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Popular Protest in North Africa and the Middle East (II): Yemen between Reform and Revolution
Popular Protest in North Africa and the Middle East (II): Yemen between Reform and Revolution
Table of Contents
  1. Executive Summary
Central Bank Crisis Risks Famine in Yemen
Central Bank Crisis Risks Famine in Yemen

Popular Protest in North Africa and the Middle East (II): Yemen between Reform and Revolution

Unprecedented protests and the regime’s heavy-handed response risk pushing Yemen into widespread violence but also could and should be a catalyst for long overdue, far reaching political reform.

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Executive Summary

Even before the popular wave from Tunisia and Egypt reached Yemen, President Saleh’s regime faced daunting challenges. In the north, it is battling the Huthi rebellion, in the south, an ever-growing secessionist movement. Al-Qaeda in the Arabian Peninsula is showing mounting signs of activism. Sanaa’s political class is locked in a two-year battle over electoral and constitutional reforms; behind the scenes, a fierce competition for post-Saleh spoils is underway. Economic conditions for average Yemenis are dire and worsening. Now this. There is fear the protest movement could push the country to the brink and unleash broad civil strife. But it also could, and should, be a wake-up call, a catalyst for swift, far-reaching reforms leading to genuine power-sharing and accountable, representative institutions. The opposition, reformist ruling party members and civil society activists will have to work boldly together to make it happen. The international community’s role is to promote national dialogue, prioritise political and economic development aid and ensure security aid is not used to suppress opposition. 

Events in Tunisia and Egypt have been cause for inspiration with a speed and geographic reach that defies imagination. In Yemen, their effect has been to transform the nature of social mobilisation, the character of popular demands and elites’ strategic calculations. They emboldened a generation of activists who consciously mimicked their brethren’s methods and demands, taking to the streets and openly calling for Saleh’s ouster and regime change – aspirations many quietly backed but few had dared openly utter. The official opposition, tribal leaders and clerics at first mostly stood on the sidelines. But as protests steadily grew in size – and as the regime security forces resorted to heavy-handed violence – they played catch-up and have come to espouse some of the demonstrators’ more ambitious demands. 

Largely caught off guard, the regime’s response was mixed. It has employed harsh tactics, particularly in the south, arresting, beating harassing and even killing activists. By most accounts, supporters donning civilian clothes took the lead, wielding sticks, clubs, knives and guns to disperse demonstrations. Police and security personnel at best failed to protect protesters, at worst encouraged or even participated in the repression. The events on 8 March, when the army used live ammunition against demonstrators, represent a worrisome escalation.

The regime also mobilised supporters, organising massive counter-demonstrations. Some likely joined due to financial inducements, yet it would be wrong to dismiss them so readily. Saleh still enjoys genuine support born of tribal loyalties and nurtured by a deep patronage system that doles out benefits. He benefits from a large wellspring of negative legitimacy, given the absence of a clear or popular alternative leader. Finally, the president has been compel­led to make a series of unprecedented concessions, notably regarding presidential term limits and hereditary succession. 

None of these tactics appears to have worked. Violence boomeranged, enraging the youth movement and attracting more supporters to the protesters’ side. Regime efforts to rally supporters have met with some success, yet every day sees more defections from traditional pillars of support, including tribal heads and clerics. Saleh’s concessions, impressive as they might have seemed to him, are viewed as both insufficient and unworthy of trust by protesters who continue to come out in force. 

What comes next? It is easy to look at Tunis and Cairo and predict the regime’s rapid demise. Some traits are shared. Far more even than Tunisians or Egyptians, Yemenis suffer from poverty, unemployment and rampant corruption; if economic disparity and injustice are an accurate predictor of unrest, the regime has reason to worry. As in those preceding cases, the demonstrators have condensed their demands into a call for the leader’s unconditional departure, and they are displaying remarkable resilience and ability to expand their reach in the face of regime counter-measures.

