YEMEN: State is deteriorating and could fail

SIGNIFICANCE: A confluence of crises including demonstrations in southern Yemen and a long running rebellion in the extreme north raise questions about the possibility of state failure in Yemen. The international effort to prevent it may be too little and too late.

ANALYSIS: Yemen's major problems are openly discussed by leading political figures and international donors:

• Oil output. It will be difficult to maintain the modest 4% GDP growth of recent years as oil exports fall (in volume by 12% in 2007, a figure likely to be repeated this year). Though gas exports will start later this year, the income will only partly compensate for the loss of oil revenue. GDP per capita is only around 800 dollars (see YEMEN: Economic reforms mask lack of real change - April 27, 2007).
• Population. The country's 22 million population is growing at an annual rate of 3%; half are under 16; and 70% of Yemenis live in rural areas, making the delivery of services difficult in a country with limited infrastructure.
• Water. Fast-dwindling water resources are under enormous pressure without much effective action to reverse the trend and enhance rain-fed agriculture. Consumption of Qat (a mild narcotic) that pushes cash crops out of the best land is universal.
• Subsidies. These cost at least 11% of GDP. The diesel subsidy is a major factor in the water problem since it encourages the use of diesel pumps to extract more.
• Education. The education system is badly in need of reform to ensure there is wider participation (particularly by girls) and the teaching of skills that will contribute to the local economy and help potential migrants find jobs.
• Migration. There have been fewer opportunities for emigration, the traditional panacea, since 1990 when Saudi Arabia expelled many Yemenis.

Endemic insecurity. The solutions to these problems are complicated by other factors:

• Tribalism. Local interests can often impede development. Apart from kidnappings, violence and sometimes local rebellions, the implementation of policies is often bedevilled by the need to accommodate local interests in a country where the state and the concept of working for the good of Yemen as a whole are relatively weak. Such interests can delay or even prevent the implementation of projects that might bring jobs and other benefits.
• Terrorism. The murder of Belgian and Spanish tourists in the last year shows that al-Qaida is present in parts of Yemen. The growth of extremism in the 1990s was brought to a halt in 2001 when the president decided he was on the side of the United States in its war against terror. However, it will take years to eliminate the extremism that breeds terrorism, which meanwhile is destroying tourism and driving up the security costs for others working in Yemen (see YEMEN: Security concerns multiply - February 11, 2008).

Regime strength. The regime has been led by President Ali Abdallah Saleh since 1977. He has built up the power of the state through expanding the army and security services and establishing a modern administration in the north, which was rudimentary compared with the south. The key security apparatus is run by close relatives or associates and provides a solid centre. The president recruited traditional tribal leaders and powerful local interests into a system that gives them a stake in the status quo. They are bound together in the regime's political party, the General Peoples Congress (GPC). Patronage keeps the system together but has encouraged the corruption that places Yemen at 130 out of 179 in the 2007 Transparency International Corruption Perceptions Index.

Yemen has a relatively vibrant democracy, with a media and civil society that are less inhibited than elsewhere in the Arab world. However, the president can use the GPC machine to ensure that he is continually re-elected and dominates parliament.

Political strains. The main opposition, Islah, was led by Sheikh Abdallah al-Ahmar until his death in December. He was also parliamentary speaker and head of the tribal confederation to which the president's tribe belonged (see YEMEN: Iran meddling claims boost aid, GCC prospects - February 27, 2007). Ahmar was a supporter of, and a major stakeholder in, the patronage system even if he did not always support presidential policies. Under Ahmar, Islah could also draw in elements from the Yemeni Muslim Brotherhood and less extreme Salafi elements to help contain the spread of more violent forms of political Islam. His death has created a dangerous vacuum and it is far from certain that any of his sons has the capacity to follow him. Islah has been weakened and could split with one part of it appealing to a militant brand of political Islam.

The Yemeni Socialist Party, made up mainly of southern politicians, never recovered from the disastrous civil war in 1994 when the south tried to secede from the union created only in 1990. The problems in southern Yemen today reflect resentment at the way that the president extended his patronage system to the south without delivering any tangible benefits to southerners, who feel neglected and excluded from state institutions. The current demonstrations are in protest at the failure of the security forces to recruit southerners. Disaffection in the south is serious.

There has also been a persistent rebellion in the Zaydi heartland of northern Yemen where the Believing Youth have fought the regime three times in recent years in a region of extremely difficult terrain. The army inflicted great losses but has not been able to beat them.

Deeper problems. Though the current discontent is most obvious in these areas, it is spreading into the heartland of Yemen as the government fails to find solutions to the country's problems:

• The state administration may produce solutions but often fails in implementing them.
• There are persistent rumours that the president is suffering from health problems and is no longer a strong leader.
• Any successor will come from within his family and be rooted in the security system but will need years to build up his authority.
• The president and the system look weaker in 2008 than any time in the last 30 years.

International support. The character of the regime and of the country's problems are major challenges to the international community, which understands the urgent need to provide support and promote reform. The major Western and Gulf Cooperation Council (GCC) governments are increasing aid and using this to push for reform. Some recent measures should lead to better governance, reduced corruption and a focus of resources onto the key problems.

The GCC countries have the greatest interest in preventing state failure on their own doorstep:

• Many Yemenis see GCC membership as the great solution.
• The GCC is moving cautiously. Yemen would be a major drain on resources, and it has had no more success than the West in persuading the regime to change fundamentally. However, GCC governments are encouraging businessmen to invest in Yemen with some success.

CONCLUSION: Within Yemen there is a perceptible weakening of government, growing discontent and a sense of state incompetence. However, the security core of the regime remains resilient, and Yemen is unlikely to implode in the short or medium term. There will be instead a process of state deterioration as Yemen gradually becomes less governable and less stable. This will manifest itself in more demonstrations, local rebellions, growing competition for access to water and other resources, tribal unrest and terrorism.