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Yemen: Enduring Conflicts, Threatened Transition
Yemen: Enduring Conflicts, Threatened Transition
Table of Contents
  1. Executive Summary

Yemen: Enduring Conflicts, Threatened Transition

Flawed as it is, Yemen’s political settlement avoided a potentially devastating civil war and secured President Ali Abdullah Saleh’s resignation, but now the challenge is to address longstanding political and economic grievances.

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Executive Summary

As messy as it has been and unfinished as it remains, Yemen’s transition accomplished two critical goals: avoiding a potentially devastating civil war and securing the resignation of President Ali Abdullah Saleh, who had ruled the impoverished country for over three decades. It also cracked the regime’s foundations, while making it possible to imagine new rules of the game. Still, much remains in doubt, notably the scope and direction of change. The nation essentially has witnessed a political game of musical chairs, one elite faction swapping places with the other but remaining at loggerheads. Important constituencies – northern Huthi, southern Hiraak, some independent youth movements – feel excluded and view the transition agreement with scepticism, if not distain. Al-Qaeda and other militants are taking advantage of a security vacuum. Socio-economic needs remain unmet. The new government must rapidly show tangible progress (security, economic, political) to contain centrifugal forces pulling Yemen apart, while reaching out to stakeholders and preparing the political environment for inclusive national dialogue.

On 23 November 2011, following eleven months of popular protest, Saleh signed the Gulf Cooperation Council (GCC) initiative and an accompanying set of implementation mechanisms. Boiled down to its essentials, the GCC initiative provided the former president domestic immunity from prosecution in return for his stepping down. The UN-backed implementation document added flesh to the bones, providing valuable details on the mechanics and timetable of the transition roadmap.

The agreement outlined a two-phase process. In the first, Saleh delegated powers to his vice president, Abdo Robo Mansour Hadi. Feuding politicians then formed an opposition-led national consensus government with cabinet portfolios split equally between the former ruling party, the General People’s Congress (GPC), and the opposition bloc, the Joint Meeting Parties (JMP). The president established a military committee tasked with reducing tensions and divisions within the armed forces, which had split between pro- and anti-Saleh factions during the uprising. Phase one ended with early presidential elections, on 21 February 2012, in which Hadi was the uncontested, consensus candidate.

In phase two, Hadi and the government are given two years to, among other things, restructure the military-secu­rity apparatus, address issues of transitional justice and launch an inclusive National Dialogue Conference with the goal of revising the constitution before new elections in February 2014. It is a laudatory program, but also plainly an ambitious one. Already the scorecard is mixed, as implementation has fallen short.

Indeed, although much has changed, a considerable amount remains the same. Begin with the most important: the settlement failed to resolve the highly personalised conflict between Saleh and his family on the one hand, and General Ali Mohsen al-Ahmar, as well as, the powerful al-Ahmar family, on the other. As both camps seek to protect their interests and undermine their rivals, the contours of their struggle have changed but not its fundamental nature or the identity of its protagonists. Likewise, the underlying political economy of corruption has remained virtually untouched. The same families retain control of most of the country’s resources while relying on patronage networks and dominating decision-making in the government, military and political parties.

For frustrated independent activists, the struggle at the top amounts to little more than a political see-saw between two camps that have dominated the country for some 33 years, a reshuffling of the political deck that has, at the party level, hurt the GPC and helped the JMP. This has serious policy implications. As politicians squabble in Sanaa, urgent national problems await. Humanitarian conditions have worsened dramatically since the uprising, with hunger and malnutrition levels growing at an alarming rate. A year of political turmoil has resulted in severe shortages of basic commodities; aggravated already high poverty and unemployment rates; and brought economic activity to a virtual halt.

The army is still divided, with warring commanders escaping the president’s full authority. Armed factions and tribal groups loyal to Saleh, Ali Mohsen or the Al-Ahmars remain in the capital; elsewhere the situation is far worse. The government’s writ over the periphery, already tenuous before the uprising, has contracted sharply since. In the North, the Huthis have vastly expanded their territorial control. In the South, the government must contend with challenges from the Hiraak and its affiliated armed groups. Most worrisome is the spread of Ansar Sharia (Partisans of Islamic Law), a murky mix of al-Qaeda militants and young local recruits, many of whom appear motivated by economic rewards more than by ideological conviction. The government, fighting alongside local popular committees, has recaptured territories in the South, but the battle with al-Qaeda is far from over.

