The Socio-Economic Disintegration of Yemen

The civil war of Yemen is probably the most catastrophic conflict besides the Syrian civil war. While the Arab spring churned disequilibrium in the region for years to follow, no country – in my opinion – faced the consequences quite like Yemen. From my literary experience, therefore, I draw inferences that it is explicit that the worsening conflict has more than devastated the populace. However, while Syria found equilibrium somewhere around the eclipse of the last decade, Yemen continues to plummet as the proxy war refuses to subside. And while the entire world is privy to the complex territorial dynamics of the conflict, the humanitarian crisis continues to bubble in Yemen as the geopolitical bystanders await; either an unlikely win or implosion of the entire state.

While the civil war waged since 2014 is quite notorious to narrate in granular detail, it is worth stressing that ever since the Houthi insurgents besieged Sana’a, the capital city of Yemen, more than 100,000 civilians have been killed while roughly 4 million have been displaced. What started as a pressure campaign to subdue the government over gasoline prices gradually morphed into a bipolar political struggle which eventually turned the whole country into debris. Quite analogous to Syria or Iraq, the Yemeni crisis was further exacerbated when foreign forces meddled and turned the already incendiary situation into full-blown warfare. Today, the Saudi-led coalition, backed by the United States, anchors the internationally recognized Hadi-regime while Iran underpins the Houthi-led offensive. Years of peace deals and accords have turned futile as no solution deems fit to appease the political split.

The underlying dissent lies in the Sunni-Shia divide that has practically etched the history of the Middle East. The sectarian clash between the conflicting parties – and their foreign benefactors – is the primary and most significant reason for cultivating Yemen into a battleground.

The six-year-long war has completely crippled the socio-economic infrastructure of Yemen. Since 2015, the United States has conducted over 150 airstrikes against Houthi rebels in the name of defense. However, it’s worth noting that Houthis never exactly posed a direct threat to the United States. In fact, its worth attention that the conflict itself never posed any danger to any of the external partners involved in the war until the Saudi-led coalition decided to intervene. Apparently, it is rather a show of resistance to their Iranian counterparts in Yemen than an attempt to safeguard the Yemeni populace. And while the Biden regime responsibly revoked the tag of a terrorist organization affixed to the Houthi insurgents by former president Donald Trump, the UN still estimates that Yemen is on the brink of a humanitarian debacle due to a subsequent reduction in foreign aid.

According to the data released by the United Nations, an estimated 131,000 deaths in Yemen are associated with the byproducts of the civil war – food insecurity and health crisis. Approximately 25 million Yemenis are reportedly in dire need of humanitarian assistance whilst millions are at immediate risk of famine and the Covid pandemic. Due to a blatant disregard of human life and the international law on both sides, the social infrastructure of Yemen has all but crumbled while the economic snapshot appears beyond dismal.

The conflict has beleaguered the economic welfare of the entire country as Yemen currently stands on the verge of a financial collapse. Since the fissures started to widen in the political fabric of the country, Yemen has pandered beyond its reputation as the poorest country in the Middle East. Besides millions of Yemenis living impoverished and nearing malnutrition, Yemen has failed to procure even the basic food and medication for consumption as the exports have shrunk over the years. A quarter of the businesses have turned extinct which simply paints a bleak picture of the domestic economy. Estimates show that almost 80% of Yemen’s population depends entirely on international aid as unemployment roughly stands at 55% of the labor force. Those who are miraculously employed have little to celebrate as wages are slashed perpetually. The result is burgeoning inflation.

The food and commodity prices are through the roof as major industries, including agriculture and banking, have severely perished while the Yemeni currency continues its downward spiral. The Yemeni Riyal has depreciated uncontrollably over the past years and recently plunged to 1000 Riyals against the US Dollar in the government-controlled south. With depleting foreign exchange reserves and dwindling income, Yemen’s economy is on the crutches being helmed by the IMF and other international donors. However, the Houthi-controlled swathes are blamed for extorting even the aid packages through nefarious tax policies. Thus, the aid presumably trickles down to arms purchases instead of reforming the destitution in the country.

Both the IMF and the United Nations have cast grave concerns as international economists have cited that inflation would continue to soar in Yemen. The evidence concurs as a massively devaluing currency, blooming international commodity prices, and obliterated domestic industries and economic infrastructure would all but exacerbate the price hikes while the country continues to burn in the latest series of the offensive in the north. While a strong governmental intervention is imperative for an economic overhaul, it is simply impossible until the country continues to be governed by two conflicting regimes dictating divergent policies. And while the United States, the EU, and the UAE continue to pump millions of dollars to enable the victims of war, intermittent aid is simply not a lasting solution.

The resolution lies in a ceasefire that could pave a way for sustainable peace and stability. Not the most appropriate example but Yemen could draw inspiration from the reconciliation of South Sudanese forces after five years of a blood-ridden civil war. In fact, even before a ceasefire, a step towards peace would be to end foreign intervention in Yemen. Stop using the county as a platform to finance a proxy war. I recently came across the USAID program initiative currently training healthcare workers to hold positions in Yemeni hospitals. Let this be a guiding force towards prosperity. Instead of butting heads, the Gulf nations should join the effort to rebuilt Yemen: a country they had an equal part in destroying over the years.

Yemen is expected to face an economic contraction of 2% in 2021 – after already registering a decline of 8.5% in 2020. To upend the deteriorating situation, Yemen needs external financial sources instead of aid packages. Yemen stands in dire need of funds to be injected into a legitimate economic mechanism instead of being guided at the whims of military leaders. Yemen needs political and economic stability to pivot its currency and Balance of Payments. Yemen requires a short-term economic blueprint to effectively rebuilt its core industries from the ground up to end its constant reliance on foreign assistance. But most importantly, Yemen needs a consolidated government to enact immediate political, social, and economic reforms. Yet unfortunately, with continued attacks from the Houthi rebels to Saudi-led offensive combat in the city of Marib, the conflict seems never-ending. In fact, it seems burgeoning and is now engulfing territorial aggression: recent attacks on Saudi Abha airport being a vital example. Clearly, with a fragmented government and bustling conflict, a resolution is as unlikely as expecting a bright future for the war-torn country – at least in the near term.

Syed Zain Abbas Rizvi
Syed Zain Abbas Rizvi
The author is a political and economic analyst. He focuses on geopolitical policymaking and international affairs. Syed has written extensively on fintech economy, foreign policy, and economic decision making of the Indo-Pacific and Asian region.