In light of the war in Yemen and the outbreak of the Corona virus, which arises in it, signs of an economic catastrophe appear in the poor country with the suffering of Saudi Arabia, the most prominent of its donors, from an economic crisis that strikes financial transfers and warns of the drying of state coffers.
Saudi Arabia has pumped tens of billions of dollars to support the poorest country in the Arab world in the form of humanitarian aid and fuel subsidies in addition to financial deposits in the Central Bank of Yemen and support for the local currency.
Riyadh has been leading a military alliance in Yemen five years ago to confront Houthi rebels backed by Iran.
After the impact of the double shock of lower oil prices in addition to the emerging Corona virus, observers say that the kingdom does not seem able to provide the same support to Yemen even as military spending continues.
Saudi Arabia may also be reassessing its role, which some describe as a “regional ATM”, while its expensive military intervention in Yemen has not yielded many gains, as well as deep disagreements in its pro-Houthi camp.
“The Saudis are no longer (inclined) to pump unlimited millions and billions into Yemen,” a Western official who follows Saudi intervention in Yemen told AFP.
Riyadh is Yemen’s largest donor – and declining support will have the greatest impact, according to observers.
Analysts expect the value of the Yemeni riyal to decline significantly this year with the depletion of the Saudi deposit of the central bank by $ 2 billion in about 2018, which means reducing the purchasing power and making millions of people unable to afford the basic foodstuffs.
And there was only less than $ 200 million in this deposit left last May, according to the non-profit “ACCESS” project, which includes a group of charitable organizations, including the Norwegian Refugee Council.
And the project warned in a report, “Yemen seems increasingly weak economically,” saying that stopping Saudi financial support would lead to a “sharp decline” in the value of the local currency.
There is no substitute for Riyadh.
Earlier this month, the United Nations collected $ 1.35 billion in humanitarian aid for Yemen at a donor conference hosted by Saudi Arabia, but this figure is equivalent to about half of the $ 2.41 billion required.
Yemen is already experiencing the world’s worst humanitarian crisis, according to the United Nations.
The UN agency estimates that 80 percent of the population, about 24 million people, “need food assistance”.
At the heart of the country’s economic imbalance is the central bank’s split into two financial centers dealing with one currency, the first in Aden which has become the temporary capital of the internationally recognized government, and the second in Sanaa, which is controlled by the rebels.
The conflict between southern separatists and the Yemeni government – both fighting the Houthis in the coalition ranks – is further complicating the crisis.
And the separatists, who announced self-administration in Aden last April, seized a shipment belonging to the Central Bank carrying about 80 million dollars, according to several sources.
A spokesman for the Southern Transitional Council justified the seizure of the shipment, confirming to AFP that it was aiming to prevent a further decline in the Yemeni currency.
The central bank, controlled by the government, faces the possibility of operating without any money.
The Sanaa Center for Strategic Studies confirmed in a recently published report that the dispute “created conditions that would discourage Saudi Arabia from renewing its support for foreign reserves.”
According to the center, “North Yemen’s neighbor is currently in the midst of huge cuts in its budget, and it does not seem that any other international donor is keen to progress to replace Riyadh.”
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Non-governmental organizations such as Oxfam warn of an “unprecedented decline” in remittances to Yemen – a major lifeline for millions while the government is unable to pay salaries.
Oxfam says that cash transfer providers in six Yemeni governorates saw remittances drop by more than 80% between January and April.
The biggest drop, apparently from the approximately 1.6 million Yemenis working in Saudi Arabia, where foreign workers face waves of layoffs and salary cuts is among the worst economic crisis in decades.
“With millions of Yemenis relying on remittances from Gulf countries, especially from Saudi Arabia, any economic turmoil there will have major consequences in Yemen,” Abdul-Wasea Muhammad, political advisor to Yemen, told France Press.
“Without family members sending money for essentials such as food and rent, more families will have to borrow or will dispense meals to cover their costs,” he added.
The Saudi authorities did not reply to an AFP request.
Despite the financial pressures, the kingdom is unlikely to cut its military spending in Yemen – estimated at $ 200 million per day, as Iran-backed Houthi rebels consider it an existential threat.
Last May, after Saudi Arabia revealed austerity measures, the Pentagon announced that Boeing had awarded two contracts with more than two billion dollars to deliver more than a thousand air-to-surface missiles and anti-ship missiles to Saudi Arabia.
SOURCE : SAUDI24
