Foreign Policy Blogs

Looming Economic Calamity in Yemen

The Following piece is written by a Yemeni-based journalist who writes for the Foreign Policy Blogs network and, due to serious security concerns, remains anonymous.

While anti-government protesters continue to demand the immediate departure of their long standing and much hated President; Yemen is now facing an imminent multi facets crisis which ripples, will be felt throughout the entire nation.

In between the global food prices increase and the decreasing in state revenues, Yemen was already in trouble before the uprising even started. But if the endemic mismanagement of the State and the rampant corruption were to blame for this state of affair, weeks of protests have brought Yemen to its knees and on the brink of collapse. The nation is about to be thrown in the midst of its deepest economic depression yet.

Food Crisis

Yemen is by far the poorest country of the Arabic peninsula, with the majority of its population living under the poverty line. Yemen actually has the highest rate of poverty in the MENA region and according to the International Food Policy Research Institute (IFPRI) is amongst the 10 most food-insecure countries in the World.

Despite being rich in Mineral resources, Oil and Gas, Yemen’s people have continuously suffered from poverty over the years; the country’s riches being reserved to those within the President’s circle.

Although, Yemen is no stranger to difficulties, the unfolding Revolution is having a knock on effect upon the country’s fragile economic cycle; threatening to bring about a very real food crisis.

Yemen has to import about 70 to 90% of its food, leaving the country at the mercy of prize fluctuations. If you take into account the fact that transportation fees have gone up as a result of higher Oil prices, food is getting more expensive to bring in.

Many analysts are saying that the situation is about to get even worse now that Yemen’s Oil industry has stopped all its activities. With World prices shooting up, Yemenis will have to foot the bill.

Already, in some rural areas, prizes have gone up 20 to 50%. With families who often can only afford one meal a day it does not leave much room.

Rising Unemployment

With a Revolution showing no sign to albeit, Yemen has now to face another very real problem: rising unemployment. As a result of the uprising, many businesses have had to close down or at least downsized in order to weather the economic downfall; firing many, if not all their employees.

If the situation is not addressed quickly many families will not be able to meet their financial obligations, forcing many to live in abject poverty.

Water Shortages

Yemen has been suffering from an extensive drought for many years, forcing many villages to rely upon water trucks to deliver the precious liquid. With no diesel left in the country and a severe gasoline penury, some companies decided to either double their prizes or simply stop their activities. As a result, many areas are now without drinkable water, leaving its population at the mercy of diseases and other health complications.

The state is oblivious to the situation; more preoccupied with asserting its own power rather than meet the basic needs of its population.

Liquidity Crisis

To put it mildly, Yemen’s government is entirely reliant upon its Oil and Gas production to bring in cash. Without this source of income, the state would disintegrate unable to pay salaries or keep its institutions running.

Saleh’s Regime has had to borrow money from Oil giant Saudi Arabia to palliate its cash penury, now that the Oil fields have fallen silent.

But with little to no liquidity left how long can truly Yemen keep going?

But if the International Community has so far shown little interest in Yemen’s plight, it might change its tone when it realizes that Yemen’s instability could throw off the balance of the entire Region: economically, politically and socially. And we all know that a crisis within the Middle East equates to a raise in Oil prices.