What is the fate of Yemen’s wealth?



Written by Mona Zaid
The war has devastated Yemen’s economy and destroyed critical infrastructure. Even before the current conflict, years of mismanagement and corruption and the depletion of oil and water resources had resulted in chronic poverty, underdevelopment, and minimal access to such basic services as electricity, water, and health care in much of the country.
The conflict has aggravated that situation, and significant international assistance will likely be needed when the war ends.
Political turmoil and civil conflict have severely damaged the overall fiscal situation, with the impact of the escalating cost of the war compounded by a collapse in oil and tax revenue.
Before the current conflict, years of regulatory mismanagement had held back development. The absence of a dynamic private sector resulted in chronic unemployment and a large informal sector. The conflict has aggravated the situation.
During his 30 years in power, former Yemen president Ali Abdullah Saleh is thought to have amassed a personal fortune of $60 billion, according to the United Nations Sanctions Committee. This exceeded the wealth of rulers in neighboring oil-rich Gulf states, despite Yemen being mired in poverty.
His net income would equal $6 million in a day – while it would take the president of the United States more than 15 years to earn that much.
Saleh might argue that part of this wealth came into his possession before he became president in 1978.
This line of defense might well be correct, as many Yemenis speak of Saleh’s prominent role in smuggling alcohol through the Bab al-Mandeb Strait, between Africa and Yemen, in the 1970s, as a junior officer.
However, if this is true, and as profitable as these smuggling operations might have been, they cannot explain all of Saleh’s wealth.
Numerical grading of Yemen’s overall economic freedom could not be resumed in the 2019 Index because of the continuing lack of reliable economic statistics for the country, although greater global attention has increased pressure to end the ongoing conflict, prospects for lasting peace remain dim.
Yemenis are starving to death, driven not by lack of food but by policies by parties to the conflict that have led to an economic collapse.
The latest IPC Acute Food Insecurity Analysis, that measures food security in Yemen, stopped short of a formal declaration of famine but identified that a Level 4 hunger crisis, or “famine-like conditions” exist for 5 million Yemenis – or approximately 17 percent of the country’s population, the report failed to find enough evidence to declare an actual famine in Yemen.
Nonetheless, the IPC (Integrated Food Security Phase Classification) global alert details a worsening emergency situation in Yemen requiring immediate assistance, for a famine to have been declared, at least 20 percent of a region’s population would have to experience extreme food shortages, with significant numbers of deaths due to starvation.
Located on the southern Saudi Arabian peninsula, Yemen descended into violent conflict in March 2015. The cost of staple foods has increased more than 35 percent in the past year alone, and 80 percent, on average, since before the crisis in Yemen.
Whilst there may not be enough data to make a technical declaration of famine, we have been watching this crisis worsen, with increased malnutrition and starvation, it is now commonplace in Yemen,” said Abdikadir Mohamud, Mercy Corps Country Director in Yemen. “Simply put, people can no longer afford to eat. We know it is not the result of a scarcity of food, rather it is due to a dramatic rise in the cost of food. The collapse of the Yemeni economy and the instability of the country’s currency have put millions of lives in jeopardy.”
“War and a currency in free fall have conspired to take Yemenis from poverty to starvation,” said Mohamud. “The hunger crisis is man-made and stems from policies that humanitarian assistance alone would never be able to repair, the path to solving hunger starts with stabilizing the economy on one hand and establishing a lasting political solution in Yemen on the other.”
In 2016, the Saudi-backed Hadi-government transferred the operations of the central bank from capital, Sana, to the southern city of Aden. The bank, whose policies are dictated by Saudi Arabia, a senior Western official said, started printing vast amounts of new money — at least 600 billion riyals, according to one bank official, the new money caused an inflationary spiral that eroded the value of any savings people had.
Aid agencies warned that relocating the central bank and politicizing the last national institution would have disastrous effects on the civilian population, and those warnings have unfortunately been proven correct, the non-payment of salaries has been a guaranteed way to impoverish these employees and their families. Yemenis are faced with economic collapse and rising prices due to shortages and the falling currency.
The rapid deterioration of the currency in recent months has exacerbated the crisis severely, the main causes of this catastrophe can all be traced back to the deliberate policies of the Saudi coalition, and as such the U.S. shares responsibility on account of our government’s unconditional support for the coalition.
Economic warfare takes other forms, too. In a recent paper, Martha Mundy, a lecturer at the London School of Economics, analyzed coalition airstrikes in Yemen, finding that their attacks on bridges, factories, fishing boats and even fields suggested that they aimed to destroy food production .
The coalition’s attacks on food production and distribution show that their forces are deliberately striking civilian targets. Moreover, they are doing this with the intention of depriving people of both the livelihoods that these farms and fishing boats provide and denying the population access to the food that comes from them.
Unfortunately, the crisis is of such a magnitude and the need for relief is so urgent that much more will be required. Ending U.S. involvement in the war that has destroyed their country and starved its people is a necessary step in bringing a halt to the fighting.