1 October 2011


Peter Salisbury

Senior Consulting Fellow, Middle East and North Africa Programme


Download paper in Arabic here
  • The recent political crisis in Yemen has created a cycle of hyperinflation, currency depreciation and disruption to the supply of basic goods. This is already having a serious impact on the 10.3 million Yemenis living in poverty, with the prospect of worse conditions to come.
  • Yemen's economy is in thrall to a complex, intertwined network of elites that control the oil industry, imports, processing, and packaging and distribution of goods. Many members of these elite groups are key actors in the current crisis.
  • The country's economy is dominated by the production and export of crude oil, which generates 70–80 per cent of government revenues and most of the country's foreign exchange reserves. As a result, Yemeni consumers are highly vulnerable to shifts in international commodity prices, domestic oil output, the country’s overall fiscal position and domestic security.
  • There is a need to reinforce existing social protection mechanisms and bolster humanitarian aid to ensure the availability of, and access to, basic commodities for the country's most vulnerable people. Western donors are demanding a swift political transition as a precondition for resuming the bulk of aid spending, but the transition process has already been lengthy and contested, and any resolution is likely to be protracted and complex.
  • The current 'wait-and-see' approach to the situation being taken by some members of the international community will hamper a swift and effective response to the economic crisis, and is likely to exacerbate the human cost of the crisis.
Yemen Forum.