Yemen

Politics:

• Analysis

  Yemen politics: Quick View - Election plans outlined at Friends of Yemen me

  Event

  Yemen's Supreme Commission for Elections and Referendums (SCER) has set out a timetable for the preparations it sees as necessary for the holding of parliamentary and presidential elections in February 2014.

  Analysis

  The SCER presented its plans at a meeting of the Friends of Yemen, a working group of diplomats and international institutions such as the UN, in London on March 7th. Although no firm dates were set, the commission explained how it plans to update the country's voter register for the first time in a decade. It also detailed the preparations that are in place for a national referendum on a new constitution, due to be drafted during Yemen's upcoming national dialogue conference, and subsequent parliamentary and presidential elections. In February Yemen's president, Abdel-Rabbuh Mansour Hadi, announced that the conference, a key component of Yemen's transitional plan, would start on March 18th; however, unrest in the south has threatened to disrupt the schedule.

  The SCER plans to use biometric technology to complete the voter register, which was last updated in 2003. It completed a study on available options for registry in late 2012, and is largely settled on the biometric approach, which has been used relatively successfully in countries such as Kenya and Sierra Leone in recent years. It hopes to build the register over the course of the national dialogue conference, so that a referendum on the constitution can be held as quickly as possible. If it manages this, dates for the referendum and the 2014 elections will be announced when the conference ends-probably in late September or early October, if all goes to plan.

  Other issues high on the agenda at the London meeting were plans for the national dialogue conference itself and a new bureau set up to disperse the funds pledged to help the country's ailing economy. Meanwhile, the World Bank said that US$190m in new funds (more than half from Turkey) had been made available to the country since the last Friends of Yemen meeting in New York in September 2012, bringing the total to US$8.09bn.

  March 14, 2013

• Background

  Yemen: Key figures

  Ali Abdullah Saleh

  Mr Saleh is president and head of the General People's Congress (GPC). His victory in the 2006 presidential election will keep him in power until 2013, when, according to the constitution, he must stand down. As field marshal of the armed forces, he bases much of his power on the unchallenged support of the army and security forces, although a deteriorating security climate throughout the country is testing his military strength and seemingly sapping his political support.

  Ali Mohammed Mujawer

  Appointed as prime minister in March 2007, Mr Mujawer had previously earned a reputation as an effective opponent of corruption in his post as electricity minister. Under his premiership, a much clearer division of labour within the government has emerged. Mr Mujawer, who trained as an economist in France, has assumed responsibility for economic management, whereas Mr Saleh retains control over security matters. Importantly, the new prime minister is from southern Yemen, continuing Mr Saleh's long-standing policy of placing southerners in prominent positions in government.

  Ahmed Ali Abdullah Saleh

  The son of the president, he is commander of Yemen's special forces, the Republican Guard. The president is seemingly keen to groom him for eventual succession, and he has increasingly been representing his father on overseas visits. Although he is not well regarded within the establishment and has little political experience, he remains a strong contender to become president in the future.

  Hamid Abdullah bin Hussein al-Ahmar

  Mr Ahmar, son of the late Sheikh Abdullah bin Hussein al-Ahmar, the founder of Islah, has overt political ambitions, recently strengthened by his management of the presidential campaign of Faisal bin Shamlan in the previous election. Before entering parliament, he forged a successful business career. This, and his modern outlook, makes him popular with the urban youth, although it sets him slightly at odds with conservative tribal figures.

  The judiciary

  The judiciary is generally poorly trained, inefficient and perceived to be corrupt, a belief that recent moves to overhaul the system have done little to change. In early 2005, in the latest of several reshuffles since the government launched its judicial reform programme in 1997, some 160 judges and 120 prosecutors in provincial courts of appeal, and around 70 judges and over 180 prosecutors in district assizes, were reassigned to different posts. The measure was designed to address concerns over rampant corruption in the system, but none of the reshuffles are perceived to have resulted in substantial improvements to the functioning of the judicial system.

  The legislature

  The primary formal legislative organ is parliament, which currently has 301 members. However, parliament has long been dominated by the ruling party, the GPC, and is largely ineffective as a check on executive power. Its powers are further circumscribed by the executive-appointed Consultative Council, which currently has 111 members. The Council initially played a purely advisory role, but this role has been expanded to include some limited legislative powers. Officially, 22 political parties contested the general election in April 2003. In practice, Yemen's political scene is dominated by three parties: the GPC, Islah and the YSP. Parliamentary elections are held every six years.

