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IMF Warns Escalation in Red Sea Could Adversely Affect Economic Activity in Yemen

IMF representatives and Yemeni officials at the conclusion of their meetings in Amman
IMF representatives and Yemeni officials at the conclusion of their meetings in Amman
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IMF Warns Escalation in Red Sea Could Adversely Affect Economic Activity in Yemen

IMF representatives and Yemeni officials at the conclusion of their meetings in Amman
IMF representatives and Yemeni officials at the conclusion of their meetings in Amman

The International Monetary Fund (IMF) has warned of negative effects on Yemen due to escalation in the Red Sea, also affirming that the halt in oil exports since the Houthi attack on oil facilities in October 2022 have deprived the government of half of its revenues.

The Fund said growth in Yemen is estimated to have contracted by 2 percent in 2023 while inflation remained high, despite declining global food prices.

The findings were released after an IMF team held this week its annual consultative meetings with the Yemeni government in the Jordanian capital, Amman.
At the meetings, the government was represented by Central Bank Governor Ahmed Ghaleb and Finance Minister Salem bin Buraik, while the IMF team was led by Joyce Wong.

Discussions covered recent economic developments in Yemen, the economic outlook, and progress on key policy reforms.

At the end of the mission, Wong said the loss of oil exports, which represented more than half of the government’s revenues (4 percent of GDP), is estimated to have widened the fiscal deficit to 4.5 percent of GDP in 2023, adding to pressures on reserves and the exchange rate.

Challenging Humanitarian Situation

Also, the IMF mission said the humanitarian situation in Yemen remains difficult with 17 million people facing food insecurity. Disbursements of the GCC support package and stable remittances have been mitigating factors, it noted.

“An escalation of the Red Sea tensions could adversely affect economic activity through trade and financial channels, and lower external support including humanitarian assistance,” the Missions’ statement said.

Despite the challenging situation, the IMF said the authorities remain steadfastly committed to reforms, including further aligning multiple exchange rates for government transactions and refining the FX auction system.

“Cash management has been strengthened with better expenditure control and prioritization. These measures have contributed to limiting the budget deficit, recourse to monetary financing, and associated inflationary pressures,” it added.

Acceleration of Fiscal Reforms

Also, the IMF mission found that “amid high uncertainty, the mission urged the further acceleration of fiscal reforms, including improving revenue administration while enhancing expenditure reprioritization and control.”

It said ensuring consistency and predictability in FX auctions will help the central bank preserve hard-won credibility amidst constrained FX resources. Strengthening central bank governance while improving data collection will enhance transparency and accountability, it added.

The mission also stressed the importance of continuing to preserve stability in the financial sector and further strengthen compliance in line with international frameworks, including AML/CFT, and national standards. It said this will further facilitate trade and remittances, which are key lifelines for the Yemeni population.

Meanwhile, external financial support remains critical to help ease fiscal pressures, limit monetary financing, and preserve price stability, the mission affirmed.

“To this end, active engagement with donors to address outstanding needs, together with improving the availability and consistency of financing will be crucial,” it said.

And while the IMF pledged to continue to provide comprehensive technical assistance to Yemen to further enhance institutional capacities, it said it held discussions with partners and key stakeholders to enhance synergies and improve coordination of external assistance.

The mission team then expressed deep appreciation to the Yemeni authorities, technical staff, and all counterparts for their excellent cooperation and candid discussions and looks forward to continued close engagement.

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Arab World

Jordanian Source: Areas Outside Govt Control in South Syria Are Haven for Terrorists, Drug Traffickers

Men inspect the aftermath of a Jordanian airstrike in Al-Tuff, in the countryside of Daraa province in southern Syria, Tuesday, Oct. 27, 2026. (AP)
Men inspect the aftermath of a Jordanian airstrike in Al-Tuff, in the countryside of Daraa province in southern Syria, Tuesday, Oct. 27, 2026. (AP)
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Jordanian Source: Areas Outside Govt Control in South Syria Are Haven for Terrorists, Drug Traffickers

Men inspect the aftermath of a Jordanian airstrike in Al-Tuff, in the countryside of Daraa province in southern Syria, Tuesday, Oct. 27, 2026. (AP)
Men inspect the aftermath of a Jordanian airstrike in Al-Tuff, in the countryside of Daraa province in southern Syria, Tuesday, Oct. 27, 2026. (AP)

An informed Jordanian source confirmed that “areas near the northern border with Syria have provided, and continue to provide, a haven for terrorists and drug traffickers.”