Yet, despite these multiple crises, partisan politics and jockeying for the most part persists in the capital. Encumbered by infighting and lacking capacity, the new government has yet to articulate or put forward a political and economic vision for the transitional period. What is more, it has done too little to bring in long-marginalised groups and is sticking to a largely Sanaa-centric approach. Reformers are concerned that vested interests in both the GPC and JMP are seeking to maintain a highly centralised, corrupt state that favours northern tribal and Islamist leaders, thus further deepening the divide with the rest of the country.

Securing Saleh’s peaceful exit from the presidency was hard enough; implementing the remainder of the agreement will be harder still. Neutralising potential spoilers – competing elites associated with the old regime as well as the divided military/security apparatus – is a priority. This cannot be done too abruptly or in a way that privileges one side over the other, lest it trigger violent resistance from the losing side. Instead, Hadi should gradually remove or rotate powerful commanders in a politically even-handed fashion and end their control over individual army units, while forcing them to demonstrate respect for the military chain of command under the president and defence minister. In like manner, the influence of powerful political parties and interest groups should be diluted in a way that ensures no single one finds itself in a position to dominate the transitional process. Equally important, the national dialogue needs to be broadly inclusive, requiring immediate confidence-building measures and continued outreach efforts toward sidelined groups: the youth, the Huthis and the Hiraak.

Implementation also is suffering from its overall opaqueness. No one – not the government, parliament, or military committee – has publicly kept score so as to shed light on who is violating the agreement and how. Nor has Hadi formed the interpretation committee, even though it is mandated by the agreement, and even though it could usefully settle disputes over the meaning of the initiative and its implementation mechanisms.

The political settlement has numerous flaws. It was an elite compromise that excluded many original protesters as well as marginalised constituencies. It failed to adequately address issues of justice, and it kept in power leaders and parties at least partially responsible for the country’s woes. But, at a minimum, it offers the chance for a different future. If politicians in Sanaa fail to resolve, or at least contain, the ongoing elite confrontation and move forward with an inclusive dialogue, the country risks experiencing further violence and fragmentation. Yemen has long run away from critical decisions. It should run no more.

Sanaa/Brussels, 3 July 2012

A boy carries a sack of recyclable items he collected at a camp for internally displaced people in Dharawan, near Sanaa, Yemen, on 28 February 2017. REUTERS/Khaled Abdullah

Instruments of Pain (I): Conflict and Famine in Yemen

War is denying Yemenis food to eat. This special briefing, the first of four examining the famine threats there and in South Sudan, Nigeria and Somalia, urges the Saudi-led coalition not to assault Yemen’s most important port, Hodeida, and both sides to immediately resolve deadlock over the Central Bank.

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I. Overview

Yemenis are starving because of war. No natural disaster is responsible. No amount of humanitarian aid can solve the underlying problem. Without an immediate, significant course change, portions of the country, in the 21st century and under the watch of the Security Council, will likely tip into famine. The projected disaster is a direct consequence of decisions by all belligerents to weaponise the economy, coupled with indifference and at times a facilitating role played by the international community, including key members of the Security Council such as the U.S., UK and France.

Avoiding famine, if this is still possible, requires the Saudi Arabia-led coalition, supporting the government of President Abed Rabbo Mansour Hadi against Huthi rebels and fighters aligned with former President Ali Abdullah Saleh, to halt what promises to be a bloody battle for Yemen’s most important port, Hodeida. It also requires immediate action by both sides to put aside differences and enable central bank technocrats to address the liquidity problem, pay public-sector salaries nationally and regulate the riyal. For this to be sustainable, Yemenis need a ceasefire and a durable political settlement to have a chance at rebuilding the shattered economy.

II. Famine and Conflict

By numbers, Yemen is suffering from the largest food crisis in the world.[fn]The UN has issued a warning of impending famine in four nations: Yemen, South Sudan, Somalia and parts of Nigeria. “USG/ERC Stephen O’Brien Statement to the Security Council on Missions to Yemen, South Sudan, Somalia and Kenya and an Update on the Oslo Conference on Nigeria and the Lake Chad Region”, UN Office for the Coordination of Humanitarian Affairs (OCHA), 10 March 2017. This briefing is the first of a series Crisis Group will issue on the four situations. Crisis Group Statement, “Instruments of Pain: Conflict and Famine”, 13 April 2017. Crisis Group has reported extensively on Yemen since 2003. For the most recent analysis, see Crisis Group Middle East Report N°174, Yemen’s al-Qaeda: Expanding the Base, 2 February 2017; Alert, “Central Bank Crisis Risks Famine in Yemen”, 29 September 2016; Report N°167, Yemen: Is Peace Possible?, 9 February 2016; and Middle East Briefing N°45, Yemen at War, 27 March 2015.Hide Footnote According to the UN, an estimated seventeen million persons, 60 per cent of the population and three million more than were so afflicted at the start of the year, are food insecure and require urgent humanitarian assistance to save lives. Seven of the country’s 22 governorates are at a phase four emergency food insecurity level, one step away from phase five: famine. Areas affected include both government and Huthi/Saleh controlled governorates. UNICEF reports that 460,000 children suffer from severe acute malnutrition.[fn]“Yemen: IPC Analysis – Summary of Findings, Acute Food Insecurity Current Situation Overview, March-July 2017”, IPCinfo, 1 March 2017, http://reliefweb.int/report/yemen/yemen-ipc-analysis-summary-findings-acute-food-insecurity-current-situation-overview-0. Yemen Humanitarian Snap­shot (March 2015-March 2017), UNICEF, http://reliefweb.int/sites/reliefweb.int/files/resources/20170317_hum.snapshot_final_0.pdf.Hide Footnote

