Yemen's reforms need a plan, not just more money

More money is not enough to solve Yemen's perennial economic and security problems. Donors in Riyadh need to break the old patterns.

What happens on one part of the Arabian Peninsula has a knock-on effect elsewhere, which makes the deteriorating situation in Yemen a regional concern. A donor conference for the country opened yesterday in Riyadh, with an initial pledge by Saudi Arabia of around $2.2 billion (Dh8.1 billion) in fuel and other products.

There will be more to come. The fuel pledge is merely part of a package of donations that Yemen needs to keep its political and economic reforms on track. The Sanaa government has suggested it will need $11 billion in foreign aid to fill gaps in its budget.

At root, there is an economic crisis, a challenge that saw the embattled economy contract by 10.5 per cent last year. Unemployment is widespread and inflation has risen by as much as 23 per cent. There has been a gradual decline in the underlying economic capacity of the country: the middle class have seen their savings depleted and investments decrease in value. For those without such cushioning, especially in rural areas, prospects are grim: up to half the population is thought to be without secure access to food.

There is a humanitarian crisis looming, linked to a more general environmental crisis in the Horn of Africa, but with specifically Yemeni issues, such as the over-cultivation of qat, which taxes water resources.

The economic crisis has been exacerbated by the political upheaval of the last year, as protests forced former president Ali Abdullah Saleh from the presidency (but not from the country).

The new government also faces a seriously worsening security situation. In the far east of the country, militant groups operate far from the gaze of the central authority, watched mainly by the operators of US drones. Militant groups, including those linked to Al Qaeda, have fought territorial battles with Yemen's army in the south.

The donations from this week's conference are essential to keep Yemen's fragile economy and political transition on track. Yet what is needed more is a clear plan to manage the money and the economic reforms. This will require a shift in thinking, both within the country and from its biggest patron, Saudi Arabia.

Money has traditionally flowed along patronage networks controlled by ruling elites. This was how Mr Saleh maintained a shaky grip on power for so long. Breaking up that patronage network and instituting central government authority will be essential to making sure the money pledged in Riyadh can make a clear difference on the ground.

Published: September 5, 2012 04:00 AM


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