Resolution Criteria

This market resolves based on the international recognition status of Yemen's political entities by December 31, 2028:

• Yes: Two or more independent states achieve formal international recognition (e.g., UN membership, diplomatic recognition from major powers). This includes scenarios where South Arabia, a Houthi state, or other entities gain recognized statehood.

• Partial: De facto territorial separation exists with functioning parallel governments and institutions, but no formal international recognition of independent statehood is achieved.

• No: Yemen remains unified under a single internationally recognized government, regardless of internal fragmentation or de facto autonomous zones.

Resolution will be determined by examining UN membership records, major power diplomatic recognition, and official international organization statements regarding Yemen's political status.

Background

Yemen's conflict cannot be reduced to one simply between the internationally recognized government and the Houthis, with an overlapping map of influence evident on the ground with de facto authorities competing over security, resources and representation. Houthi insurgents currently control the capital Sanaa and all of former North Yemen except for eastern Marib Governorate. In December 2025, the STC said it had entered and taken control of the southeastern Hadhramaut province, which holds 80% of Yemen's oil reserves.

On 2 January 2026, the STC published a constitutional declaration for the State of South Arabia, with the STC leader stating that the constitution would be in effect for two years, after which a referendum on self-determination would be held. Most of the major parties to the conflict support a single state and UN Security Council resolution 2216 (2015) backs Yemen's territorial unity.

Considerations

The offensive was seen as a significant setback for Saudi ambitions in the region, and could set the conditions for the Southern Transitional Council eventually declaring a secession of southern Yemen. However, immediate secession would likely be difficult for the Southern Transitional Council, citing the mere partial recognition of the Sahrawi Arab Democratic Republic during the Western Sahara conflict. On 30 December 2025, the PLC government declared a 90-day state of emergency and ordered UAE withdrawal, with the UAE subsequently announcing full withdrawal of its remaining counterterrorism personnel from Yemen. The rapid reversal of STC territorial gains and ongoing military confrontation between Saudi-backed and UAE-backed forces creates significant uncertainty about whether any entity will achieve formal international recognition by 2028.