missile attacks threaten the kingdom’s oil facilities, airports and cities.

The extraordinary demands emerged after Saudi Arabia approached the Houthis to explore a negotiated end to the conflict following attacks on Saudi oil tankers in the Red Sea and the group’s seizure of strategic territory overlooking the Bab Al Mandab Strait, The Wall Street Journal reported on Thursday.

Citing people briefed on the discussions, the newspaper said the Houthis sought the money as compensation for years of Saudi-led airstrikes and a prolonged blockade of Yemen.

Although different figures have since been discussed, any potential financial settlement could still run into tens of billions of dollars.

But the financial demand is only part of Riyadh’s dilemma.

The Houthis also want Saudi Arabia to recognise them as Yemen’s legitimate rulers — a concession that would undermine the internationally recognised Yemeni government backed by Riyadh and potentially strengthen an Iran-aligned movement along the kingdom’s southern border.

No agreement has been announced, and Saudi Arabia has not publicly accepted either demand.

Missile threat to Medina

The revelations came as Saudi Arabia faced fresh security threats on Thursday.

The Saudi-led coalition said it intercepted and destroyed a missile fired by the Houthis towards the Medina region, home to Islam’s second-holiest city.

Saudi authorities also issued warnings about potential threats to Yanbu, the kingdom’s principal Red Sea oil export hub, while civil defence officials sent emergency alerts to residents of Sharurah, near the Yemeni border.

The Houthis had earlier claimed an attack on Riyadh’s international airport during a visit by Syrian President Ahmed Al Sharaa, although Saudi authorities had not confirmed the reported strike.

The latest incidents underline the widening reach of Houthi attacks, which have increasingly targeted Saudi energy infrastructure, airports and other strategic facilities.

Why are the Houthis demanding $51 billion?

The Houthis say the proposed compensation would cover damage from years of Saudi military operations and the restrictions imposed on Yemen during the conflict.

Saudi Arabia intervened in Yemen in 2015 to support the internationally recognised government against the advancing Houthi movement.

Although the conflict subsequently entered a period of relative calm, renewed fighting has placed Saudi territory and critical infrastructure under growing pressure.

The Houthis have also expanded their territorial control, advancing towards Aden, the southern port city that serves as the seat of Yemen’s internationally recognised government.

According to the WSJ, Houthi forces have moved to within approximately 80 kilometres of Aden, raising concerns about the government’s ability to defend its remaining territory.

The group’s control of positions overlooking Bab Al Mandab has added another strategic dimension to the conflict.

The narrow passage connects the Red Sea with the Gulf of Aden and is a vital route for international trade and energy shipments.

Can Saudi Arabia afford to accept?

For Riyadh, agreeing to a financial settlement could offer a possible route towards reducing attacks on Saudi territory.

However, analysts warn that accepting the demands could encourage further pressure from the Houthis.

Maged Al Madhaji, co-founder of the Sana’a Center for Strategic Studies, told the WSJ that the greater danger was creating a precedent in which the group could use military escalation to extract additional concessions or payments.

Saudi Arabia must also weigh the political consequences of recognising the Houthis as Yemen’s rulers.

Such a move would raise fundamental questions about the future of Yemen’s internationally recognised government and the kingdom’s long-term security.

Kristian Coates Ulrichsen, an expert at Rice University’s Baker Institute, told the newspaper that Saudi Arabia now faced greater risks than during the earlier phase of the conflict between 2015 and 2022.

He pointed to the impact of attacks on civilian and energy infrastructure, including their potential to undermine investor confidence.

Riyadh searches for military support

Saudi Arabia’s negotiating position is complicated by difficulties in securing military assistance from regional and international partners.

The kingdom has sought defensive and offensive support as Houthi attacks have intensified.

Egypt has approved a military assistance role aimed at helping Saudi Arabia defend itself against threats from Yemen.

Turkey, meanwhile, is moving towards ratifying a mutual defence agreement with Saudi Arabia and Pakistan, although the arrangement has not yet translated into a coordinated offensive against the Houthis.

Pakistan has resisted involvement in offensive military operations inside Yemen, while the United States has declined direct participation in a renewed Saudi campaign, according to the WSJ.

The dispute has also brought renewed attention to Iran’s relationship with the Houthis.

On Thursday, Iran’s Foreign Ministry rejected criticism by European Union foreign policy chief Kaja Kallas, who had called on Tehran and other actors to end military support for the Yemeni group.