Why oil wealth cannot prevent famine in Yemen

The civil war in Yemen has been raging for more than ten years. Some 19.5 million people – well over half the population – are dependent on emergency aid; more than 80 per cent live below the poverty line; and more than 2 million children are malnourished. What began in 2014 as an internal power struggle between the internationally recognised government and the Houthis – a Shia armed resistance group that believes the US and Saudi Arabia exert too much influence over Yemen, and that the Shia are being oppressed.

The conflict escalated when Saudi Arabia intervened militarily in support of the Yemeni government, with backing from, amongst others, the US, the UK and France. Saudi Arabia wants to break the hold on power that the Houthis seized in north-western Yemen in 2014. The Houthis are outspoken opponents of Saudi Arabia.

The country has since been split in two. The north-west, where the Houthi rebels are in power and where the capital, Sana’a, is located, is home to 70 per cent of the population. The internationally recognised government controls the south-east, where 30 per cent of the population lives and where most of the oil and gas fields are located.

In 2016, the Central Bank was also split, and since then there have been two competing currencies, and the salaries of more than a million civil servants have not been paid. As Yemen is dependent on imports, the depreciation of its currencies has meant that food and other goods have become unaffordable.

Humanitarian disaster

The division and violence led to economic collapse and one of the world’s worst humanitarian disasters. “I earn a meagre daily wage that is not enough to provide for my three children,” says Ali Quasim (41). He is staying with his family in the Yemeni refugee camp Al-Qoz, which is controlled by the government. He is one of the 4.8 million refugees displaced within Yemen.

Almost all of Yemen’s oil and gas reserves are concentrated in the south and east, where the government is in control. Before the war in 2015, energy exports accounted for 95 per cent of total exports and were the main source of revenue, but the conflict has brought gas exports to a complete standstill and caused oil exports to fall by almost three-quarters.

And those remaining oil revenues do not end up with the Central Bank of the internationally recognised government, let alone with the population. According to a panel of UN experts, the profits are channelled via opaque contracts and unregistered transfers to offshore accounts held by influential figures close to the government or the president. One example is the Al-Eissi Group, a conglomerate of companies led by the influential businessman Ahmed Al-Eissi, who, amongst other things, served as an adviser to former President Hadi.

A daily struggle

By keeping oil revenues out of the official state budget through opaque structures and intermediaries, ordinary citizens do not benefit from these revenues. “Before the war, I was a civil servant, but after my salary was cut off in 2016, I became a day labourer on building sites and farms,” says Quasim. He lives with his family – including a child suffering from stress caused by wartime experiences – in a dilapidated tent. “I used to want a permanent job, just a decent life, but now I struggle every day to afford a loaf of bread and a pill for my sick child.”

It is not only people who have fled within their own country, such as Ali, who are suffering as a result of the disastrous economic situation; Yemenis who still live at home are also struggling. Take Youssef Faisal (45), for example, who lives with his wife and five children in the capital, Sana’a, in the north-west of the country, which is controlled by the Houthis. “Before the war, I worked in construction. I had a steady job and earned a good living. Then the war broke out and work gradually dried up until there was none at all. I had to spend all my savings to provide for my family’s basic needs.”.

When my savings ran out, I couldn’t find any other source of income apart from doing day-to-day work in all sorts of jobs – sometimes loading and unloading, sometimes cleaning. Some months I work three days and earn a total of 10 dollars. That’s enough to buy rice or bread for a few days, and for the rest of the month I have no work and therefore no food. I’m more than a year behind on my rent. The food parcels distributed by NGOs used to cover part of our food needs, but after the organisations ceased their work, the situation deteriorated and we had to resort to local charity.”

Rising prices

Following several incidents in which UN and other NGO staff were taken hostage by the Houthis, many aid organisations were forced to leave Sana’a. However, local, small-scale charities are unable to fill the gap left by the departure of the major NGOs. Furthermore, sanctions against the Houthi movement, Ansar Allah, are hampering the import of food and medicines, causing prices to rise even further.

In north-western Yemen, in areas controlled by the Houthi group – where nearly three-quarters of the population live – the region is subject to a suffocating military and economic blockade by the Saudi-led coalition: not a single airport or port is operating normally, and there is no local oil production. Airports in Houthi-controlled territory are completely closed to regular traffic and accessible only to a limited number of UN flights. Ports are open to humanitarian aid and essential goods, but operate under strict restrictions. Officially, this is to prevent arms shipments, but the effect is a lack of imports and economic activity.

Shadow economy

And although oil production has largely ground to a halt, imported fuel is being used to finance the war. According to the UN report, this fuel enters the country via informal networks of middlemen who are closely linked to politicians or local power brokers and who run a non-transparent distribution network. This oil is then sold at high prices, which in Sana’a can sometimes reach 1.50 euros per litre.

That price is similar to fuel prices in the Netherlands, whilst more than 80 per cent of Yemenis have no stable source of income and the income of those who do earn something, such as Ali Qasim, does not exceed 50 euros a month. Money is also laundered through imported oil. According to the UN, an estimated 1 billion dollars a year changes hands in this parallel economy in Sana’a and within the corruption networks in government-controlled areas. That money is channelled into the war, rather than to the civilian population.

Skin over bone

In a makeshift refugee camp in the capital, Sana’a, Maryam Al-Faqih (33) tells her story. “Almost ten years ago, my husband died at the age of 33. We lost our sole breadwinner. Before the war, I worked as a teacher and my husband was a civil servant. Before the war, we led a normal life and lived in a flat. But after salaries were suspended in 2016 and my husband fell ill and could no longer work, we were evicted from the flat because we couldn’t pay the rent, and we became homeless.”

“Since my husband’s death, I have been on my own with my five children. After visiting various places, I eventually ended up with our children at a shelter in Al-Tuhayta, in the west, where we have nothing but a thin straw mattress on the floor, with no protection from the wind and weather. There are days when we only have one meal, which is terrible for the children. The food we sometimes receive from organisations isn’t enough. Most of the time, we just eat bread and drink water.”

All her children are skin and bones, Maryam says. “But my son Alaa, who was four years old at the time, had the hardest time of all. His condition deteriorated steadily until he could no longer move. For the last two days, he stopped asking for food and I thought he was asleep. That final night, all I could hear were his cries of pain, and he refused to eat anything. When I called for help and he was taken to hospital, I was told that he had died of starvation a few hours later. They couldn’t save him.”

Yemen’s tragedy does not lie in a lack of natural resources, but in an economy that has been severely disrupted by the conflict. Before 2014, oil and gas exports accounted for an estimated 60 to 70 per cent of government revenue, enough to keep the country running and provide millions of people with a stable income. However, the war has devastated that economic foundation. According to the UN, total economic losses since the start of the conflict are estimated at more than 126 billion dollars. The wealth, which is now being distributed amongst the warring parties’ corruption networks, could significantly alleviate the acute famine.

The article above was previously published via OneWorld.