The
ongoing civil war in Yemen has caused immeasurable pain and heartache, from
the thousands of lost lives to the approximately 20 million residents
in desperate need of food or other aid.
Now, many public workers are experiencing more severe poverty as
they lose paychecks due to suspended salaries.
Reports from Reuters say the existing Yemeni government has
pulled the central bank out of the capital city of Sanaa, which is
now largely controlled by a rebel movement, and relocated it in Aden,
a southern port.
A government employee quoted by Reuters calls salaries “a
playing card” in the conflict and complains that countries
involved in the Yemen war are ignoring the mass starvation and
poverty evident in the country.
While the rebel group has promised to pay public servants, those
vows appear to ring empty as banks report months of unpaid wages for
many employees.
The Gulf News Journal spoke with Pradyumna Mishra at the global
research firm Aranca about the greater context of instability and
humanitarian crisis in Yemen. Mishra has more than five years of
equity research experience in the Middle East and Europe.
“According to the U.N., the civil war in Yemen has claimed over
10,000 lives and displaced nearly 3.3 million people,” Mishra said.
“Of 27 million Yemenis, more than 50 percent are considered ‘food
insecure,’ while almost 70 percent lack access to drinking water
and proper sanitation.”
Naval blockades have disrupted the imports that Yemen relies on
for 90 percent of basic food staples, he said, adding that the
country’s economy shrank 20 percent in 2015, with runaway inflation
at up to 30 percent.
“In this challenging economic-political climate, the central
bank ensured the functioning of the banking system until September
2016, and managed the import of basic commodities and paid salaries
to public-sector employees,” Mishra said. “The government then
decided to move the central bank from the Houthi-controlled Sanaa to
port city Aden, alleging the misuse of bank funds, and intending to
economically weaken rebels.”
Besides taking banking out of a sector controlled by rebels, Aden
is also a better strategic location for the bank, with better access
to foreign military aid, he said.
“The move also is expected to strengthen the economic role of
Aden, the city closest to the East-West sea trade route,” Mishra
said.
But he said there are downsides as well.
“The relocation of the central bank nevertheless brings its own
set of problems,” Mishra said, citing the “confusion” in
banking that led to the unpaid salaries. “The decision created more
trouble in the northern region, which is already facing the brunt of
the crisis. With hydrocarbon revenues flowing through the banking
system, the northern region is expected to face a severe financial
crisis due to non-payment of salaries to state employees.”
Mishra called the need to right Yemen’s banking system a
necessity for overall stability and growth in a country so badly
beset by the ravages of war.
“Restoring confidence in the banking system is a major challenge
for Yemen in attempting to manage its international/geopolitical
relations and remains the key to bring its economy back on track,” he said.