Still, Yemen is neither Egypt nor Tunisia (though, for that matter, nor was Egypt like Tunisia, which says something about how oblivious popular protests are to societal differences and how idle is speculation about what regime might be the next to go). Its regime is less repressive, more broadly inclusive and adaptable. It has perfected the art of co-opting its opposition, and the extensive patronage network has discouraged many from directly challenging the president. Moreover, flawed as they are, the country has working institutions, including a multi-party system, a parliament, and local government. Qat chews are a critical forum for testing ideas and airing grievances. Together, these provide meaningful outlets for political competition and dissent, while preserving space for negotiation and compromise. 

Other significant differences relate to societal dynamics. Tribal affiliations, regional distinctions and the widespread availability of weapons (notably in the northern highlands) likely will determine how the transition unfolds. There is nothing resembling a professional military truly national in composition or reach. Some parts of the security apparatus are more institutionalised than others. Overall, however, it is fragmented between personal fiefdoms. Virtually all the top military commanders are Saleh blood relatives, who can be expected to stand by his side if the situation escalates. 

Then there is the matter of opposition cohesion, which has proved critical in successful regional uprisings. Preserving unity of purpose amid the ongoing Huthi rebellion and tensions between northerners and southerners will be challenging. In the south, the movement best equipped to mobilise protesters, the Hiraak, promotes secession, an agenda around which other Yemenis hardly can be expected to rally. While Hiraak supporters recognise that a strong protest movement in the north benefits their cause by distracting the security apparatus, the link thus derives from strategic opportunity, not cooperation in pursuit of a common goal. This may be changing: youth activists are seeking to transcend geographic divides, and the umbrella opposition group – the Joint Meeting Parties (JMP) – is building closer ties with rebels in both north and south. It is too early to predict the outcome, which could well determine Saleh’s fate. 

The spectre of descent into tribal warfare likewise makes many Yemenis nervous. A potentially bloody power struggle looms between two rival centres within the Hashid tribal confederation – one affiliated with the president, the other with the late Sheikh Abdullah bin Hussein al-Ahmar’s sons. Rules of the game are in flux, presenting an uncommon opportunity for serious reform – but also for violent conflict.

The protesters, with the wind at their backs, expect nothing less than the president’s quick ouster. The president and those who have long benefited from his rule are unlikely to give in without a fight. Finding a compromise will not be easy. The regime would have to make significant concessions, indeed far more extensive than it so far has been willing to contemplate. To be meaningful, these would have to touch the core of a system that has relied on patron-client networks and on the military-security apparatus. The opposition and civil society activists have a responsibility too. A democratic transition is long overdue, yet they should be mindful of the risk of pushing without compromise or dialogue for immediate regime change. The outcome could be a dangerous cycle of violence that jeopardises the real chance that finally is at hand to reform a failing social contract. 

Sanaa, Brussels, 10 March 2011 

A boy pulls containers of water amid an acute shortage of clean drinking water in Sanaa, on 20 April 2015. REUTERS/Mohamed al-Sayaghi

Central Bank Crisis Risks Famine in Yemen

Efforts to move Yemen’s Central Bank will likely add to risks of insolvency and starvation, while complicating and deepening civil war divisions. Regional and international powers should rally round this critical institution and help revive UN-brokered peace talks.

The collapse of UN-mediated peace talks in August is sending Yemen’s war into a new phase, potentially with even more devastating consequences. During eighteen months of fighting between a Saudi-led coalition backing the internationally- recognised government of President Abed-Rabbo Mansour Hadi and Huthi (Zaydi/Shiite) rebels aligned with forces under the previous president, Ali Abdullah Saleh, the population has been the primary victim, sustaining air bombardments, rocket attacks, and economic blockades. Over 10,000 people, approximately 4,000 of them civilians, have been killed, the majority in Saudi-led coalition airstrikes. Both sides stand accused of repeated violations of international humanitarian law, actions that make the conflict increasingly difficult to resolve. Over 3.2 million Yemenis are internally displaced. Fourteen of 26 million are food insecure, and 370,000 children under age five risk severe, acute malnutrition. Now the situation is about to get worse.

