Cracks Emerge in Saudi War on Yemen amid Talks with Rebels

In a sign of cracks within the Saudi-led coalition in Yemen, Riyadh said Wednesday it military has completed a prisoner swap with the Yemeni Ansarullah rebels a day after a report suggested that Saudi officials and rebels had held talks in Riyadh to end the conflict.

The Saudi Press Agency said Yemeni tribal leaders coordinated the swap, which has led to the release of Corporal Jaber al-Kaabi in return for seven Yemeni fighters. The military also said the fighting on the Saudi-Yemeni border has been temporarily halted.

RELATED: Pope Condemns as 'Senseless and Diabolical' Slaughter in Yemen

"The leadership of the coalition forces welcomed the continuation of a state of calm along the border ... which contributes to arriving at a political solution," the Saudi statement said.

The direct peace talks and first prisoner swap of the conflict could indicate a major policy shift in the Saudi leadership, which could be looking for a way out of a conflict it initiated in March last year, which has killed more than 7.000 people and has cost the kingdom billions of dollars so far.

In recent months, Saudi Arabia has been suffering an economic crisis due to low oil prices caused by to the kingdom’s own policy of increasing production in order to drive competition from fracking industries in the United States, as well as maintaining hegemony in the industry over its arch-rival Iran.

Sources told Reuters Wednesday that Riyadh is seeking a bank loan of between US$6 billion and US$8 billion, in what would be the first significant foreign borrowing by the kingdom's government in over a decade.

ANALYSIS: Why Saudi Arabia is Bombing Yemen

In December last year, Saudi Economy Minister Adel Fakeih said his country’s spending in 2015 increased by 13 percent to US$260 billion. He attributed more than US$5.3 billion of that figure to the war on Yemen.

Riyadh launched its operation, with 10 of its regional allies, in a bid to reinstate their Yemeni ally, exiled President Abd-Rabbu Mansour Hadi, after the Ansarullah rebels took control of the capital Sanaa and other parts of the country in September 2014, ousting the Saudi-backed government and forcing Hadi to flee to Riyadh.

Saudi Arabia says the rebels are funded by Iran, which both Tehran and the Ansarullah rebels deny.

WATCH: Over $26B in Arms Sold to Saudi Arabia