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Dubai, United Arab Emirates. Yemen’s crumbling economy has created fertile ground for the spread of extremism and the rise of a secessionist movement in the south and a Shiite rebellion in the north, officials and analysts say.

Economic woes in one of the poorest nations on earth have been aggravated by widespread corruption, social injustice and a steep decline in oil income, which makes up 70 percent of revenues.

“Yemen’s deteriorating economy is the main driving force behind events in the country, including the spread of Al Qaeda,” explained Mohammad al-Muthaimi, an economics professor at Sanaa University.

He said “the terrorism and extremism market” in Yemen was flourishing with the Al Qaeda network attracting “desperate, unemployed youths.”

“Sixty-five percent of young people are without job opportunities, and extremist organizations are exploiting the chance to recruit them by handing out much-needed money,” Muthaimi said.

Unemployment in Yemen’s workforce of 6.5 million has jumped to 34 percent, while per capita income remains one of the lowest in the region at just above $1,000, according to official data, compared with more than $70,000 in Gulf state Qatar.

The United Nations’ 2008 Arab Human Development Report said poverty affects 59 percent of Yemen’s 24-million-population, while according to IMF reports and government data 45.2 percent of Yemenis now live below the poverty line.

“The slumping economy is certainly contributing to the rise of Al Qaeda and rebel movements. Corruption is another key problem,” Saudi analyst Anwar Eshki said. “Both these factors make foreign assistance and investments difficult to come by.”

“Social injustice within parts of Yemen and internal tribal feuds are helping Al Qaeda in Yemen, which is under pressure in Afghanistan and Pakistan,” said Eshki, who is from the Jeddah-based Middle East Strategic Studies Center.

The decline in oil income “has had an influence on all conditions from the viewpoint of the economy, finance and security,” said presidential office head and chairman of Yemen’s National Security Agency Ali Muhammad al-Anisi.

“This creates a fertile environment conducive to the spread of extremist ideas and an increase in criminal and terrorist acts,” he told an International Institute for Strategic Studies regional security summit in December.

Oil production in Yemen has declined from around half a million barrels per day in 2000 to less than 300,000 barrels per day last year, coupled by a sharp drop in oil prices from its peak of $147 a barrel in the summer of 2008.

The country’s already scarce crude oil reserves could be depleted in as little as 10 years in the absence of any major new discoveries, the IMF said in its latest assessment of Yemen’s economy.

The start of liquefied natural gas exports in November gave Yemenis rare cause to celebrate.

The $4.5-billion project is expected to boost economic development and generate between $30 billion and $40 billion over the next 25 years.

But the IMF said this would only partly compensate for the decline in oil revenues.

“Yemen faces considerable challenges in dealing with the transition to a non-oil economy, generating strong non-hydrocarbon economic growth, ensuring fiscal and external sustainability, and reducing poverty and unemployment,” the fund said. Other economic challenges include inflation, down from 20 percent at the end of 2008 but still around 10 percent, and a chronic budget shortfall despite the government’s reform program.

The current account deficit stands at 7 percent of Gross Domestic Product, estimated at $28 billion, following a small surplus between 2002 and 2006, while foreign debt stands at $6 billion.

The government has turned to energy-rich Gulf Cooperation Council states and the international community for help, which Muthaimi said has been almost negligible, although Saudi Arabia gave Sanaa $7.2 billion in aid over the past 10 years, Eshki said.

Complicating Yemen’s economic challenges is the fact that half of the population is under 15 and the same proportion is illiterate, with as many as 70 percent of women unable to read or write.

Muthaimi said funds to lure radical new recruits were sent from outside to the Yemeni branch of Al Qaeda, which Eshki believes “will be far more dangerous than in Afghanistan because of its proximity to Gulf oil resources and transportation lines.”



Agence France-Presse