It Is the Economy, Stupid

Earlier this week Waq al-waq was rightly criticized for ignoring a number of Yemeni issues and while we don’t claim or even aim to be a one-stop shop for all things Yemen, we do have a number of thoughts on the economic sector in Yemen that we should do a better job of discussing here, if only because it is such – as again the commenter correctly pointed out – an important part of Yemen’s future.

(Mostly I tend to blog on whatever I happen to be thinking about that day or what I read in the papers every morning – some days, like today, when I was reading ‘Abdullah Juzaylan’s Lamahat min dhikrayat al-tufulah, I have to thrown out a great blog post like the state of the Yemeni army under Imam Yahya to focus on something a bit more relevant.)

One of the more interesting discussions I have been a part of recently centered around Yemen’s economy. Unfortunately, I’m prohibited from providing details, but I can say there were a handful of Yemen hands involved in the discussion and while there was a significant amount of disagreement on future prospects and trends, no one came close to arguing that the economy was in good shape. Basically, if memory serves, it came down to a majority opinion that believes Yemen is headed for real problems in the economic sector and a minority opinion that claimed we were a bit over-dramatic and that there were bright spots in Yemen’s economy and that, in fact, some of the trends were reversing.

That is where this article from Hugh MacLeod at al-Jazeera English comes in. Much of what he points out is well known, such as:

“Over three-quarters of the state budget, which this year totalled around $8.76bn, according to Mostafa Nasser, chairman of the Economic Media Centre in Sanaa, comes from oil revenues.”

or

“The World Bank estimates that by 2017 the government will earn no income from oil at all.”

The report also quotes Jalal Yaqub, the deputy finance minister, who is the most optimistic Yemeni official I have ever met. Jalal was kind enough to spend a bit of time with me on my last trip to Yemen and we had a number of fruitful conversations from which I was able to gain some understanding of what he is faced with in attempting to implement his 10-point plan. (As much as I like Jalal and his plan, I have my doubts about its feasibility in Yemen as does, it seems to me, the US Embassy in San’a.)

But this is a bit more dangerous for the Embassy than it is for me, as the US has a pretty poor record in Yemen of embarrassing and undermining individuals within the government through its actions. Actively supporting these clandestine allies is not always easy or helpful but at the very least the US should commit itself to: first, do no harm.

Addressing the issue of the crippling diesel subsidies – of which there is some debate about how significant these are for 2009, given a decline in price – Jalal wins with the article’s most depressing quote:

“Last year we estimate we used one billion litres of diesel only for water pumps around Yemen. Subsidising $0.70 per litre of diesel, the government in effect paid $700mn to subsidise the depletion of water in the country,” said Yaqoub.“

The article also delves a bit into the shadowy world of back-room Yemeni politics. Don’t believe the hype that this is all a struggle between Ali Muhsin and Ahmad or between Hamid and Ahmad or between whatever two figures you can name – there are many more players and much more in the way of shifting and fragmenting alliances than many of us on the outside realize.