Impoverished Yemen's economy hard hit by protests

AP News
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Posted: Apr 18, 2011 12:30 PM
Impoverished Yemen's economy hard hit by protests

Almost two months of unrest in Yemen has more than doubled the price of some basic foodstuffs and cooking gas while the value of the rial has plummeted, deepening the strain in what was already the Arab world's poorest nation.

The economic woes mirror those that surfaced in other Arab countries that either already underwent similar uprisings, or are still grappling with the mass protests. But they carry a particular weight in Yemen, where concerns are mounting that President Ali Abdullah Saleh's already shaky grip on power is working to the advantage of militant groups like Al-Qaida in the Arabian Peninsula.

Anger about the price increases and shortage of cooking gas have been building for weeks, with protests surfacing in major cities, including the capital, and hundreds of people blocking main roads with empty gas cylinders. Meanwhile, unemployment, pegged at 49 percent in 2010, according to economists, is getting worse as business tapers off and the devaluation in the rial has hammered the construction sector.

"There is no chance for work," said Abdullah al-Matari, a 55-year-old construction worker and father of eight who was one of hundreds of other day laborers waiting for a job at a downtown Sanaa market.

Unlike most of the other countries that share the peninsula, Yemen's story is one of being the impoverished sibling. It has almost none of the oil wealth that its northern neighbor, Saudi Arabia, enjoys and it has been largely overlooked by the Gulf nations in their bid _ through an infusion of cash _ to stem the unrest building up in the region.

While Saudi Arabia, the United Arabia Emirates, Kuwait and Qatar pledged $20 billion in aid Bahrain and Oman, their more impoverished fellow Gulf Cooperation Council sister states, Yemen has found no such benefactor.

Meanwhile, the country, with over 24 million people, has the lowest per capita income of any of the major Arab states _ just $1,200 according to the London-based Capital Economics. Its GDP is roughly twice that of Bahrain, a tiny nation of just 800,000.

Its economic troubles have only deteriorated since the start of the uprising.

Since the start of the protests in February, the rial has lost about 20 percent of its value. With daily life disrupted, Yemenis have taken to hoarding essential food stuff, leading to price increases and a sharp decline in stocks of such goods and products.

Inflation, which stood at about 11 percent last year, has climbed to between 15 and 18 percent in the first quarter of 2011 while GDP growth has slowed to slightly under 1 percent, said Youssef Saeed, an economist at Aden University.

"If there's no political solution, these figures are only going to get worse," said Saeed, adding that the country needed "urgent help from the Gulf nations and donor countries."

The surging prices are a burden that Yemenis can ill afford.

A 50 kilogram sack of sugar that normally sold for 9,000 rials ($37 per 110 pound sack) now costs 11,000 in the capital and 14,000 in remote villages in other provinces. The price of wheat, cooking oil and milk have all climbed by at least 25 percent.

The spike in prices is further fueling the unrest, putting even more strain on the embattled Saleh and his government.

In Sanaa, angry youth who spent three days demonstrating outside a gas distribution center clashed repeatedly with police and dispersed on Saturday, only after a truck arrived carrying full gas cylinders. But even then, resentment abounded.

Ahmed al-Himi said he bought one of the canisters for more than double the government-mandated price of 1,200 rials, and said he was convinced the government was behind the price surge.

"The government gets the extra money to pay to its supporters who take part in the pro-government demonstrations, or to buy allegiance of some tribal chiefs," al-Himi said.

The claims are common in a country _ and indeed a region _ where authoritarian governments have long had little credibility among a people who argue that the established regimes are intent only on enriching themselves and loyalists.

Saleh, who has for weeks resisted pressure to step down, responded in kind _ blaming the protesters for the gas cylinder crisis. On Friday, he said that the opposition was blocking roads to prevent the cylinders from reaching Sanaa from Marib, the al-Qaida stronghold southern province where the gas in produced.

An attack earlier last week on a power plant in the province, disrupted the flow of gas, and several cities including Sanaa, suffered electricity shortages. The official SABA news agency accused unnamed "saboteurs" of being behind the attack.

For millions of Yemenis, however, the real concern is how to cope in a country where the deteriorating political situation is eclipsed only by the economy.

"I come here every morning but, at noon, I go back empty-handed," said Hazza al-Hamadi, a 33-year-old plumber. "Life has become more difficult."