MIDDLE EAST / GULF FALLOUT : More Hard Times Ahead for Yemen as Kuwait Crisis Shreds Its Economy

This was to be Yemen’s year in the news, its warring halves reunified and oil revenues pulling the Arabian Peninsula’s most backward country into the mainstream.

Instead, the 14 million Yemenis have become a footnote to the Persian Gulf crisis, the nation that, along with Cuba, cast abstaining votes on U.N. Security Council resolutions aimed at forcing Iraq to cough up Kuwait. Conflict in the gulf has spelled economic disaster.

A Double Blow

After long living on the edge, Yemen has taken a double blow: Its oil dealings with Iraq and Kuwait have been crushed by the embargo, and remittances from workers in Saudi Arabia and the gulf sheikdoms--about one of every five Yemenis--evaporated overnight.

The pro-Iraqi stand by the Sana government, which only reluctantly has agreed to support the embargo, has soured prospects of continuing charity from the gulf states. Largess from Kuwait built Sana’s main hospital, and Sheik Zayed ibn Sultan al Nahayan, the president of the United Arab Emirates, personally financed the $90-million Marib Dam and irrigation project that is located at the site of an ancient earthen dam that dates from the time of the fabled Queen of Sheba.

Prospects that seemed high at the time of the May 22 reunification have receded. This week, at a meeting of the new national assembly, the Supreme Peoples’ Council, President Ali Abdullah Saleh received the bad news from his officials. As of now, Yemen stands to lose about $1.68 billion because of the Persian Gulf crisis.

“Nobody is starving here,” a diplomat in Sana said before the invasion of Kuwait. “An unskilled laborer makes about $10 a day, which is not bad. But the Egyptians come in here and work for less.”

He estimated per capita income at about $680 in the north, the former Yemen Arab Republic, and $400 in the south, which was the People’s Democratic Republic of Yemen before reunification created the new Republic of Yemen. Nevertheless, even with oil discovered in the north by the American Hunt Oil Co. in 1984 and subsequent finds in the south, Yemen remains among the poorest Arab countries.

Its politics are driven by the revolutionary governments of the two former halves. South Yemen, formerly a British territory, adopted Marxism in the 1970s and became a reclusive vassal of the Soviet Union, providing training camps for various Palestinian guerrilla operations.

In the north, a military-based regime based its politics on opposition to Saudi Arabia, which funded pro-royalist tribal insurrections in past years. Sana’s aversion to the Saudis colors its inclination toward Iraq, as does the Aden refinery that did business blending Yemeni, Iraqi and Kuwait crude before the embargo.

Yemen’s promise was all in the future, and visitors here step out of the airport into a country barely emerging into the modern world. It is a nation where tribes still rule the hinterlands and whose cities seemed ripped from the pages of a faded National Geographic.

In 1970, an estimated 99% of the people were illiterate. In 1972, there were 500 cars in the country, which may have been sufficient because three years ago Sana had just two paved roads.

Outside the capital, particularly around Sada in the north and Marib in the east, tribesmen resist government authority. “Particularly when it impinges on their smuggling routes,” the diplomat said. But the smugglers have been able to keep a steady stream of cars, television sets and food coming from across the Saudi border.

And guns. Yemeni authorities estimate there are 18 million personal weapons in the country. “Every male in Sana has at least three guns,” said a Sana journalist, and three or four tribal gunfights take place on the streets of the capital every year.

Now the Yemenis face hard times. Even before the current crisis, remittances from the gulf had fallen sharply as oil profits tumbled in the late 1980s, from more than $4 billion a year in the early 1980s to less than $300 million in recent years.

Budget Deficit

The confrontation over Kuwait has brought home about 10,000 of the estimated 2.5 million Yemenis who are working abroad, and thousands more are in refugee camps on the Iraq-Jordan border.

Oil exports through the government joint venture with Hunt Oil bring in about $800 million a year, but the government budget remains in deficit. Only the smugglers’ economy appears unaffected by the crisis.