  Media services

  Ostensibly, Yemen has a vibrant press, with numerous privately-owned newspapers and magazines. However, the Ministry of Information retains considerable control over the media, and all broadcast media is controlled by the government. The press has come under particular attack by officialdom in recent years, with the harassment of journalists increasing and state interference in the publication and dissemination of news more in evidence. The highest-profile victim of the government's recent backlash is Abdulkarim al-Khaiwani, who was sentenced to six years in prison in 2007 for reporting government brutality in the conflict against Zaydi rebels.

  Democracy index (for methodology, see Appendix)

  The Economist Intelligence Unit's 2008 democracy index ranks Yemen 140th out of 167 countries, putting it among those countries considered to have authoritarian regimes. Despite its lowly position, however, Yemen is in fact ranked higher than several of its neighbours, including Saudi Arabia, Iran, Qatar and the UAE. This reflects its higher scores for political participation and political culture, a result in large part of the September 2006 presidential election, which an EU election observer mission described as an "open and genuine contest"—a rarity in the Arab Middle East.

  Since that time, however, the government has stepped up considerably its repression of the media, and protests, especially in the south, over low living standards have been forcibly repressed at times. As a result, the country scores poorly for civil liberties. The state security forces are now stretched on multiple fronts, facing al-Qaida attacks, an insurgency in the north and an apparent rise in secessionist feeling in the south. The government has, however, taken a haphazard approach to dealing with these challenges: adopting an apparently conciliatory approach to jihadis, while simultaneously violently suppressing peaceful protest rallies. In the past, the government would have often resorted to bribery to co-opt opposition elements. However, with the country's oil reserves declining, it appears to have resorted to one of the few tools still available to it—force—to weaken its opponents.

  Democracy index
  	Overall score	Overall rank	Electoral process	Government functioning	Political participation	Political culture	Civil liberties	Regime type
  Yemen	2.95	140	2.17	2.50	3.33	5.00	1.76	Authoritarian
  Overall and component scores are on a scale of 0 to 10; overall rank is out of 167 countries.

  Download text file (csv format)

  July 02, 2008

• Structure

  Yemen: Political structure

  Official name

  Republic of Yemen

  Form of state

  Republic, unified on May 22nd 1990

  Legal system

  Under the constitution of May 1991, sharia (Islamic law) is the principal source of law

  Legislature

  Unicameral assembly directly elected for a six-year term

  National elections

  February 21st 2012 (presidential); April 2003 (parliamentary). Next parliamentary election had been scheduled for April 2009 but was postponed. Under the transitional agreement, signed in November 2011, a presidential election was held in February 2012, albeit with just one candidate, Abdel-Rabbuh Mansour Hadi (who had previously been vice-president). The next parliamentary election will have to await the conclusion of the drawing-up of a new constitution, but is expected to take place in 2014

  Head of state

  President (directly elected for a two-year term): Abdel-Rabbuh Mansour Hadi. Mr Hadi will in effect act as a caretaker president until a multi-candidate election takes place in 2014

  Executive

  Council of Ministers headed by the prime minister. In December 2011 a new cabinet was announced, roughly split between the General People's Congress (GPC, the former ruling party) and the opposition

  Political parties

  There are 22 legal parties, five of which are represented in parliament: the GPC; the Yemeni Congregation for Reform (Islah, a religious-based party with tribal and Islamist wings); the Arab Socialist Baath Party; the Yemeni Socialist Party (YSP); and the Nasserist Unionist Party (NUP). These, together with two opposition groups without parliamentary representation, the Union of Public Forces and al-Haq, form a loose parliamentary coalition, the Joint Meeting Parties (JMP)

  Government

  Prime minister: Mohammed Salem Basindwa (JMP)

  Key ministers

  Agriculture & irrigation: Farid Ahmed Mujawar (GPC)

  Defence: Mohammed Nasser Ahmed Ali (GPC)

  Education: Abdul-Razzaq Yahya al-Ashwal (JMP)

  Electricity: Saleh Hasan Sumai (JMP)

  Endowment & Islamic affairs: Hamoud Ubad (GPC)

  Finance: Sakhr Ahmed al-Wajih (JMP)

  Foreign affairs & immigration: Abu Bakr Abdullah al-Qirbi (GPC)

  Human rights: Houriah Ahmed Mashhour (JMP)

  Information: Ali Ahmed al-Amrani (JMP)

  Interior: Abdul-Qader Qahtan (JMP)

  Justice: Murshed Ali al-Arashani (JMP)

  Labour & social affairs: Armat al-Razzaq Hummad (GPC)