On 19 September, President Hadi fired the Central Bank governor and announced he would move the bank from the Huthi/Saleh-controlled capital, Sanaa, to the government’s temporary base in the port city of Aden. The decree could mark a turn toward economic warfare aimed at strangling the Huthi/Saleh alliance financially in its northern strongholds. Yet, ordinary Yemenis would suffer the most.

War in Yemen

April Longley Alley, Crisis Group Senior Analyst for the Arabian Peninsula, explains in this video how Yemen reached this destructive impasse. CRISIS GROUP

The move appears to have no well-thought-out implementation plan and opens a host of uncertainties, including a breakdown of the banking system and continued inability to pay salaries that would accelerate economic collapse and could tip large parts of the country into famine. It will also vastly complicate prospects for a negotiated settlement and almost certainly encourage the Huthi/Saleh forces to escalate, including attacks inside Saudi territory. Not least, it will deepen the north-south political divide, making more difficult future efforts to negotiate a peaceful solution to the troubled relationship between these areas.

The economy has long been a weapon in the war. Huthi/Saleh forces enforce, with occasional loosening, a crippling blockade on the second largest city, Taiz, which has been fought over for more than a year, with disastrous humanitarian consequences. The Saudi-led coalition imposed a tight air/sea blockade on Huthi/Saleh-controlled areas early in the war, ostensibly to prevent Iranian weapons from entering. While that situation has gradually improved since May under a UN verification mechanism, the cumulative humanitarian impact has been calamitous.

There had been a tacit agreement between the sides to allow the Central Bank, run by veteran technocrat Mohammed Awad bin Humam, to perform its functions relatively free of interference. Diplomats and international economists agree that, under increasingly adverse circumstances, the bank has remained largely impartial, guaranteeing import of basic commodities, protecting the riyal’s value and paying public-sector salaries nationally. Without revenue from interrupted hydrocarbon exports, formerly approximately 70 per cent of the government’s budget, or donor support, however, the bank is rapidly approaching insolvency. Acute riyal shortages are interfering with its ability to pay salaries, and the Hadi government has blocked bin Humam from printing additional currency through a Russian company.

The bank’s looming insolvency coincides with a military stalemate and the breakdown of peace talks. In three months of negotiations in Kuwait, the parties came closer to a negotiated settlement than ever before. Both realised they were mired in a costly war of attrition, in which the Saudi-led coalition failed repeatedly to dislodge Huthi/Saleh forces from their northern positions, and the latter defended their area at great human cost without making headway in Taiz and further south. They sensibly entered into discussions on force withdrawals, general disarmament and formation of a national unity government, though the Huthis were unwilling to go into details on withdrawals. The talks faltered on sequencing security and political steps, however, and both sides have redoubled efforts to make decisive battlefield gains.

The bank’s looming insolvency coincides with a military stalemate and the breakdown of peace talks.

Even before peace talks ended, the Huthi/Saleh alliance had begun to entrench its political control of the north, highlighting the Hadi’s government’s lack of influence there, by forming a high political council as a first step toward a rival government. It also escalated attacks inside Saudi Arabia and is attempting to hold territory there. The Saudi-led coalition has pummelled Huthi/Saleh-controlled areas with airstrikes, and its Yemeni allies have tried, and again failed, to enter Sanaa from the north east. Possibly seeing it has limited military options in the northern highlands, Saudi Arabia and its main partner, the United Arab Emirates (UAE), now appear to be shifting the fight to the economic front, where they have significant leverage.

During the Kuwait talks, the Hadi government and its Gulf Cooperation Council backers turned increasingly critical of the Central Bank, accusing its governor of allowing the Huthi/Saleh forces to pilfer state coffers to fund their war effort. The heart of the issue is the monthly disbursal of 25 billion riyals (approximately $100 million) to the Huthi-controlled defence ministry. This notoriously opaque line item in the 2014 budget, which bin Humam has continued to implement absent a new budget, benefits the Huthis disproportionately, as they, like every group in Yemen before them, have likely stacked the ministry payroll with their loyalists.

