Yemen frays under economic, political stress

Source: Reuters by Alistair Lyon 05/05/2010

BEIRUT, May 5 (Reuters) - Yemen can no longer feed its people as its economy buckles under the strain of declining oil and water resources, corruption and violent conflicts.

One in three of Yemen's 23 million people suffer chronic hunger and more than one in 10 Yemeni children are acutely malnourished, U.N. aid agencies said on Tuesday.

Such bleak economic realities feed into the political challenges to President Ali Abdullah Saleh's 31-year rule.

Secessionist unrest in the south looms as his gravest immediate problem now that a fragile ceasefire has calmed a long-running northern "Houthi" revolt -- although that truce risks unravelling, with breaches reported on both sides.

Islamist militancy, fuelled by poverty, poses a lesser threat, analysts say, despite last month's failed attack by an al Qaeda suicide bomber on the British ambassador in Sanaa.

"The south is the real challenge," said Yemeni political analyst Abdul-Ghani al-Iryani. "The regime is not dealing with the grievances of southerners, raising the spectre of a civil war. Arguably a low-level civil war is already in progress."

Southern discontent, rumbling since a 1994 civil war, has flared into mass protests and almost daily clashes with security forces. Secessionist groups are split and lack outside support.

"There is no doubt, however, that the Southern Movement has the potential to develop into a major challenge to the legitimacy of the government, the stability of the country and eventually to the integrity of the state," argued a paper published in April by the Dubai-based Gulf Research Center.

Instability or state collapse in Yemen, a small Arab oil producer, risks dire consequences for oil giant Saudi Arabia and its other neighbours in the Gulf and the Horn of Africa.

North and south Yemen united in 1990, but many in the south, home to most Yemeni oil facilities, say northerners usurp their resources, warp their identity and deny their political rights.

President Saleh has complained that southerners nurture a "culture of hate" against the north.

"Southern disaffection has gone beyond the point of no return," Victoria Clark, author of a recent book on Yemen, told Reuters. "Saleh's biggest mistake would be to crack down on southerners as hard as he has tried to do on the Houthi rebels."

Southerners, comprising less than a fifth of the population, no longer have the tanks, aircraft and heavy weapons to fight a conventional war as they did in the 1994 secessionist revolt.



"INEVITABLE DUST-UP"

"My best guess would be that the break-up of the state will happen in the inevitable dust-up that will follow the removal of Saleh, which will happen when the money to pay the army and civil service runs out," Clark said.

The Sanaa government is already strapped for cash. This week it raised fuel prices to ease the burden of diesel subsidies which Central Bank officials say cost around $2 billion a year.

Yemen, whose rial has lost over 10 percent of its dollar value this year, said in January it needed $2 billion a year in aid to stay afloat and double that to turn its economy around.

"The regime pretends it's just a matter of fine-tuning an otherwise well-running machine, but the machine is broken and without an overhaul we face disaster," said Iryani, listing economic woes such as tariff collection failures, declining foreign investment, diesel smuggling and capital flight.

Yemen lies near the bottom of Transparency International's corruption index, ranking 154 out of 180 countries last year.

Yemeni officials, however, blame falling oil income for aggravating economic, financial and security problems.

Western donors, alarmed by a Christmas Day attack on a U.S. airliner by a Yemen-based al Qaeda militant, say they want to improve governance and the capacity of Saleh's government to spend $4.7 billion of aid pledged as long ago as 2006.

Throwing development money or counter-terrorism aid at Yemen will not correct what a Carnegie paper by Australian academic Sarah Phillips called "the heavily centralised system of power that keeps resources and political leverage in the hands of a select few and further entrenches Yemenis' economic hardship".

That hardship is perhaps nowhere more acute than among the 270,000 people who fled battles between government forces and Houthi rebels in and around the northern city of Saada.

A February ceasefire halted six months of fierce fighting in the north, but U.N. officials say many of the displaced have sold their last livestock while waiting to see if it holds.

"People have three options after that -- revolt, migrate or die," said World Food Programme spokeswoman Emilia Casella.

Senior Yemeni officials say al Qaeda recruiters can also thrive in a country with 35 percent unemployment, coupled with poverty affecting 42 percent of a young population.

Iryani, the Yemeni analyst, described al Qaeda in the Arabian Peninsula (AQAP), which is thought to have no more than a few hundred militants, as a minor concern that could be laid to rest if the grievances that helped it recruit were addressed.

"Poverty, injustice, callous disregard for the law and rampant corruption that have undermined the legitimacy of the regime: once we deal with these we can easily deal with AQAP."