Yemen war undermines economy

Friday 26/02/2016
Increasing shortage of fuel

SANAA - Mohammad Mouthan­na, 27, stands in a long queue along with tens of others waiting with empty butane cylinders in front of a refill centre on Northern 60th Street in western Sana’a. Mouthanna, who has two cylinders, says he is there to refill them for another person in return for a small fee.
He started doing this “job” on weekdays after the Saudi-led Arab alliance launched its air military campaign against Houthi militants in March 2015.
The war, raging in several Yemeni governorates, worsened living con­ditions in one of the poorest Arab countries. Butane and oil products are increasingly hard to find and expensive. Prices of food and other consumer goods have skyrocketed.
“I lost my job at a travel and tourist agency, which shut down and laid off all its employees, and I could not find another job,” Mouthanna said. “Three months ago, someone offered me to stand in queue to fill butane cylinders for him in return for 2,000 riyals ($7). I said yes and I started doing this job.”
Before the war, more than half of Yemen’s population lived in extreme poverty (less than $1.90 a day) and more than half of the youth were unemployed, the World Bank says. These numbers have in­creased and more than 20 million Yemenis — 82% of the population — are considered poor.
Although the money Mouthanna makes is not commensurate with his long wait in imminent danger of bombings and extreme weather, he is happy to be making it.
Other young men, such as Mouk­htar Qassem, 22, found jobs as street petrol vendors in Sana’a, which is under blockade by the Arab coalition.
Qassem, a refugee from Taiz gov­ernorate, spends 12 hours every day selling petrol barrels and bottles of various sizes at the main entrance to the University of Sana’a, he says. “I get food, water and 1,000 riyals ($3.50) every day selling petrol. The money goes to my family back home because I am its only bread earner.” Qassem’s father was one of the more than 2,200 civilians who have died in the war.
International aid organisations have lambasted the blockade, os­tensibly imposed to stop weapons shipments from Iran to the Hou­this. The World Food Programme has accused the coalition of stop­ping a relief ship from reaching the port city of Hodeida.
Oil products are hard to find in stations authorised by the govern­ment-owned Yemen Oil and Gas Corporation. Instead, importers sell their shipments to intermedi­aries for resell to consumers.
This created a black market in which petrol sells for $26 per 20 li­tres; triple the official price. Tank­ers parked along roadsides sell most of the imported oil products directly to Yemenis.
Jamil el-Hashedi, a taxi driver, relies on these supplies. “I fill my car from these tankers in order to avoid stopping work for days while waiting for my turn at petrol sta­tions,” he said.
If black market supplies were unavailable, he would be obliged to queue for petrol at a station, sometimes for several days. “In this event, I would take turns with another person in return for 2,000 riyals per day,” Hashedi said.
The war has taken a severe toll on Yemen’s economy, with its gross domestic product shrinking 28.1% in 2015, the International Mon­etary Fund said. The country’s oil production was 70,000 barrels per day (bpd) in 2015, down from 111,000 bpd in 2014 and 190,000 bpd in 2011, according to the UN Economic and Social Commission for Western Asia. As a result, oil revenues dropped to $70 million in 2015 from $4.5 billion in 2014 and $7.7 billion in 2011.
“It is possible that soon there will be no oil revenues in Yemen because there are no investments in the oil sector, not to mention the damage inflicted on it by armed competing tribes and factions,” economist Rashid Haddad said.
He said inflation — 30% in 2015 — will increase with declining riyal exchange rates and shrinking for­eign reserves at the central bank.
“Who still lives in Yemen?” he asks. “Those who cannot afford to flee or those who are profiteering from the war. The overwhelming majority is paying heavily for hav­ing to live in very bad economic conditions.”