  Local administration: Ali Mohammed al-Yazidi (JMP)

  Oil & minerals: Abdullah Dares (GPC)

  Planning & international co-operation: Mohammed al-Saadi (JMP)

  Public health & population: Ahmed Qassim al-Ansi (GPC)

  Public works & roads: Omar Abdullah al-Qurshumi (GPC)

  Trade & industry: Saad al-Din Ali bin Talib (JMP)

  Transport: Waid Abdullah Bathib (JMP)

  Water & environment: Abdo Razzaz Saleh Khaled (JMP)

  Central Bank governor

  Mohammed Awadh bin Hamam

  March 08, 2013

• Outlook

  Yemen: Key developments

  Outlook for 2013-17

  • Owing to weak central control and his lack of a natural support base, the new president, Abdel-Rabbuh Mansour Hadi, will struggle to impose his authority on Yemen's myriad power centres.
  • Mr Hadi and the recently formed government of national unity will embark on plans for a new constitution and competitive elections. However, violence is likely to persist, and the risk of Yemen splitting apart remains high.
  • The Gulf Co-operation Council will step up its economic support to Yemen, in order to shore up the country's political transition. However, Western countries' concern will continue to be focused on al-Qaida.
  • The new transitional government's main economic priority will be improving Yemenis' quality of life. As a result, the Economist Intelligence Unit does not expect the government to reimpose fiscal austerity until 2014 at the earliest.
  • After contracting by an estimated 10.5% in 2011, the economy will continue the gradual recovery seen in 2012, growing by an average of 2.7% in the forecast period, as private-sector activity revives and donor aid pushes up investment.
  • With the worst of the food and fuel shortages over, and with global commodity prices falling, we expect inflation to remain below its highs of 2011, although it will rise again as a depreciating riyal pushes up import costs.
  • The current-account deficit is expected to remain wide in 2013-17, as oil exports are depressed by falling production.

  Review

  • The allocation of seats for the "national dialogue" conference has been disclosed: the former ruling General People's Congress has the largest bloc and the secessionist Southern Movement the second-largest.
  • Several members of the national dialogue technical committee have suspended work in protest against the killing of seven activists in the southern city of Aden.
  • A Saudi diplomat has been killed in Sanaa, prompting embassies in the capital to step up their security. A government spokesman blamed the attack on al-Qaida in the Arabian Peninsula.
  • Despite the improved political situation, the latest data from the Central Bank of Yemen and the International Energy Agency both show that average oil output fell last year.
  • Yemen's government has set up a new department to fast-track US$7.9bn in economic aid pledged to the country. However, there remains considerable overlap between its role and that of the Ministry of Planning.

  March 08, 2013

Economy:

• Background

  Yemen: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	13.6	12.9	13.3	12.4	12.4
  Industry	42.0	43.9	44.4	42.3	40.8
  Services	44.3	45.3	48.1	45.4	46.7
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  Oil and agriculture are the two mainstays of Yemen's economy. In 2007 oil accounted for 85% of export earnings and an estimated 71% of government revenue. This leaves the external and fiscal accounts highly vulnerable to fluctuations in global oil prices. Yemen's oil reserves are relatively small, by Gulf standards, and output is declining: production at the end of 2007 was just 339,000 barrels/day (b/d), some way below the peak average of 465,000 b/d recorded in 2003. On current trends, Yemen is expected to have depleted its oil reserves within 12 years, although prospects for the gas sector look better. The oil sector dominates the overall economy, but agriculture has traditionally been the mainstay of the domestic economy. Depending on rainfall patterns, agriculture generally constitutes around 20% of GDP and employs more than half of the economically active population. The sector is under threat, though, as aquifers have been seriously depleted in recent years.

  Yemen has a small economy in comparison with its Gulf neighbours, and the country is poor. Average annual income per head in Yemen is around US$900, compared with over US$12,500 in Saudi Arabia and over US$52,000 in Qatar. Private consumption accounts for about 66% of the country's nominal GDP, and government consumption for around 12%. The share of fixed investment has remained relatively constant at around 15%.

