10 January 2010: AFP
DUBAI, Jan 10 (AFP) -- 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 total state revenues.
"Yemen's deteriorating economy is the main driving force behind events in the country, including the spread of Al-Qaeda," Mohammad al-Muthaimi, economy professor at Sanaa University, told AFP.
He said "the terrorism and extremism market" in Yemen is flourishing with the Al-Qaeda network attracting "desperate, unemployed youths."
"Sixty-five percent of young people are without job opportunities, and extremist organisations 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 dollars, according to official data, compared with more than 70,000 dollars 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 International Monetary Fund reports and government data 45.2 percent of Yemenis 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. Both these factors make foreign assistance and investments difficult to come by," Saudi analyst Anwar Eshki said.
"Social injustice within parts of Yemen and internal tribal feuds are also helping Al-Qaeda in Yemen, which is under pressure in Afghanistan and Pakistan," Eshki, head of the Jeddah-based Middle East Strategic Studies Centre, told AFP.
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 bpd last year coupled by a sharp drop in oil prices from its peak of 147 dollars a barrel in the summer of 2008.
The country's already scarce crude oil reserves could be depleted in 10-12 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 (LNG) exports in November gave Yemenis rare cause to celebrate. The 4.5-billion-dollar project is expected to boost economic development and generate between 30 and 40 billion dollars 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 major economic challenges include high 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 programme.
The current account deficit stands at seven percent of Gross Domestic Product, estimated at 28 billion dollars, following a small surplus between 2002 and 2006, while foreign debt stands at six billion dollars.
The government has turned to energy-rich Gulf Cooperation Council (GCC) states and the international community for help, which Muthaimi said has been almost negligible, although Riyadh gave Sanaa 7.2 billion dollars 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 new recruits are 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."
