By the Blouin News Politics staff

Economic, political crises in Yemen could tear it apart

by in Middle East.

Thousands protest against the Houthis' "constitutional declaration," in Ibb, Yemen, February 7, 2015. Anadolu Agency/Getty Images

Thousands protest against the Houthis’ “constitutional declaration,” in Ibb, Yemen, Feb. 7, 2015. Anadolu Agency/Getty Images

On Monday, Yemen’s Foreign Ministry Undersecretary for Political Affairs called on the international community to prevent Yemen’s economy from collapsing. Fighting between the Shiite Houthi rebels, who seized power in September, and the Sunni terrorist group al-Qaeda in the Arabian Peninsula (AQAP) has upended the country’s fragile political balance while the economy reels.

The Houthis, who have occupied the capital Sana’a for almost six months, dissolved parliament on Friday and installed a Revolutionary Committee drawn from their ranks to rule. Negotiations with rival politicians had broken down the day before, when the Houthis offered no concessions, but talks resumed on Monday. Yet, optimism is in short supply, and there is trouble on all fronts. Houthis, being Shiites from the mountainous north, are a minority group in Yemen. That bodes ill for their prospects of capably ruling a mostly Sunni country that has virtually no history of inclusion. AQAP, by no means defeated (even despite ongoing U.S. drone attacks), is set to continue suicide bombings and armed assaults against Houthis, civilian targets, and the country’s oil and gas infrastructure. As the conflict becomes irreversibly sectarian, the Sunnis of the oil-rich eastern province of Marib will resist any Houthi encroachments. Secessionist fervor is also rising in the South, which was an independent state from 1967-1990 and sparked a civil war in 1994 by attempting to break away again.

The poorest country in the Arab world, with over 54% of the population living in abject poverty, Yemen has been an economic basket case for quite some time, and its situation has worsened in recent months. The Houthis’ reinstatement of fiscally-ruinous fuel subsidies has been moderated by lower global oil prices, but that has meant Yemen’s dwindling oil exports earn even less. (These exports are insignificant on a global level but still generate around 60% of the government’s revenues.) Yemen’s budget deficit in 2014 was $3.15 billion, alarmingly close to its shrinking foreign reserves which totaled only $4.8 billion in October 2014.

Yemen’s sectarian violence and its potential ripple effects matters enormously for the region and the world. (Note that AQAP trained the Charlie Hebdo murderers.) However, no country has as large a stake as neighboring Saudi Arabia. The kingdom has traditionally been Yemen’s economic guarantor, both through Sunni solidarity and in the hopes of avoiding an economic and humanitarian crisis on its border. Between 2012 and 2014, Saudi Arabia provided or pledged nearly $4 billion in aid. However, after the sudden Houthi takeover of Sana’a in September, an insurgency that Saudi Arabia views as a front of Shiite archrival Iran in its own backyard, Riyadh froze all assistance to Yemen. Continued turbulence in Yemen poses security risks for Saudi Arabia, which is grappling with its own, domestic security concerns (think homegrown al-Qaeda attacks and unrest from the minority Shiite population in its eastern oil-producing heartland.)

At the “Friends of Yemen” conference in September 2012, donor countries and institutions pledged $7.9 billion (with $3.25 billion promised by Saudi Arabia) but Yemen has received only about a third of the money. On Monday, Yemen’s Undersecretary for Foreign Affairs called for the donors to fulfill their pledges, but even if the international community does come through (an improbable prospect as best), the money won’t be sufficient. Sadly, Yemen’s current socio-political crisis has been decades in the making — and even a much needed influx of cash won’t be enough to right its course.