Yemen has spent much of the past 60 years embroiled in armed conflict and political crisis, with this cyclical instability and insecurity among the primary factors that have stymied both private sector development and the establishment of a strong state with well-functioning public institutions. The vast majority of the Yemeni private sector is made up of small or very small businesses, providing almost 70 percent of working Yemenis with their livelihood. The largest employment sector within the private sector is rural agriculture, which has traditionally provided work for more than half the population.
Local councils are among Yemen’s most important state institutions. Responsible for providing basic public services to millions of Yemenis, local councils represent official governance and the Yemeni state for vast swathes of the population. The intensification of the Yemen conflict since March 2015 has undermined the councils’ ability to operate effectively in most areas of the country. The councils depend heavily on central government financing and, to a lesser degree, local sources of revenue such as taxes on basic utilities and telephone usage. As such, Yemen’s precipitous economic collapse, the subsequent decline in government revenues and the incapacitation of the Central Bank of Yemen (CBY) have compromised local councils’ ability to operate. The non-payment of civil servant salaries and Yemenis’ decreased purchasing power have contributed to Yemen’s grave humanitarian crisis while limiting local councils’ ability to extract local sources of revenue.
Local councils are among Yemen’s most important state institutions. Responsible for providing basic public services to millions of Yemenis, local councils represent official governance and the Yemeni state for much of the population. The intensification of the conflict between the internationally recognized government, its regional backers and the Houthi group since March 2015, however, has heavily impacted funding and security for local councils, undermining their ability to provide services effectively in most areas of the country.
In many areas, this absence of effective official governance has created fertile ground for non-state actors to exert their influence. In the areas under Houthi control, Houthi supporters closely monitor local council activity. In the southern coastal city of Aden, local councils are caught among competing armed militias that form part of a broader power struggle between southern secessionists and the internationally recognized Yemeni government.
The ongoing conflict in Yemen has imposed grievous costs on the country’s people, damaging lives, property and infrastructure and ravaging the country’s already fragile economy. And yet the conflict will eventually subside. While some reconstruction projects have begun, they have generally been undertaken haphazardly and not as part of a comprehensive and structured plan. Post-conflict reconstruction following the war must address the basic needs and rights of the Yemeni population and put the country on the path toward sustainable peace and development.
Previous reconstruction efforts in Yemen following conflict or natural disaster have suffered from lack of coordination with and unrealistic expectations from international donors, as well as the Yemeni government’s limited capacity for aid absorption and project implementation; as a result, there was little tangible long-term impact.
In light of lessons learned from similar post-conflict contexts and Yemen’s own history of reconstruction efforts, this policy brief proposes an institutional structure for a future reconstruction process in Yemen: a permanent, independent, public reconstruction authority that empowers and coordinates the work of local reconstruction offices, established at the local level in areas affected by conflict or natural disasters. This proposal does not arise only from these lessons learned, but also from the immediate need for such an institution to begin planning and implementing reconstruction work to the greatest extent possible.
The second Development Champions Forum of the “Rethinking Yemen’s Economy” initiative recently brought together more than 20 of the leading socio-economic experts on Yemen to discuss the most critical challenges facing the country. Among the key topics included were the need to increase the coverage and efficiency of the campaign international humanitarian organizations and United Nations agencies are undertaking to address Yemen’s humanitarian crisis. Among the major issues the Development Champions identified during discussions were:
The current humanitarian crisis in Yemen has been precipitated by almost three years of civil war and regional military intervention, with the United Nations declaring the country the world’s largest humanitarian emergency in January 2017. At the end of last year the UN Office for the Coordination of Humanitarian Affairs (OCHA) released its 2018 Humanitarian Needs Overview (HNO) in which it reported that roughly 22.2 million Yemenis were in need of some kind of humanitarian protection or assistance, of which 11.3 million were in acute need.
As part of the “Rethinking Yemen’s Economy” initiative, more than 20 of the leading socioeconomic experts on Yemen converged for the second Development Champions Forum on January 14-16 in Amman, Jordan. Among the urgent topics of discussion was the deterioration of the value of the Yemeni rial (YR), the magnifying impact this is having on the humanitarian crisis, and the need to re-empower the Central Bank of Yemen (CBY) as the steward of the rial and the economy generally. This policy brief is an outcome of those discussions, and the recommendations it includes collectively underline the need for the CBY to function in a more coherent, assertive manner – whereby its various branches operate as a united entity that is able to draft and implement monetary policies for Yemen as a whole. This paper includes further input from the Development Champions following the announcement by Saudi Arabia on January 17 of a $2 billion deposit to the CBY.
Families around the world suffer devastating loss when their relatives are killed in U.S. drone strikes and other attacks. Their suffering is magnified and prolonged by uncertainty and injustice when the U.S. government does not officially acknowledge their loss or explain the strikes, as has frequently been the case for U.S. strikes in Pakistan, Somalia, and Yemen. Continual non-recognition or denial of their harm suggests to families that their loved ones are dispensable, not even worthy of minor recognition.
Over the past six years Yemen has been experiencing a period of widespread destabilization, which intensified in September 2014 and resulted in full-blown civil war and international military intervention in early 2015. While the violence has been vicious and destructive, by far the most damaging consequences for the wider Yemeni population have been how the conflict has undermined the systems by which the country functions – devastating the economy, social integration, the humanitarian situation and developmental progress. The result is that millions of people in Yemen are now enduring severe economic deprivation and near-starvation.