The evolving hunger crisis has both a supply and demand side, with an underlying motif of combatants pursuing war by any means with little to no regard for the population. According to a prominent Yemeni entrepreneur, “the real story of the humanitarian crisis is that Huthi/Saleh forces and the corrupt people around President Hadi are all benefitting from the war economy while the people of Yemen suffer”.[fn]Crisis Group interview, March 2017.Hide Footnote

The evolving hunger crisis has both a supply and demand side, with an underlying motif of combatants pursuing war by any means with little to no regard for the population.

Saudi-led coalition allies repeatedly have hindered the movement of aid and commercial goods to the population. Huthi/Saleh violations are most egregious in the city of Taiz, where their fighters have enforced a full or partial blockade since 2015, with devastating humanitarian consequences. They routinely interfere with the work of humanitarians, at times demanding the diversion of aid to themselves or denying aid workers access to populations in need, revoking visas or even detaining them.[fn]Statement to the Security Council on Yemen, Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, Stephen O’Brien, 31 October 2016. Crisis Group interviews, representatives of humanitarian organisations operating in Yemen, March 2017.Hide Footnote They heavily tax all imports into their areas in part to finance the war effort and also run a black market in fuel, enriching military elites while driving prices up for trans­port of vital commodities.[fn]If goods are moved from Aden to Sanaa, they are taxed twice, once in the port of Aden by the Ye­me­ni government and again when they enter Huthi/Saleh territory. Importers and businessmen confirm that neither Hodeida port nor Aden port is functioning properly, as corruption is rampant at each. On the roads, militias in both Huthi/Saleh and government-controlled areas charge fees for movement of goods. Crisis Group interviews, March, April 2017.Hide Footnote

The Saudi-led coalition has strangled the flow of commodities into the country’s largest and most important port, Hodeida, which is under Huthi/Saleh control. Yemen is over 90 per cent dependent on imports for staple commodities such as wheat and rice; the UN estimates that 80 per cent of all imports for the north currently pass through Hodeida.[fn]Yemen on the ‘brink of famine’ as more than one third of the population faces starvation, UN warns”, ABC News, 24 February 2017.Hide Footnote Under the cover of UN Security Council Resolution 2216 (April 2015), which called for an arms embargo against Huthi/Saleh forces, the Saudi-led coalition aggressively imposed a naval blockade for the first year of the war. Three months after their military intervention, only 15 per cent of pre-war imports were entering the country, prompting UN humanitarian agencies to issue initial famine warnings. Following bureaucratic delays on the part of the Security Council, the coalition and the Yemeni government, the problem was partially resolved in May 2016 through a UN Verification and Inspection Mechanism (UNVIM) that led to an easing of restrictions, but by then coalition airstrikes had already damaged the port’s throughput capacity, contributing to long queues and delays.[fn]“In Hindsight: The story of the UN Verification and Inspection Mechanism in Yemen”, Security Council Report, 1 September 2016. The major air damage was done already in August 2015.Hide Footnote

The situation is about to become much worse, as the coalition appears determined to break a military stalemate that has largely held since September 2015 by attempting to capture the Red Sea coast, including Hodeida. It says that taking the port is necessary to stem the flow of weapons to Huthi/Saleh fighters and to bring them to the bargaining table. This reasoning is questionable, since the Saudi-backed Hadi government, not the Huthi/Saleh bloc, officially rejected the latest peace initiative of the UN special envoy, and the coalition’s navy and the UNVIM already monitor, albeit not perfectly, the port.

If the city is attacked and the [Hodeida] port closed, it will become the most important choke point in what already is a massive hunger challenge.

