Our regional director for the Middle East, Olga Ghazaryan, recently pointed out just how many development buzzwords are being bloodily explored in her region right now – transition to democracy in Egypt; Responsibility to Protect in Libya, and Yemen is looking like a combination of revolution in a fragile state and a dystopian vision of a resource-constrained future.
So what to read on Yemen? In a way it doesn’t matter: in all the media and academic coverage, one name keeps cropping up – Abdul-Ghani al-Iryani appears to enjoy a complete monopoly on analysis for the outside world. He must be a very busy man. But of the various al-Iryani inspired pieces that I’ve come across, my favourite is a new paper by Sarah Phillips, (based on local field research by Mr Al-Iryani), ‘Yemen: Developmental Dysfunction and Division in a Crisis State.’ It’s part of the excellent ‘developmental leadership program’ research, which I’ve linked to before. It mainly focuses on the political players and institutions involved, but as they are changing so fast, I’ll highlight instead some interesting background on the history and context of the current upheaval:
“Several political and economic structures form the basis for beliefs about what is politically possible, including:
• Historical coincidence. In the 1970s and 80s, north Yemen was largely a remittance-based economy. At the same time as almost one million Yemeni workers were expelled from the Gulf as punishment for Yemen’s stance on Iraq’s invasion of Kuwait in 1990, the country’s oil exports began to increase dramatically. The balance of power rapidly switched from a remittance-rich (and therefore relatively autonomous) citizenry and a poor state, to a poor (and relatively economically dependent) citizenry and an oil-rich state. This shift was reflected in the renegotiation of the political settlement, favouring the regime rather than Yemeni social forces.
• Ongoing access to external rent. The implicit message from Western donors and Yemen’s neighbours is that Yemen poses too serious a security threat to be allowed to descend into chaos, and that the regime must be supported politically and economically against that outcome. For example, in 2009, Saudi Arabia made a direct payment of $US2.2 billion to the Yemeni president, and the United Arab Emirates followed suit with a payment of $US700 million. This makes the total known to have been received by the regime in direct support around 70 percent of what Yemen earned from oil exports when revenues peaked in 2008. In this context, the depletion of oil revenues appears far less threatening, and the perceived need for the regime to plan for a post-rentier economy greatly reduced.
The most serious short-term threat facing Yemen is that oil production has fallen faster than the government had anticipated and there is no other source of income likely to replace it before oil revenues drop to, or below, subsistence level. The Yemeni economy is in serious trouble: the budget deficit was estimated to be 9.3 percent of GDP for 2010 and the country’s main export (oil) is depleting by around 4 percent per year. In 2010, for example, the government’s operating costs are expected to exceed its income by around 30 percent. The regime now has less money to distribute through its networks. Oil revenue dropped by around 40 percent in 2009, further hamstringing the government’s already strained budget, and the Economist Intelligence Unit estimates that Yemen’s real GDP growth for 2011-12 will drop to an average of less than 3 percent, which is less than the country’s annual population growth, and “insufficient to prevent increasing economic hardship”. That 40 percent is not being recouped through gas exports, greater foreign investment, or labour remittances, for reasons that are largely political and are discussed below. While the regime has publicly claimed that the revenue from gas exports would largely replace the income from oil exports, in May 2010 it admitted that the income from gas was less than one-quarter of what had been hoped for 2010. Despite these declines, almost nothing of substance has been done to plan for a post-rentier economy.
Water, Food, and Vulnerability
Like much of the Middle East, Yemen has a large youth bulge, though like most issues of concern, this is particularly pronounced in Yemen. Over 75 percent of Yemen’s population is now under the age of 25, in a country where unofficial estimates usually place unemployment at around 40 percent. Yemen is also one of the most water scare countries in the world and it is widely believed that the capital city of Sana’a could run out of freshwater within 15 years. Finally, Yemen now has one of the most food insecure populations in the world, with 42 percent of children being malnourished. In a recent survey on food security, the World Food Programme (WFP) reported that: “about 6.8 million Yemenis (31.5 percent) are food-insecure and, within this group, 2.5 million people (11.8 percent) were found to be severely food-insecure”. As food prices reach all-time highs in early 2011, these percentages will continue to climb, which will increase pressure on the Yemeni regime to increase economic opportunities for the vulnerable.”
What emerges for me is the kind of question it feels like one shouldn’t even ask: is Yemen a non-viable country? Shrinking and squandered oil; booming population; a patronage system running out of the cash it needs to keep the system together. What are the options – mass aid-funded social protection? A return to the migration that kept things going before the oil started flowing? Any other ideas?
Update: here’s Sarah Phillips’ recent powerpoint on the Yemen