The source told Asharq Al-Awsat that “numerous targets inside Syria are not under the control of the Syrian government,” noting that these gatherings “have served as a launchpad to target Jordanian security.”

Jordanian security asserted that it “seeks to protect its borders from sites that serve as a launchpad for operations targeting its security and stability, which are areas outside the control of regular Syrian security forces.”

Meanwhile, Jordan has found itself “at the forefront of confronting the risks of terrorist activity on its borders,” according to the source.

The source stated that the death toll from Jordanian airstrikes targeting ISIS operatives in southern Syria has risen “to at least 24 terrorists.”

The same source linked “ISIS to drug trafficking networks, which have recently resumed their operations in southern Syria.”

The Jordanian source maintained that the strikes were based on precise intelligence.

Amman also expressed its willingness to cooperate with Damascus on security assessments, intelligence sharing and border protection.

Syria, however, condemned the bombardment, denied any prior coordination with Jordan and accused Amman of carrying out strikes that killed several civilians.

Jordanian sources disputed that account, insisting the operation had been coordinated with Syrian authorities and targeted locations identified through confirmed intelligence.

They linked the ISIS operatives targeted in the strikes to the cell behind last Friday’s attack at a church in the village of Hammoud, in Jordan’s Karak governorate.

The Jordanian source noted that the kingdom had largely secured its northern border through its own efforts since 2012, confronting militias and militant groups operating in southern Syria that have repeatedly threatened Jordanian civilians.

The airstrikes destroyed warehouses holding large quantities of weapons and narcotics near Sweida and in the Syrian desert, according to intelligence information obtained by Asharq Al-Awsat.

The intelligence also pointed to cooperation between militant groups in southern Syria and smuggling networks along the Jordanian border.

An informed source described the links, coupled with a recent rise in intercepted smuggling attempts, as a dangerous development for the kingdom’s security.

Jordanian forces have intercepted 160 infiltration and smuggling attempts along the Syrian border since the beginning of the year, including 22 infiltration attempts and 138 operations involving drugs and weapons.

Seized contraband included large quantities of narcotic pills and other drugs, weapons, explosives, drones, GPS devices and communications equipment.

Smugglers have increasingly used drones and balloons, complicating border surveillance and efforts to trace the origins of cross-border operations.

Jordanian Minister of Government Communication Mohammad Momani warned that his country’s patience was running out over militant activity threatening national security.

Between 2024 and 2026, Jordan carried out several airstrikes against drug-traffickers, arms smugglers and militant groups under security and intelligence-sharing arrangements with the Syrian government.

The operations were aimed at protecting civilians on both sides of the border from militant and criminal networks.

Arab World

Two Drones Shot Down Near US Embassy in Baghdad, Sparking Security Alert

The US Embassy building in Baghdad. (Iraqi News Agency)
The US Embassy building in Baghdad. (Iraqi News Agency)
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Two Drones Shot Down Near US Embassy in Baghdad, Sparking Security Alert

The US Embassy building in Baghdad. (Iraqi News Agency)
The US Embassy building in Baghdad. (Iraqi News Agency)

Air defenses at the US Embassy in Baghdad shot down two suspected reconnaissance drones over the heavily fortified Green Zone on Tuesday, Iraqi security sources said, triggering a security alert in the capital.

The sources said the drones were believed to be unarmed and intended for surveillance.

The embassy sounded its alarms as the aircraft flew over the Green Zone, which houses government buildings and foreign diplomatic missions.

Iraq’s Security Media Cell, however, reported the interception of only one unidentified drone.

“The sound heard in Baghdad resulted from the interception of an unidentified aircraft near the Green Zone,” Lieutenant General Saad Maan, head of the cell, said in a statement.

