The war in Yemen has resulted in a quarter of a million deaths and billions of dollars in economic damage, leading some to dub it the world’s worst manmade humanitarian crisis. A vicious cycle of Saudi airstrikes and Houthi military offensives, coupled with a Saudi-led blockade and Houthi interference with the delivery of humanitarian aid, has left more than half of Yemen’s population at risk of starvation and widespread communicable diseases. The conflict between a Saudi-led coalition and Iranian-backed Houthi rebels, which began in 2015, is only the most recent episode in a long history of Saudi attempts to control and subjugate Yemen’s economy and political establishment. For over three decades, Saudi Arabia has waged an economic campaign to suppress its southern neighbor in an effort to prevent it from emerging as a regional competitor. Most recently, Saudi Arabia began terminating work visas for tens of thousands of Yemeni migrant laborers, forcing them to return to a war-torn country amid an ongoing humanitarian crisis.

Saudi Arabia’s decision to expel Yemeni workers—while particularly heinous given the circumstances of their displacement—is part of a long-standing pattern. Since the creation of the modern Saudi state during the 1930s, successive monarchs have feared the threat that a united, prosperous, and democratic Yemen might pose to their reign, especially after the unification of North and South Yemen in 1990. The Saudis have found ways to foment internal divisions and weaken the Yemeni economy, in particular by withdrawing guest work permits and rescinding foreign aid, on which the country is dependent. The Saudi-led decision to exclude Yemen from the oil-rich Gulf Cooperation Council (GCC)—a regional political and economic union—has also deepened Yemen’s economic collapse, adding to the political unrest and crisis of governance that has divided the country and led to civil war.

Although it may seem premature to consider Yemen’s postconflict future given the ongoing hostilities, it is arguably in Saudi Arabia’s interest not just to cease its military incursion but also to help shore up its neighbor politically and economically. Decades-long efforts to hamper Yemeni development have not achieved the Saudi security goals of cultivating a weak and malleable Yemeni state. Rather, they have succeeded only in generating a costly and volatile military conflict. The kingdom would do well to integrate Yemen into the regional economy and create legal pathways for its citizens to work in Saudi Arabia once again.

A Long, Intertwined History

Prior to 1990, the migration of Yemeni laborers to Saudi Arabia and other Gulf countries led to an economic boom back home as these migrant workers sent remittances that financed local construction and development projects across North and South Yemen. North Yemenis especially benefited as Saudi Arabia granted them preferred status, waiving the documentation and sponsorship required of other migrant workers and allowing them relatively free passage to and from Saudi oil fields and worksites. Throughout the 1970s and the 1980s, an estimated 700,000 to 1.8 million Yemenis worked in GCC countries, which consist of the oil-rich Arab monarchies of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Nearly every Yemeni household benefited either directly from worker remittances or indirectly from the impact that the influx of cash had on local purchasing power and small-scale investment projects. Migrant laborers’ friends and families formed Local Development Associations, grassroots organizations that pooled remittances and invested in rural development projects. LDAs were remarkable not only for their capacity to spur targeted development but also for their ability to empower local leaders while insulating themselves from the vagaries of a largely corrupt Yemeni central government.

For over three decades, Saudi Arabia has waged an economic campaign to suppress its southern neighbor.

By the late 1980s, however, Saudi employers were longing for a cheaper and more pliable source of labor and began searching for an alternative labor pool to replace the Yemeni workforce. In its stead, migrant laborers from South and Southeast Asia became the fastest-growing workforce in Saudi Arabia, in part because Saudi leaders considered them less likely to engage in Arab nationalist or Islamist agitation.

The Saudis’ fears of the example Yemen could set for the region reached an apex with the country’s unification in 1990, creating a multiparty democracy in a region governed by family-run autocracies. In particular, the Saudis worried that its southern neighbor might become a haven for opposition groups. To prevent that possibility, the Saudis sought to weaken the nascent Yemeni state by hobbling it economically. And the Yemeni government, in an unfortunate misstep, aided that campaign after Iraqi President Saddam Hussein invaded Kuwait.

