Washington is keen to keep Russia in the Syrian quagmire

Project Name: The Role of the Private Sector
Client: in Yemen
Project Commencement Date: February 18, 2017
Priject Completion Date: January 25, 2018

In the light of the “Reimagining Yemen” program, launched by B’huth Center, as a contribution to developing new future prospects for Yemen, this report is introduced among a series of reports that seeks to discuss some post-war aspects. The report focuses on the economic standpoint, particularly with regard to the private sector in Yemen and the role this sector will play after the war in Yemen ends. B’huth Center would like to thank everyone who cooperated with the Center during the period that included a number of the Center’s research activities concerning Yemen, through workshops, intellectual content or research discussions, either by members of the Yemeni elite, inside and outside Yemen, or by the UAE and Gulf elites. Such contributions had a significant role in unravelling the details of the Yemeni crisis and benefitting from all suggestions in order to conduct analyses and achieve results that serve the peace process and stability inside Yemen and in the region in general. B’huth Centre also extends special thanks to the participants in the workshop held by the Centre on 31 July 2016, in conjunction with the International Finance Corporation and the Centre for International Private Enterprise, entitled “Private Sector Role in Post-War Yemen”. Their visions and discussions have contributed to the launch of this report.

Executive Summary

Looking into the Yemeni economy in the current phase is a complicated process, as the status is ambiguous both at the macro and micro levels. There are several serious problems that the Yemeni economy suffered from and they may not be limited to specific features of the economies of developing or least developed countries. But there are new and cumulative problems arising from sequential and successive political conflicts, legal and security violations and social, intellectual and ideological divisions that occurred after unification. These problems have affected the formation of the economic structure itself, due to the integration of two contrary economic systems and the start of a new phase – politically, economically and socially. This phase, since its inception, has lacked in-depth planning and systematic studies, which represent the basis for completing the economic integration by achieving the positives and avoiding the negatives in both systems in a manner that is compatible with the new status.

The lack of appropriate planning results in a corrupt economic system, which makes it difficult to be classified according to the established economic systems. The Yemeni economic system is actually driven by individuals in and out of power in accordance with their personal and party alliances and desires, depriving the system of the legitimacy it needs. This was reflected in the regional and global economic transactions of Yemen with the governmental and nongovernmental organisations from various international bodies. Therefore, analyzing the development of the Yemeni economy during this period helps in highlighting many issues in different sectors of the economy. The recent military confrontations between Yemen’s legitimate government, led by the Gulf Arab coalition, and the Houthis-Ali Abdullah Saleh camp, revealed the great weakness of the Yemeni economy and the lack of sufficient capabilities to be able to face serious crises. This led to a continuous decline of economic and financial conditions, especially in the light of the continuing war. The private sector, as one of the most important pillars of the Yemeni economy, is not independent, transparent and efficient, in spite of its main role during the phases of stability and conflict in driving the economy, even when faced with major obstacles. The private sector in Yemen did not stop, although it became slow and sometimes inactive as a result of the ongoing conflict after the crisis of 2014 in which the Houthis stormed Sana’a in a civil war that engulfed Yemen’s various governorates in 2015.