In any case, the campaign’s humanitarian risks are clear. Unlike Aden and areas in the south, coalition forces would not be greeted as liberators, and Huthi/Saleh fighters have had ample time to prepare defensive positions. The battle would likely be protracted and could close and further damage this vital entrepôt. Even if the coalition is able to secure the city, it is far from clear it would have the will or capacity to ensure imports cross battle lines into Huthi/Saleh-controlled areas of the north, where the bulk of Yemen’s population resides. Indeed, there is widespread agreement among Yemenis that the Hadi government would use control of the port to further squeeze Huthi/Saleh-controlled areas economically in an attempt to break that alliance or engender an internal uprising against it, an outcome the Saudi-led coalition has long predicted.[fn]Crisis Group interviews, three prominent members of Saleh’s General People’s Congress Party, four Yemeni businessmen, Adeni journalist, Hadi government official, Yemeni analyst from Taiz, March 2017.Hide Footnote The costs of such a strategy would fall disproportionately on the civilian population, with Huthi/Saleh fighters being the last to starve.

Humanitarians argue that even at its reduced capacity, there is no alternative to using Hodeida in terms of location and infrastructure.[fn]“Statement on behalf of the Humanitarian Country Team in Yemen, on the Critical Importance to Maintain Al Hudaydah Port Open”, Relief Web, 4 April 2017.Hide Footnote If the city is attacked and the port closed, it will become the most important choke point in what already is a massive hunger challenge.

The more acute current problem, however, is on the demand side. Notwithstanding mounting challenges, food is still widely available in the markets, including Sanaa. Yet, Yemenis throughout the country increasingly are unable to purchase it. After two years of ground fighting and air bombardment, the economy is in tatters. Families and communities are approaching a breaking point, having sold their assets, spent their savings and exhausted extended networks of support. The situation is most severe for the more than three million internally displaced persons (IDPs) and residents of governorates like Hodeida, who were the poorest before the conflict. It also takes a particularly harsh toll on women and girls, who are typically the last to eat and in December 2016 made up 62 per cent of the four million people suffering from acute malnutrition.[fn]At the same time, child marriage is on the rise as parents use it to raise funds. Women are also carrying greater burdens; as many as 30 per cent of displaced women head their families. Fact-sheet, Gender Snapshot, Yemen, Care International, December 2016.Hide Footnote

A critical component of the purchasing power crisis is the inability of the central bank to consistently pay public-sector salaries since August 2016. This is a product of shrinking state finances, an acute liquidity crisis and the bank’s inability to move financial resources between areas controlled by conflict parties. The issue has become deeply politicised. Prior to President Hadi’s 19 September decision to move the central bank from Sanaa to Aden, there had been a tacit agreement between the warring sides to allow the institution to function relatively free of interference. Diplomats and economists widely agreed that the bank had remained largely impartial, facilitating the import of an increasingly limited list of basic commodities, protecting the value of the riyal and paying public-sector salaries nationally under increasingly difficult economic circumstances. But this did not last. Without revenues from hydrocarbons, which accounted for approximately half the government’s budget in 2014, or donor support, both solvency and immediate liquidity came under immense strain.[fn]Crisis Group Alert, “Central Bank Crisis Risks Famine in Yemen”, 29 September 2016.Hide Footnote

By moving the bank, the government argued, it could prevent the Huthi/Saleh bloc from using central bank funds for its war effort, while allowing the bank to dispense public-sector salaries nationally and stabilise the economy. The bank in Aden has printed much-needed currency to address the liquidity crisis (a move that was blocked by the Hadi government when the bank was in Sanaa); at least 160 billion Yemeni riyals (approximately $640 million) have been delivered to Aden as part of a 400-billion riyal ($1.6 billion) order from a printing company in Russia.[fn]Crisis Group interview, Yemeni bank technocrat and Western diplomat, April 2017.Hide Footnote However, there is little transparency as to how the money has been disbursed. Moreover, since the relocation, some salaries have been paid in the south but far fewer in the north, and the banking system has all but collapsed, putting additional pressures on the supply side, as commodity importers can no longer access letters of credit.[fn]The total public sector salary bill based on 2014 (pre-war) lists is approximately 75 billion Yemeni riyals ($300 million) per month. As such, the recently delivered riyals are far short of what is needed to meet outstanding public salary payments since September 2016. The bank in Aden has reportedly paid public sector salaries for December 2016 in all areas under its control, but only a small fraction of salaries in Huthi/Saleh-controlled areas for that same month. It cites as reason for non-payment lack of access to reliable employment lists in these areas (which the government says the Huthis refuse to share, an accusation the Huthi/Saleh authorities deny), the difficulty and risks associated with transferring funds to Huthi/Saleh-controlled territories and the Huthis/Saleh authorities’ unwillingness to deposit local tax and import revenues into the central bank in Aden. Crisis Group interview, Yemeni bank technocrat, April 2017.Hide Footnote

