By Faisal Abu Bakr | 2023-09-06

Nine years ago this month, in September 2014, the Iran-backed Houthis staged a coup in Sanaa that ignited a war, which in turn triggered a humanitarian crisis that has ultimately affected every aspect of life in Yemen.

According to a United Nations (UN) estimate, by the end of 2021 there were 377,000 deaths in Yemen caused directly and indirectly by the conflict, with nearly 60% of them a result of indirect issues, Reliefweb reported.

These include a lack of access to food, water and health care.

Cumulative losses the Yemeni economy incurred as a result of the war were estimated at more than $126 billion for the same period, with a Yemeni economist telling Al-Fassel the losses are continuing today.

In recent comments to regional media, Yemeni Finance Minister Salem bin Breik blamed the Houthis for looting humanitarian aid and siphoning money away from government institutions to establish a parallel economy.

The war has cast a shadow on all aspects of life in Yemen, he said, crippling the country's economy and crucial development activity, with high inflation eroding per capita income and making it harder for Yemenis to meet their basic needs.

Yemen's legitimate government is facing a slew of challenges that include a contraction of gross domestic product (GDP) and a significant decline in private and foreign investments.

There has been a drop in Yemen's already meager public revenues due to the Houthis' targeting of ports and the cessation of oil exports, bin Breik said.

He noted that the Houthis' diversion of ships to the Red Sea port of al-Hodeidah had precipitated a decline in tax and customs revenues.

In contrast, Saudi Arabia's support for Yemen has helped its southern neighbor maintain a degree of economic stability and has eased the severity of the crisis the population is facing, he said.

In early August, Saudi Arabia announced it would provide $1.2 billion in economic support to Yemen, part of which will go towards ensuring food security among Yemen's vulnerable.

Disastrous consequences of war

"The economic losses resulting from the war the Iran-backed Houthis ignited include the decline in GDP, which dropped from $36 billion before the war to $21 billion now," economist Fares al-Najjar told Al-Fassel.

"The disastrous consequences of the war on citizens include an increase in food insecurity," he added, pointing out that more than 20 million Yemenis "struggle to get one meal a day" and "a child dies every 10 minutes from malnutrition."

High inflation in the cost of goods and services, the decline of purchasing power, and the deterioration in the currency's exchange rate also have contributed to the hardships residents are facing, he said.

The exchange rate for the US dollar currently stands at more than 1,200 Yemeni riyals (YER)/dollar at present, in contrast to its pre-war value, which did not exceed 215 YER/dollar.

Another consequence of the war is the destruction of infrastructure resulting from the Houthis' coup against the state and its institutions, al-Najjar said.

"It is unfortunate that these estimates of losses are increasing on a daily basis as the war continues," said economist Mustafa Nasr, chairman of the Taez-based Studies and Economic Media Center, a non-profit organization.

The losses are escalating every day, he said, be they direct losses to the economy or from the economic stagnation Yemen is experiencing in all sectors.

Reviving Yemen's economy

Yemen's government must come up with a clear plan for the development of non-oil exports and work to improve the collection of customs duties and taxes, as these are the second source of revenue after oil exports, al-Najjar said.

He stressed the need to work with the international community "to secure and protect the oil export ports, as they are the main source of support for the state."

The government also should "avoid unnecessary expenditures that drain the state's budget," he added, while "moving toward strategic projects, especially in the electricity sector."

He stressed the importance of activating projects in the agricultural and fishery sectors that would provide jobs and reduce the level of food insecurity.

Peace in Yemen also would help the Aden-based Central Bank preserve the value of the currency, curb speculation and the smuggling of foreign currencies and combat money laundering, economist Abdul Aziz Thabet told Al-Fassel.

The resumption of oil exports and the resulting increasing revenues would gradually help stop these losses until the Yemeni economy can regain its balance, he said.