  July 02, 2008

• Structure

  Yemen: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 08, 2013

• Outlook

  Yemen: Country outlook

  Yemen: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Having come to power in February 2012, in an election in which his was the only name on the ballot paper, the president, Abdel-Rabbuh Mansour Hadi, is struggling to oversee the country's political transition. His election was a key step in the Gulf Co-operation Council (GCC)-backed transition process, which included the departure of Ali Abdullah Saleh after 33 years in power (Mr Hadi had previously been his vice-president) and is intended eventually to culminate in a new constitution and competitive elections. However, despite considerable international backing, the new interim government, with cabinet posts evenly split between the Joint Meeting Parties (JMP) and the former ruling General People's Congress (GPC), will struggle to impose its authority over Yemen's more remote and often self-governing areas. In addition, relations between the JMP (which includes Islah, an offshoot of the Muslim Brotherhood) and the GPC will become increasingly tense, with an emboldened JMP seeking to impose its will on the embattled former ruling party. Against this backdrop, key political, military and former regime players will increasingly jostle for supremacy, while areas removed from the ongoing power struggle in the capital, Sanaa, will gradually fall under the sway of tribal, secessionist and in a few places terrorist control.

  ELECTION WATCH: The presidential election in February 2012 took place within 90 days of the GCC-backed agreement coming into force (a stipulation in line with the current constitution). Despite the fact that Mr Hadi ran unopposed, the turnout was relatively high, including in the south, where southern separatists had called for a boycott. At the end of the national dialogue process new parliamentary and presidential elections will be held, probably in early 2014, with both institutions likely to be elected for four-year terms. Given the previous dominance of the GPC, the outcome of the polls is extremely uncertain (and Mr Hadi's intentions are particularly opaque). Nevertheless, considerable international attention at least will be focused on Islah (the main party within the JMP), which will be looking to replicate the electoral success of fellow Muslim Brotherhood offshoots in the Middle East.

  INTERNATIONAL RELATIONS: The worsening security situation in Yemen and the continued tussle for power have attracted increased attention from the country's neighbours and several Western powers. With Mr Saleh's departure, the GCC states have focused on attempting to shore up Yemen's transition by stepping up economic development support and using their influence behind the scenes to shape the behaviour of the key players. As part of this process, at a Friends of Yemen event in late May Saudi Arabia pledged US$3.25bn in development aid; the UAE subsequently pledged US$136m in food aid, and following a donor conference in September in New York total international aid pledges have risen to US$7.9bn. Although Western countries will also retain an active diplomatic role in Yemen, they will remain predominately focused on security concerns--in particular al-Qaida in the Arabian Peninsula (AQAP)--as demonstrated by the increased attacks on AQAP targets by US drones (a number of which, it was recently exposed, are now based in Saudi Arabia).

  POLICY TRENDS: The new government faces a daunting task in reviving the economy. Despite the urgent need to reduce the fiscal deficit, the new government has said that it will prioritise stability over austerity. In keeping with this bias, it passed expansionary budgets for 2012 and 2013, both of which included substantial outlays for fuel subsidies. However, with domestic resources sorely lacking, it will redouble its efforts not only to attract pledges of foreign aid but, more crucially, to ensure that they are disbursed (a repeated problem in the past). The government and the international community alike will seek to earmark donor funds for specific capital projects, with the power sector likely to be the main beneficiary, and the president has announced that a new department will be set up to oversee the allocation of funds.

  ECONOMIC GROWTH: Our economic forecast is based on the assumption that the political transition will not descend into a violent contest for power. With that in mind, we estimate that, after contacting by over 10% in 2011 (the government has struggled to come up with a precise figure), the economy will build on the slow recovery seen in 2012, growing by an annual average of some 2.7% over the forecast period, as private-sector activity revives and donor aid pushes up investment. However, even though the Marib pipeline finally reopened in July 2012, it has been repeatedly disrupted since, and as such oil production is not expected to bounce back. In addition, a number of investment projects (including government-funded schemes) have been delayed in the wake of the worsening security situation, but would be restarted if sufficient stability returned. The outlook for the agricultural sector is more uncertain, however. Although it should recover from the disruption caused by population displacement, worsening groundwater shortages are likely to depress output growth.

  INFLATION: Inflation fell back to an average of 10.6% in the first 11 months of 2012, with the improved security situation helping to ease supply bottlenecks. Assuming the worst of the shortages are over, and with global commodity prices falling, inflation should remain at around its trend rate in 2013-14, averaging 11.2%. Nonetheless, with the depreciation of the riyal expected to accelerate in the second half of the forecast period, pushing up import costs, we expect average inflation to reach 13.6% in 2017.

