Yemen president vows at U.N. to 'extract Yemen from claws of Iran'

September 23, 2016 11:34 AM EDT

President Abdrabuh Mansour Hadi Mansour of Yemen addresses the 71st United Nations General Assembly in the Manhattan borough of New York, U.S., September 23, 2016. REUTERS/Carlo Allegri

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By Yara Bayoumy and Michelle Nichols

UNITED NATIONS (Reuters) - Yemen President Abd-Rabbu Mansour Hadi vowed at the United Nations on Friday to "extract Yemen from the claws of Iran" as he accused Tehran of impeding peace by intervening in the country.

A Saudi-led Arab coalition has been fighting Iran-allied Houthi rebels in Yemen since March 2015 in a bid to restore the internationally-backed Hadi to power after rebels took over the capital Sanaa, made gains in other provinces and forced Hadi's government to flee into exile.

Saudi Arabia sees Iran as the paramount threat to the Middle East's stability because of its support for Shi'ite militias that Riyadh says have inflamed sectarian violence.

Tehran views the Houthis as the legitimate authority in Yemen but denies accusations by Saudi Arabia and Yemen that it supplies the rebels with weapons. The Houthis say they are fighting a revolution against a corrupt government and its Gulf Arab backers.

"We shall extract Yemen from the claws of Iran, we shall raise the Yemeni flag over every foot of our precious Yemeni soil and we will lay the foundation for a just federal state," Hadi said in a speech at the annual United Nations gathering of world leaders.

U.N.-sponsored talks to try to end the fighting that has killed more than 10,000 people collapsed last month and the Houthi movement and allied forces loyal to former president Ali Abdullah Saleh resumed shelling into neighboring Saudi Arabia.

"We tell the whole world in very clear terms that extremism and sectarian terrorism sponsored by Iran in the region has created and will create a terrorism counter to that," Hadi said.

Hadi defended a move to appoint a new central bank governor and move the bank's headquarters from the rebel-held capital Sanaa to the southern port city of Aden, the main foothold of fighters loyal to Hadi.

"We decided to move the central bank to the interim capital, Aden, in order to save what we could save so that the bank would not reach zero reserves," Hadi said.

Arab central bank governors said on Friday they supported the move.

The central bank has been the last bastion of the impoverished country's financial system in the civil war and is effectively running the economy, according to central bank officials and diplomats.

The government has accused the Houthis of squandering some $4 billion on the war effort from central bank reserves. The Houthis said the funds were used to finance imports of food and medicine.

(Writing by Yara Bayoumy; Editing by Grant McCool)

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