Nowhere to Turn

At the time, Yemen held a seat on the UN Security Council, and its delegate voted against the authorization of a use of force “by all necessary means” to free Kuwait from Iraqi occupation in November 1990. This tacit support for Saddam’s regime stemmed from Yemen’s long history of economic and military cooperation with Iraq—a relationship that was formalized in 1989 with the creation of the Arab Cooperation Council (ACC), an alliance that consisted of Egypt, Iraq, Jordan, and Yemen and portrayed itself as a regional alternative to the elitist GCC.  

Yemen’s vote was, as U.S. Secretary of State James Baker observed, one of the country’s most expensive mistakes. The United States, the World Bank, and the International Monetary Fund immediately halted aid programs to Yemen. Among the Gulf states, Saudi Arabia and other neighbors rescinded the special status granted to Yemeni migrant laborers, effectively expelling 880,000 Yemeni workers. Although the expulsion was cast as a reaction to Yemen’s pro-Saddam stance, it was also the culmination of the gradual Saudi transition away from a Yemeni workforce. Expelled migrants returned home to an estimated unemployment rate of 30 to 40 percent, with no alternative job training and without adequate housing, resulting in a manmade refugee crisis.

Yemen must be brought into the economic fold.

The loss of remittances threatened the disintegration of the Yemeni economy. Luckily, the discovery of oil in Yemen in the late 1980s and its development during the 1990s introduced a new source of revenue to the Yemeni state. The state treasury’s transition from worker remittances to oil revenue, however, exacerbated existing socioeconomic divisions and compounded deep inequality. Yemen’s greater workforce remained underutilized, disenfranchised, and impoverished while a small segment of Yemen’s political elite profited from the spigot of oil revenue. Endemic corruption and economic mismanagement, moreover, meant that the already scarce state funds the government distributed for social and economic development were often used for political patronage rather than investment in infrastructure.

Economic desperation and a relatively porous 800-mile border with Saudi Arabia led to huge numbers of undocumented Yemeni workers streaming into the kingdom. Saudi officials largely turned a blind eye to the migrant laborers, who filled jobs that Saudi citizens did not want—but periodic Saudi crackdowns on illegal workers invariably targeted Yemenis. In 2013, for instance, nearly 400,000 Yemenis were deported in accordance with new economic policies in the kingdom. Despite this mass deportation, years of gradual economic reconciliation and migrant flows had led to an estimated two million Yemenis working in Saudi Arabia prior to the most recent expulsion order. Remittances from these workers have amounted to $2.3 billion annually, which accounts for 61 percent of Yemen’s total remittances sent from abroad. For a country with an estimated annual GDP of $20 billion, these funds play an outsize role, and losing that influx of cash would be devastating for a country already in economic and political free fall. The ongoing Saudi-led blockade and internal Houthi political and social repression have left the Yemeni population with few other options for regular employment.

A Solid Foundation

Yemen must be brought into the economic fold, and the process needs to begin even before a complete cease-fire is brokered and a peaceful reconciliation takes place. Economic reconstruction funds could build on Yemen’s legacy of local development, funding the same Local Development Associations and other grassroots organizations that emerged during the oil boom era of the 1970s and the 1980s.

 Yemen’s postwar economic recovery would benefit from the country officially joining the GCC alliance. This would ameliorate the Yemeni labor crisis by formalizing the work authorization process for migrant laborers. With an unemployment rate of over 13 percent nationally and over 25 percent for those aged 15–24, Yemen is facing an economic crisis that will linger far beyond the current conflict if immediate steps aren’t taken to shore up its economy and labor market. Reliable employment opportunities throughout the Persian Gulf region would provide a path toward prosperity for Yemeni youth who might otherwise turn to extremist organizations for social welfare and financial support. This economic desperation is in part responsible for the Houthi movement, which emerged from a cloud of political and economic grievances driven by unequal infrastructure investment and widespread unemployment. Yemen’s future institutions will not survive—at least not without costly political or military intervention—if the country’s core socioeconomic problems are not addressed from the outset.

Although Saudi Arabia has opposed previous Yemeni efforts to join the GCC, the reality of the current conflict may have altered regional calculations. The security of the southern border with Yemen continues to be one of Saudi Arabia’s main concerns and was one of the principal reasons for embarking on the ill-fated military campaign in 2015. Despite spending $100 billion on the war in Yemen, the southern border is far more dangerous than it was six years ago. Shifting to a strategy that instead supports short- and long-term Yemeni economic development could potentially foster this elusive stability, without giving rise to further bloodshed and humanitarian crises.

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