  EXCHANGE RATES: In the wake of the unrest that began in early 2011 the riyal came under severe downward pressure, forcing the Central Bank of Yemen (CBY) to run down its reserves to protect the currency. In response, the Central Bank kept the official rate steady at YR213.8:US$1, leading to a wide gap with the unofficial, black-market rate. However, this gap has narrowed recently, and the CBY has begun to allow a small weakening of the official rate--seemingly a sign of confidence, given that foreign reserves have recovered of late (after Saudi Arabia deposited US$1bn at the CBY) and the IMF has stepped in to provide financial support. However, with the external account set to return widening deficits over the forecast period, we expect Yemen to be forced to run down its foreign reserves to alarmingly low levels, reaching the equivalent of just 1.3 months of import cover by the end-2017. As a result, the CBY will be less able to protect the riyal, resulting in an accelerated depreciation of the currency to an average of YR300:US$1 in 2017. However, a free float of the currency is also a possibility, if the CBY chooses to protect its foreign-currency reserves at the expense of the riyal.

  EXTERNAL SECTOR: The current account is expected to return widening deficits in 2013-17. Export earnings remained surprisingly resilient in 2011-12, as oil production outages were almost entirely restricted to domestic supplies (rather than exports). However, after a modest rebound in 2013 (as oil production recovers slightly), export earnings are set to resume their downward trend as oil production continues its long-term decline. As a result, the trade deficit is forecast to widen to US$6.3bn (8.9% of GDP) in 2017. With Yemen facing a potentially urgent balance-of-payments crisis, we expect foreign donors to step up their support (and GCC states to allow more Yemenis into their labour forces), which will push up inflows of current transfers and move the non-merchandise account into surplus from 2014. However, this will be insufficient to offset the widening trade deficit, and thus we expect the current-account shortfall to widen substantially from an estimated US$2.4bn (5.7% of GDP) in 2012 to US$5bn (7% of GDP) in 2017.

  March 11, 2013

• Forecast

  Yemen: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	3.2	3.1	2.0	2.2	2.7	3.3
  Oil production ('000 b/d)	180	187	178	152	129	119
  Crude oil exports (US$ m)	4,535	4,399	3,384	2,214	1,366	1,006
  Consumer price inflation (av)	10.2	10.7	11.7	12.6	13.3	13.6
  Deposit rate	18.0	15.0	15.0	15.0	15.0	15.0
  Government balance (% of GDP)	-9.1	-8.6	-8.8	-8.8	-8.3	-7.5
  Exports of goods fob (US$ bn)	7.6	7.9	7.2	6.3	5.9	5.8
  Imports of goods fob (US$ bn)	8.9	9.4	9.9	10.5	11.2	12.1
  Current-account balance (US$ bn)	-2.4	-2.1	-2.5	-3.3	-4.0	-5.0
  Current-account balance (% of GDP)	-5.7	-4.4	-4.9	-5.8	-6.4	-7.0
  External debt (end-period; US$ bn)	7.4	7.8	8.3	8.7	9.1	9.3
  Exchange rate YR:US$ (av)	214.3c	220.7	238.5	258.4	277.8	300.2
  Exchange rate YR:US$ (end-period)	214.9c	228.0	248.0	267.0	288.0	310.0
  Exchange rate YR:¥100 (av)	267.9c	238.0	252.4	268.5	285.0	311.1
  Exchange rate YR:€ (av)	275.6c	293.6	313.0	328.2	350.1	378.6
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual.

  Download the numbers in Excel

  Download text file (csv format)

  March 08, 2013

View detailed map

Country Briefing

Land area

527,968 sq km

Population

24.3m (IMF, mid-2010 estimate)

Main towns and provinces

Population in '000 (2004 census)

Taiz: 2,403

Hajjah: 1,481

Ibb: 2,138

Dhamar: 1,339

Hodeida: 2,161

Hadramawt: 1,029

Sanaa city (capital): 1,748

Sanaa (province): 918

Climate

Northern and central highlands: warm in summer but cold in winter; Tihama and southern coast including Aden: hot; eastern plains and desert: hot, arid and harsh

Languages

Arabic (official); English is also used in official and business circles

Measures

Predominantly metric in the northern provinces and UK (imperial) in the south; local measures are also in use

Currency

Yemeni riyal (YR) = 100 fils. The riyal was floated on the open market in July 1996

Time

3 hours ahead of GMT

Public holidays

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate. New Year's Day (January 1st); Mawlid al-Nabi (the birthday of the Prophet; February 4th 2012); Labour Day (May 1st); Unity Day (May 22nd); Revolution Day (September 26th); Eid al-Fitr (end of Ramadan; August 19th 2012); National Day (October 14th); Independence Day (November 30th); Eid al-Adha (Feast of the Sacrifice; October 26th 2012); Islamic New Year (November 15th 2012)

March 02, 2012