Yemen's slide cannot be allowed to continue

Yemen is now virtually a failed state, with disastrously high unemployment and a dying economy. This can only be to the detriment of its GCC neighbours.

Unemployment and underemployment have become defining factors of Yemeni society. Above, in the capital, Sanaa. Khaled Abdullah / Reuters

Yemen rarely makes it into regional, let alone international, news headlines. Its economics stories struggle to get any sort of media attention.

Its economy and in many other aspects the state itself have been effectively written off as beyond repair. Two years ago, a senior Yemeni diplomat confided to me that what really angers him about the way his country is treated by the international media is that it is regularly described as a "failing state". Now, it is quickly turning into an effectively failed country.

The Arab Spring may have claimed Ali Abdullah Saleh as a victim, driving him from the presidency, but the root causes of Yemeni discontent remain unaddressed. In fact, they have worsened. Unemployment and underemployment have become defining factors of Yemeni society. For this reason, the Gulf states in particular should be worried about Yemen.

The devastating effects of unemployment rarely remain confined to the borders of the country concerned. My Harvard historian friend Mark Somos often reminds me why unemployment is bad, not only for the country where it persists, but more so for its neighbours.

That's a powerful and recurring pattern throughout history. Ancient Rome's urban unemployment destabilised both the known world and Rome itself. In more modern times, Algeria and Romania exemplify smaller, non-hegemonic states where unemployment - not necessarily caused by domestic misgovernment - created a demographic and economic strain upon neighbouring states.

The abundance of examples of how unemployment carries transformative political and economic repercussions across borders should make GCC states worry about Yemen. In fact, there are no cases where unemployment has not had damaging effects on neighbouring states.

Youth unemployment is particularly malignant. It is a key determinant in long-term instability, as unemployed youths turn into a future generation of inexperienced and under-qualified workers and citizens. In Yemen's case, turning into militants is becoming one of the few options available for the nation's youths.

For Yemen, creating jobs is an uphill task. The Yemeni government is simply incapable of doing anything tangible. Whether because of misgovernment or corruption is besides the point. The Yemeni job market is dead. So far, aid provided by Arab states and the international community has mostly been diverted to help fighting militants, train government officials or to address an impending humanitarian disaster. Little has been done to address the chronic unemployment. This is the reason that the billions of dollars paid or pledged are not sufficient to tackle the Yemeni problem. The aid money available is sufficient to make headway, but it is not being used for the right purposes. The key is to look afresh at the challenge.

Yemen is a major risk to its neighbours and the rest of the world, but it also presents a rare opportunity. The figures are compelling. It is impossible to find an accurate figure for Yemeni unemployment or underemployment, for the simple reason that defining what unemployment is in a Yemeni context is a near-impossible task.

International organisations estimate unemployment at about 30 per cent, while the World Bank estimates youth unemployment at 35 per cent. A senior Yemeni official told me that he estimates effective youth unemployment is more than 70 per cent. The government knows that it has an almost insurmountable challenge but has little means to address it.

Requesting access to the GCC market can certainly provide temporary relief but is by no means sufficient. Yemen simply needs a new economy. More than half of Yemenis work in agriculture, yet this sector forms less than 10 per cent of the country's GDP, and accounts for less than 5 per cent of exports. In other words, more than half the Yemenis who are considered employed are grossly unproductive.

Compared with Vietnam, a country of similar GDP per capita, and where 60 per cent of the workforce is in agriculture, that sector's contribution to Vietnam's GDP is 22 per cent, and 30 per cent of exports. The productivity of Yemenis in agriculture is also rapidly eroding as land is lost to desertification, urbanisation and the more lucrative growing of qat.

The agricultural sector in Yemen needs urgent funding to become mechanised. This can be transformative to the Yemeni economy. Other sectors offer similar opportunities. Longer term, manufacturing jobs can ensure a well-diversified economy and a more efficient and productive labour force.

Yemen provides an ideal opportunity for its neighbours. It could become the bread basket of the Arabian Peninsula rather than a source of regional instability. The longer it takes to realise the potential, the more difficult it will be to reverse decades of decline.

Ghanem Nuseibeh is the founder of Cornerstone Global Associates and a senior analyst at Political Capital