Analysis: Yemen desperate for aid as economy crumbles

Wed Dec 7, 2011 9:19am EST
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By Martin Dokoupil and Mohammed Ghobari

DUBAI/SANAA (Reuters) - A deal to remove Yemen's leader from power may pave the way for flows of desperately needed foreign aid into the country, after aid slowed to a trickle this year because of political violence.

Ten months of unrest demanding the removal of President Ali Abdullah Saleh, and deteriorating security around the country, have deterred international donors from providing help needed to finance food imports and government operations.

Saleh agreed in November to step down after ruling for 33 years, with presidential elections set for February 21 next year. This could encourage donors to chip in to support the transition to a new government -- but continuing violence between Saleh's supporters and his foes threatens the agreement.

If aid is delayed further, the economic crisis is likely to worsen in Yemen, where some 42 percent of the population of 24 million lives on under $2 a day, according to World Bank data.

"I expect that the international community recognizes the need of Yemen for urgent aid...The suffering and shortages are acute," said Motahar Alsaeedi, economics professor at Sanaa University and a member of the Shura Council, a chamber of parliament.

Yemeni officials held talks with the International Monetary Fund in Jordan in November; afterwards, the IMF declined to comment on the situation in Yemen. It approved a $370 million loan for Yemen in 2010, and has said it is ready to discuss fresh aid when the situation allows. But it may not be willing to provide money until Yemen has a stable government that can push through economic reforms -- something which may have to wait at least until after the February elections.

"The IMF stands ready to assist Yemen, including by providing new loans once the political crisis is resolved and the parties are able to implement a program of reforms that is consistent with inclusive growth, low inflation, and lower poverty," Hassan al-Atrash, the IMF's head of mission to Yemen, told Reuters in July.

Another potential source of aid is wealthy Gulf states which have an interest in keeping the region stable. In June and July, Saudi Arabia and the United Arab Emirates announced they would provide supplies of crude oil and fuel to Yemen, but they have been silent on the possibility of monetary aid. Last month, Yemen's prime minister designate said Riyadh and Abu Dhabi would provide more oil and electricity, but he did not give details.   Continued...

<p>A woman begs for money in the southern Yemeni city of Taiz November 17, 2011. REUTERS/Khaled Abdullah</p>