Though Saudi Arabia intervened in the past to prop up the economy (and still has a $1 billion Central Bank deposit), it is no longer prepared to put cash into a bank it reasonably views as being used to finance a war against it and seems less concerned the bank’s demise in Sanaa could precipitate a total economic collapse that arguably would not be in its long-term interest. The Huthi/Saleh alliance has been unwilling to negotiate guarantees to address Saudi concerns, while Hadi and his supporters expect Saudi Arabia and the UAE to replenish the bank’s cash once it is in Aden. Faced with the prospect of a collapsing bank in Sanaa and a move to Aden that could inject much-needed liquidity even as it raises the possibility of economic warfare, the U.S., UK, UN and other international players have not opposed the move.

Yemen has become a failed and divided state and soon could also be a starving one.

Paradoxically, Hadi issued his decree on the heels of a push by his international backers to revive the peace talks. On 25 August, U.S. Secretary of State John Kerry announced that the “quad” (U.S., UK, Saudi Arabia, UAE) had agreed with the UN special envoy, Ismail Ould Cheikh Ahmed, to renew negotiations for a comprehensive settlement that would move simultaneously on political and security tracks to achieve a Huthi/Saleh withdrawal from Sanaa, their handing over of heavy weapons to a third party and formation of a unity government. The plan brings together many elements the UN envoy proposed in Kuwait, while meeting the Huthi/Saleh demand that political and security compromises be signed as part of a package. It also closely sequences those compromises in a way that would give wins – and the perception of these – to both parties.

The proposal might force the Huthis, in particular, to show their cards, requiring them to either accept a plan that accommodates their demands or reject it, thus indicating unwillingness to make concessions to which they had previously committed in principle. But the promising initiative could be stillborn. None of its supposed backers, save Kerry, has strongly championed it. The UN has yet to officially submit a revised roadmap to the sides incorporating its ideas. And now the bank announcement undermines and complicates diplomatic prospects.

Yemen cannot bear the demise of yet another opportunity to end the war. It has become a failed and divided state and soon could also be a starving one. One of its last functioning, technocratically-run institutions, the Central Bank, is in peril. Pulling back from what threatens to be even more severe fragmentation and suffering requires urgent steps:

  1. A UN-brokered plan for effective Central Bank functioning and a ceasefire to allow immediate resumption of talks.
    • As part of this, the Hadi government would commit to resume paying civil servants throughout the country, suspending plans to move the bank to Aden and continuing to rely on the bank’s infrastructure and staff in Sanaa. Both sides would agree to a plan for collaboration between the bank’s Aden branch and Sanaa headquarters until a peace agreement.
    • To ensure civil-servant salaries will be paid nationally and the liquidity problem is addressed, the sides would agree to support immediate printing of additional riyals, which are essential for resumption of salary payments and should be delivered to Central Bank offices in Sanaa, Aden and elsewhere, according to a plan based on the 2014 budget’s salary stipulations. Ideally, defence ministry salaries would be paid nationally according to the 2014 budget and personnel lists, which include combatants on all sides but exclude Huthi fighters added since 2015. 
  2. Resumption, immediately following a ceasefire, of UN-mediated talks based on a new roadmap in line with the quad initiative.
    • The UN envoy should present the revised roadmap to the belligerents, preferably in writing, including a framework for political and security compromises moving simultaneously to result in phased withdrawals, disarmament and quick formation of a unity government.
    • The Huthi/Saleh delegation should, in response, propose a withdrawal plan to become part of the comprehensive agreement. Concluding an agreement would be contingent on negotiation of the plan’s details.
    • To complete the comprehensive settlement, the envoy should add a mechanism to the settlement package for addressing regional autonomy demands, including the possibility of southern independence.

A devastating economic war of attrition may still be avoided, but only if the sides agree to an immediate ceasefire and return to peace talks. If a settlement cannot be reached based on the quad initiative, at least the ceasefire would give humanitarian agencies and governments time to put in place mechanisms to mitigate the impact on average citizens during the next phase of conflict.