SANA’A, Yemen — Recently, Yemen’s government cut fuel subsidies, resulting in both an increase in poverty and a decrease in food security. There were massive protests throughout Yemen’s capital, Sana’a.
The modern Republic of Yemen was only formed 24 years ago in 1990, after the merging of North and South Yemen. Since then, the combined state, known most commonly as simply Yemen, has had a troubled history.
Following a short civil war in 1994, regional tensions flared up again in 2009 as government forces and members of the Shia Zaidi sect in the north of the country clashed. The nation would be hit by more political upheaval in 2011 protestors, following example of the Arab Spring Uprisings in Egypt and Tunisia. The protests called for the resignation of the then current President Saleh, who had led the country for the past three decades. In response to these protests he would, at the end of the year, step down from his post.
In addition to this internal struggle, Al-Qaeda maintains a visible presence in the nation. In the south, Al-Qaeda is currently battling the government for control of the towns there. The United States is also involved with this conflict, using drones to drop bombs on the radical militant group.
As a result of this troubled past, Yemen’s economy suffered, and since 2011, the budget has suffered from consecutive deficits. In July, in an effort to free up this budget and foster economic growth, the government cut fuel subsidies. The fuel subsidies cost roughly one fifth of all of Yemen’s spending, costing them about $3bn to 3.5bn in 2013 alone.
However, through the employment of these subsidies the government maintained a lower price of transport, water and food for those living in Yemen. The success of the subsidies is the reason why their being cut has received such widespread disapproval. When the subsidies were cut in July, the price of gasoline increased by 60 percent and diesel by 95 percent. As a result, the cost of transport and bread have risen by at least 20 percent.
Yemen’s Ministry of Planning and International Cooperation estimated that the fuel cutting subsidies could lead to a subsequent rise of 500,000 becoming impoverished. Today, roughly 12.5 million individuals in Yemen already live in poverty. This is about 50 percent of the population.
The government’s decision to slash fuel subsidies set off major protests in the capital of Sana’a, where the protestors called for the cuts to be discontinued, the subsidies reinstated and the government dissolved.
Their voices have not gone unheard. After only two weeks of protests, current President Hadi sacked his cabinet and partially reinstated the fuel subsidies. However, while this partial reinstatement has been achieved, not only have the underlying issues and poverty in Yemen economy gone unaddressed, but the protests also showed a large amount of animosity from the citizenry towards their government.
Most of the protests took the form of sit-in demonstrations and served the purpose of effectively shutting down large swathes of the city. Some of the demonstrations did turn violent, however, in reaction to government forces reportedly firing on protesters.
The cuts to the fuel subsidies were originally envisioned as being a necessary step for Yemen to avoid an economic meltdown. The plan was that, along with the cutting of the subsidies, there would be a concurrent increased income to the welfare fund of this state, allowing for 250,000 more people to be added to the fund. Currently, 1.5 million people are already receiving cash transfers from the welfare fund. However, the welfare payments have been erratic at best recently in Yemen, with the government failing to provide any welfare payments for the past six months. Furthermore the planned funds never materialized for the welfare fund when the cut took place.
As Julie Harneis, the UNICEF representative in Yemen, explains, “The agreement was that the increase in fuel process would be compensated by an increase in grants to the poorest Yemenis through the Social Welfare Fund. But the SWF payments haven’t been regular. That is obviously a big issue.”
The cutting of fuel subsidies is also impacting farmers who account for the vast majority of employment in the rural areas of Yemen, where 60 percent of the population resides.
Recently, Colette Fearon, Yemen country director for Oxfam, spoke of the farmers’ economic troubles: “During Ramadan, many farmers didn’t plough their fields because they couldn’t afford the cost of the diesel and even if they could they couldn’t afford the cost of water for irrigation.”
International aid agencies are further concerned that the rising costs of basic commodities will cause Yemen’s poor to sell off what few assets they have, such as livestock, inhibiting their future economic growth. Local and international NGOs originally supported the cutting of the fuel subsidies for the nation’s economy, although they have since questioned the rapidity at which these cuts took place and the lack of a prepared safety net for the population.
Abdulkarim Sulah, the director of policy at the Yemen Social Welfare Fund, has expressed doubt over to what extent the Fund can currently help Yemenis, even if payments were being distributed. This dissatisfaction stems from the fact that, although the cost of living has going up in Yemen, the government has not condoned an increase in the amount of welfare payments since the fund’s establishment in 1996. Sulah had this to say on the matter: “But year on year, prices have gone up. We negotiated with the government to increase the money we dispersed [by 50 percent]but there has been no response from the government side, and now they want to increase the number of people covered by 250,000 even when we have no money.”
The government is expected to make an announcement in the next few days in which they will present their new plan of action in regards to the various complexities of this situation. Hopefully, whatever their next plan of action is, it is a good one.
– Albert Cavallaro