Witnesses told Asharq Al-Awsat they heard two loud explosions near the interception sites, while residents reported finding drone wreckage near Al-Rasheed Street in Baghdad’s old city center.

Reuters cited two security sources as saying the embassy’s air defenses were activated after detecting the drones approaching the Green Zone. Both were shot down, with wreckage recovered at separate locations.

Security forces were investigating their origin and intended destination, the sources added.

The US Embassy has faced rocket and drone attacks since the United States and Israel launched strikes on Iran.

Sources told Asharq Al-Awsat that debris was scattered around the Green Zone, the Shorja market, Al-Rasheed Street and the Kadhimiya district. No civilian casualties or injuries were reported.

The incident marked the first breach of its kind in the area in many months. In previous years, the Green Zone had repeatedly come under attacks targeting the US Embassy and other diplomatic missions, often blamed on Iran-backed armed factions.

Motives

The incident came less than a month after the withdrawal of US-led coalition forces from Iraq, whose presence armed factions had long cited to justify attacks on diplomatic and military facilities.

The purpose of the drone flights remains unclear.

Some observers linked the incident to tensions between Washington and Tehran, while others suggested it could be political signaling between rival groups within the Coordination Framework and armed factions.

Baghdad launched a campaign months ago to bring factional weapons under state control and integrate armed groups into the security forces.

The initiative was initially due to be completed by September 30, coinciding with the coalition’s withdrawal, but the government later postponed the deadline until June 2027.

While some factions have complied, others continue to oppose the plan, including the Iran-backed Kataib Hezbollah.

The group calling itself the Islamic Resistance in Iraq had previously pledged to support Iran if the United States resumed its war in the region.

Arab World

Al-Sharaa: Syrian-Iraqi Borders Are Completely Secure, ISIS Threats Have Dropped

Syrian President Ahmad al-Sharaa. (AFP)
Syrian President Ahmad al-Sharaa. (AFP)
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Al-Sharaa: Syrian-Iraqi Borders Are Completely Secure, ISIS Threats Have Dropped

Syrian President Ahmad al-Sharaa. (AFP)
Syrian President Ahmad al-Sharaa. (AFP)

Syrian President Ahmad al-Sharaa stressed on Tuesday that the Syrian-Iraqi borders are completely secure, saying joint coordination was underway between the two neighbors.

In an interview with Iraq’s Dijlah TV, he added that the threats posed by the ISIS terrorist group have dropped, saying that no organization currently presents a danger to the two countries.

Al-Sharaa also said he welcomes a visit by Iraqi Prime Minister Ali al-Zaidi to Syria. The Syrian and Iraqi governments are in agreement over several issues that bind them.

Iraqi media have reported that al-Zaidi is set to kick off an official visit to Syria on Wednesday. He will visit at the head of a large ministerial delegation to discuss bilateral ties, and issues related to water, oil and trade between the two countries.

The relationship with Iraq is not based on sectarian or ethnic considerations but on shared history and deep economic ties, al-Sharaa stressed.

He said visiting the shrine of Sayyida Zeinab is available while ensuring security conditions, noting that individuals who tried to exploit the issue to stir sectarian strife have been arrested.

"Syria does not view Iraq through a sectarian lens. We share a great deal in common, and social relations between Iraq and Syria have remained healthy for years. Since we came to power, Baghdad's policies have been positive, despite attempts by some factions to adopt differing stances,” al-Sharaa said.

“I did not intervene in any sectarian conflict in Iraq following the events of 2003. I was released from prison in Iraq in 2011, after which I returned to Syria,” he remarked.

"Syria’s stability is in the interest of Iraq and vice versa. We must build upon our common ground and establish an appropriate environment for relations, free of fears. What unites us is greater than what divides us, and we have had enough of wars and disputes. I have not assaulted any civilian in Iraq," he declared.

“We are communicating with international companies to connect the Baniyas pipeline to oil refineries, and memorandums of understanding have been signed between Syria and Iraq regarding the Baniyas–Kirkuk pipeline,” al-Sharaa went on to say.

“Syria is Iraq's gateway and maritime outlet, serving as the strategic route to the West. Syria is considered Iraq's gateway to the Mediterranean Sea for oil exports,” he noted.