Yemen on the Brink

Yemeni girls in hijabs.

Al Qaeda on the Arabian Peninsula seriously continues to threaten Yemen's stability, regional security and Western interests. Western security concerns focused on the impoverished Arab country, which is a neighbour of top oil exporter Saudi Arabia, after al Qaeda's Yemen-based regional wing claimed responsibility for a failed suicide bombing of a U.S.-bound plane in December 2009. Since then, al Qaeda's Yemen arm has intensified its attacks against state infrastructure in various Yemeni provinces. The attack in the southern Shabwa province on July 25 was among five raids on state targets since June, which have been attributed to the resurgent militant group.

That is why Yemen's pressing short-term and long-term problems need to be addressed immediately and comprehensively. The root causes of terrorism, appropriate methods of de-radicalizing or countering religious radicalism, and the potential for Yemen's troubles to infect its neighbors demand proper policy responses. It is evident, however, that security and economic development are mutually dependent, and meaningful political reform is necessary to sustain both.

In fact, there is an urgent need for a process of dialogue to address the critical issue of national reconciliation as well as broader political reforms. Yemen's government needs to adopt more constructive and inclusive attitudes, and decentralization of political power could alleviate many of the local grievances spawning confrontation. Personal status and business disputes are being increasingly resolved under tribal law, and not state law, and thus the restoration of the rule of law and of a strong, independent judiciary is urgent.

An outside facilitator is needed to provide a neutral forum for discussion and promote accountability. Regional and international support is absolutely critical to achieving success, and Oman or Qatar could possibly be suitable interlocutors. The dialogue process should be broad, including the ruling party, the Joint Meeting Parties, the Southern Movement, the Houthis and other relevant actors.

At the same time, Yemen's oil reserves are being depleted. Approximately 70 percent of the government's revenue comes from oil, making economic diversity an urgent and critical issue if Yemen is to avoid devastating consequences, while immediate attention needs to be paid to Yemen's emerging water and energy crises. Both crises, if not managed well, have the potential to threaten Yemen's national security.

With this reality on the ground, the framework established at the London Summit of 2010 by the representatives of countries and international organizations has become a meaningful basis to address Yemen's problems. The summit reiterated commitment to support Yemen in fighting extremism, corruption, poverty, maritime piracy and African displacement, as Yemen currently hosts more than 2 million refugees from the Horn of Africa, in addition to a large number of internally displaced persons.

A follow-up meeting of donor countries in Riyadh in February was a major extension of the London Conference. The Riyadh Donor Conference was designed to gather donors to find transparent ways to disburse aid and establish mechanisms that will monitor the reform of economic institutions and practices, the improvement of the investment climate and the rapid replacement of dwindling water and energy resources.

Nine agreements were signed by the Saudi Fund for Development on the sidelines of the Donors Conference for financing several projects in Yemen at a cost of $642 million. Saudi Arabia also agreed to extend funding for the implementation of six projects, in partial fulfillment of its pledge initially made at the first London Donors Conference of 2006 to offer $1 billion to Yemen. Additionally, the World Bank revealed that it would offer Yemen an amount of $480 million to finance development projects as part of the strategy of country assistance to Yemen for the years 2010-2013.

Both the London and the Riyadh Donors conferences aimed to address issues like the tackling of unemployment, water and energy, the role of the IMF, international aid delivery and the role of the Gulf Cooperation Council (GCC). Yemen's high unemployment rate is critical for its stability. Given the dearth of job opportunities inside the country, the greatest obstacle towards building up Yemen's economy lies in the unwillingness of its neighbors to allow Yemenis to work in their countries. Neighboring countries such as Saudi Arabia and other GCC states could gradually open their labor markets to Yemeni citizens.

Yemen's lack of water is also critical as San'a may well be the first capital to lack sufficient water for its population. This water crisis could lead to massive population shifts in the region as well as serious health implications and internal instability with unpredictable security ramifications. The construction of desalination plants in key population centers along the coast and intensive aid to the government of Yemen for a national effort to manage and conserve water are important.

Additionally, neighboring countries could support Yemen in the power sector, for example, connecting Yemen to the regional power grid and assisting construction of Yemen's power infrastructure, while the further development of the Aden Free Zone as an industrial zone that would have a separate administrative authority and appropriate regulations is critical. A special status permitting duty and quota-free shipments to the European Union, the United States and other countries would stimulate investment. This zone could also host projects such as desalination and power production plants, both of which would have an evident impact on the daily lives of the Yemeni people.

It is also important to note the vital role the IMF can play in the implementation of critically needed financial and budget reforms, both of which are fundamental to progress toward a sustainable economy and thus improving the security status. The IMF could assist the Yemeni government in tax reform, which could recover billions of dollars lost through tax evasion, energy subsidies such as reducing subsidies on diesel fuel, and water reform such as increased tariffs for high water usage.

Additionally, international development aid needs to maximize coverage to a wide variety of actors and regions without favoring the government at the expense of opposition groups that have legitimate grievances. Aid should flow through the central government and local institutions. The Social Fund for Development provides a model for aid distribution. In all cases, the flow of aid must be carefully monitored in light of Yemen's pervasive corruption. Approved international government agencies and NGOs could manage foreign aid with transparency and accountability.

Last but not least, the GCC can play a significant role in addressing Yemen's problems, especially in the economic realm. But the GCC as an organization and its individual states are unwilling to open their doors to Yemeni expatriate laborers. They still mistrust the Yemeni government for backing Saddam's 1990 invasion and occupation of Kuwait, and they suspect that the Yemenis will bring with them the infections of Islamic extremism. Given that some GCC countries remain reluctant to give Yemen full membership in the Council, perhaps the GCC might consider granting Yemen "associate status" that would allow freer movement of labor and capital between Yemen and GCC countries. Such a designation would be a vote of confidence and encouragement, and could serve as a basis for reinvigorating the process of economic reform in Yemen.

As it is evident, there is no panacea or silver bullet solution for Yemen. Prerequisite for Yemen's success is the development of a comprehensive plan to address chronic poverty, reform economic institutions and practices, improve the investment climate, introduce national dialogue, restore order and the rule of law, and establish security. Failure to act on these issues will undermine any effort to deal with the threat from al Qaeda or Yemen's internal misery and thus will prolong regional turmoil and violence.

Antonia Dimou is an associate at the Centre for Strategic Studies of the University of Jordan and head of the Middle East and Persian Gulf Unit at the Centre for Security and Defence Analyses based in Athens.

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