Blog | June 23, 2016

Post-Conflict Yemen: The Need for Early Economic Recovery Initiatives

Saskia van Genungten, a senior research fellow at the Emirates Diplomatic Academy, examines the long-term challenges facing the UN-facilitated peace negotiations intended to end the civil war in Yemen. She poses actionable solutions to create a more positive environment for the next generation of Yemenis.

The UN-facilitated peace negotiations aimed at ending the civil war in Yemen are showing slow progress as the warring parties—as well as their regional backers—seem willing to stop the fighting and invest in a political, power-sharing solution instead.

The military confrontation between the forces of Yemeni President Abd Rabbuh Mansur Hadi, supported by a Saudi-led intervention force, and the Houthi rebels and other local factions propped up by Iran and Hezbollah, has devastated the country. However, many of Yemen’s problems predate the war and, if left unaddressed, competition for ever scarcer resources, damaging corruption and social inequality will keep fueling conflict.

Thus, to make any sort of political deal viable and sustainable, it will have to go hand-in-hand with tackling Yemen’s extremely vulnerable socioeconomic situation. To (re)gain trust and to keep momentum, the Yemeni authorities should generate quick, tangible and positive results. Keeping the long-term challenges in mind, they could start with launching a set of early economic recovery initiatives.

Keeping in mind Yemen’s long term challenges

The list of fundamental, long-term challenges facing Yemen is long. Early recovery initiatives should take into account the following conditions:

  • A young and rapidly growing population. Between 1990 and 2015, Yemen’s population grew from 12 million to 26.2 million people. Population pressure will impact Yemen’s infrastructure, its education and health care systems, its labor market and its adaptability to climate change.
  • Steady depletion of energy reserves. Approximately three-quarters of Yemen’s economy is dependent on revenue from the oil and gas sector, which makes up about 90 percent of Yemen’s exports. Without new discoveries, the oil fields will be depleted within several years and with oil prices forecasted to remain low, companies are unlikely to consider Yemen as a lucrative place for investments.
  • The potential increase in water and food scarcity. Water governance is weak and has contributed to depletion of this vital resource. Available groundwater is unable to support fast-paced population growth. Some experts predict that Sana’a, Yemen’s capital, could run out of viable water supplies as soon as 2017. Of all irrigated lands, 40 percent is used for the cultivation of Khat, a mild narcotic that contributes immensely to the unproductivity of Yemen’s work force.
  • Unsustainable fiscal and external balances. With international oil prices expected to remain relatively low, Yemen will keep running structural deficits and will struggle servicing its international debts. Additional income for individual families from large scale remittances dried up back in the 1990s, due to the expulsion of Yemeni expat workers by other Gulf countries. That situation is unlikely to change anytime soon.
  • Weak local governance and limited absorption capacity. Much of Yemen’s territory remains under de facto local and tribal rule. Years of mismanaged of state resources have soured relations between national, regional and local authorities. This has translated into a trend towards federalism and created room for more extremist actors to take root. 

Finding suitable early recovery initiatives 

With the above constraints in mind, recovery initiatives ideally would contribute to de-escalation, promote peace and move local economies (and young men, in particular) away from relying on combat or criminal activities. Relevant policy objectives could include:

  • Increasing monetary and fiscal stability. Yemen’s authorities will need to bring down prices, secure vital imports and restore confidence in the local currency. Direct budget support, when earmarked and monitored adequately, can help. In addition, a serious discussion needs to be held about the economics of reconciliation and potential federal models that would regionalize income sources.
  • Initiate labor-intensive reconstruction projects. Infrastructure works can provide large-scale employment for unskilled (male) youth, help reinsert ex-combatants into society and rebuild and redesign infrastructure and public services. These projects can also be tools for reconciliation, as jobs in reconstruction can help build a sense of joint ownership and a stake in regional recovery.
  • Restore the agricultural base. Agricultural and fishery activities constitute 22 percent of Yemen’s GDP and provide formal and informal professional activities for around 54 percent of the population. Maintaining this base will make Yemen less dependent on external aid and relief efforts. Yemen could implement a robust, incentives-based substitution strategy towards crops that use less water and are less harmful than Khat.
  • Provide relevant, skills-focused education initiatives. Education creates alternatives for ex-combatants and the unemployed, while promoting schooling for girls will have a decelerating effect on unsustainable population growth. Education efforts should be aligned with the needs of Yemen’s future job market. Training programs could include basic health care and primary schools supporting teaching, administrative, agricultural, social entrepreneurial and de-mining skills.

The need for a social awareness campaign

The country is in dire need of success stories; early recovery initiatives should tie into a general public awareness campaign aimed at providing Yemeni youth a sense of purpose and ownership. A large-scale campaign could make Yemen’s challenges explicit and emphasize the social behaviors that positively or negatively affect Yemeni communities, such as unsustainable population growth, corruption, etc.

Funding and the role of external donors

Local revenue will not cover any of the above mentioned initiatives, and external donors will be called upon to fill the gaps. The international community could consider preparing for a new international conference on rebuilding Yemen, taking the outcomes of the 2012 Yemen Donor Conference as a starting point. The related 2012-2014 Transitional Program for Stabilization and Development could be reviewed and deepened for this purpose.

Any international initiatives should avoid aid-dependency when focusing on incentivizing individuals and communities, while also remaining mindful of the limited absorptive capacity of local institutions.

Conclusion

A political deal between the warring parties will be an important step towards sustainable peace in Yemen. Nevertheless, post-war Yemen will continue to face extreme difficulties, many of which are rooted in longer-term trends and developments. In the short-term, authorities should strive to implement a selection of strategic initiatives, incentivizing individuals and communities towards a productive path. This selection should focus on addressing current conditions and impediments, creating a more positive environment that emphasizes opportunity and empowers a new generation of Yemenis.

Dr. Saskia van Genugten is a senior research fellow at the Emirates Diplomatic Academy and author of Post-Conflict Yemen: Early Economic Recovery Initiatives. She tweets at @svgen.

 

The views expressed in this post reflect those of the author and not that of the EastWest Institute.