More worrying yet, the government has not received a much-needed injection of foreign currency Hadi supporters expected would come from Gulf backers once the bank moved. The small amount of domestic revenue that is generated is not being deposited in central bank accounts, as the country’s various administrative centres are acting autonomously. Neither Huthi/Saleh-controlled territories nor Marib governorate, which is technically controlled by the Hadi government and is the main producer of oil and gas for Yemeni consumption, are making revenues available to the central bank in Aden. The Hadi government is also not depositing oil export revenues from the Masila basin in Hadramout, which came back online in August 2016, and is instead using an external account in Saudi Arabia with no oversight of expenditures.[fn]Crisis Group interviews, Western diplomat, Adeni businessman, April 2017. Letter from the Yemeni foreign ministry in Sanaa presented to the International Monetary Fund, World Bank, European Union, Russian Federation, and UN special envoy to Yemen, 31 March 2017, on file with Crisis Group. A bank technocrat argued that the reason for opening an external account in Saudi Arabia is technical. The central bank in Aden lacks a functioning SWIFT system (which it says will be resolved soon), the ability to interact with correspondent banks and access to its international accounts. The government thus opened the external account so it could mobilise money for expenditures related to, for example, the gradual resumption of some debt financing. Crisis Group interview, April 2017.Hide Footnote In the absence of access to foreign exchange, pumping additional riyals into the market would create inflationary pressures.

Each side blames the other for the economic disaster. The government says it cannot pay salaries in Huthi/Saleh-controlled territories until these remit tax and other import revenues to the bank in Aden (nationally these revenues accounted for around 30 per cent of pre-war government income). The Huthi/Saleh authorities accuse the government of trying to starve the north and refuse to recognise or share accounts with Aden. As the two sides bicker, Yemenis across the country are slowly starving.

III. What Is Needed

Addressing the looming famine is a complex challenge that requires immediate action to prevent a worsening of the situation and to deliver lifesaving assistance to those most in need. Yemenis are set to starve as a result of the financial consequences of the war, but this trend can still be arrested and even reversed if political actors choose to do so. The following steps are urgent:

  • The Saudi-led coalition should halt plans to invade the port of Hodeida.
     
  • The Huthi/Saleh authorities, the Yemeni government and the Saudi-led coalition should work with the UN envoy to reach a deal that allows technocrats in the central bank in Aden and Sanaa to devise a plan for the resumption of public-sector salaries nationally,
    disbursement of social-welfare cash transfers to the poorest Yemenis and performance of basic banking functions free of political interference until a comprehensive political settlement is reached. This compromise should contain several elements, including:
    • cooperation between the central bank in Aden and the branch in Sanaa, where the majority of bank technocrats and infrastructure are still located;
       
    • agreement by the Huthi/Saleh forces and the government not to interfere with decisions made by technocrats in the central bank, nor to divert the bank’s injections of liquidity for other purposes;
       
    • commitment by all parties to ensure that hydrocarbon, customs and tax revenues are accurately deposited/reflected in the national central bank system; and that the central bank has access to at least some commercial banks and to foreign central banks where it has reserves on deposit. (Currently its accounts are blocked, in part as a result of uncertainties on the part of foreign central banks regarding the move from Sanaa to Aden and the appointment of a new bank management by President Hadi.)
       
    • agreement to pay public-sector salaries nationally based on 2014 pay lists (these exclude any additions made by the Huthi authorities since the February 2015 coup); and
       
    • Saudi Arabia and the United Arab Emirates should agree to help finance, along with the World Bank and other donors, the approximately $500 million needed to fund emergency cash transfers to the poorest Yemenis for one year using 2014 social-welfare lists.

To be successful, these stopgap measures ultimately must be supplemented and supported by a ceasefire and peace agreement that allow Yemenis the chance to rebuild state institutions and the economy. To this end:

  • the Huthi/Saleh authorities and the government should reengage immediately with the UN special envoy to secure a ceasefire and resumption of talks based on the UN envoy’s roadmap; and
     
  • the UN Security Council should take prompt action to rejuvenate the political track by passing a long-overdue new resolution under its mandatory Chapter VII authority demanding an immediate ceasefire, unfettered humanitarian access and a return to talks based on the existing UN roadmap, which requires compromises from both sides.

Brussels, 13 April 2017

Appendix A: Map of Yemen

Map of Yemen. International Crisis Group/KO/February 2016. Based on UN map no.3847/Rev.4 (January 2004)