Yemen: A Sad Reminder of the Economics of Famine

Marcus Noland (PIIE)



The collaboration between Steph Haggard and me began with the North Korean famine, and food security issues remain central to this blog. Following Amartya Sen, food security is an issue of entitlement: in socialist countries this access to food is essentially determined politically; in market economies it is determined by a household’s ability to command resources in the marketplace. The North Korean case is interesting intellectually because what began as a fairly standard socialist famine evolved as the economy marketized under stress into something more akin to what would be observed in a market economy. Yet no matter how many forests have been sacrificed to the paper our writings have filled, famine is still thought of as “starvation” often due to “bad weather” in the popular mind (and a regrettably large amount of questionable “scholarship”).

The other day a major newspaper in the Middle East called to ask me to comment on the movement of the Yemeni central bank from Sanaa to Aden. I declined, not knowing enough about the specifics to comment knowledgably. (In the words of Inspector “Dirty Harry” Callahan, “A man’s got to know his limitations.”) But the call made me start thinking about the country where the most severe pre-famine conditions in the world today exist, and its relevance to North Korea.

Yemen has always been a pretty tough place. Its scores on the standard socio-economic indicators are generally the worst in the Middle East. Since the withdrawal of the Ottoman Turks in 1918, the region has been politically unstable, and a division between North and South Yemen emerged. Unification was achieved in 1990, but ideological, tribal, and religious divisions have persisted. The current civil war started last year when Houthi/Shiite forces, supported by Iran, and loyal to former president Ali Abdullah Saleh revolted against the internationally recognized government of Addrabbuh Mansur Hadi, which is backed financially and militarily by Saudi Arabia and the UAE (and by extension, the US). Al-Qaeda in the Arabian Peninsula (AQAP) and the Islamic State of Iraq and the Levant (ISIL or ISIS) have also been in the mix. Today the pro-Saleh forces control much of northern Yemen, including the traditional capital Sanaa, while the pro-Hadi forces control southern Yemen, including the port city of Aden.

The pain will be felt most acutely by the young and the old. The rebel held areas in the north of the country will presumably bear the brunt.

Until last month, the central bank, under the leadership of a widely respected technocrat, Mohammed Awad bin Humam, had continued to operate, maintaining the payments system, paying government salaries (until last month) and trying to stabilize the value of the riyal, the local currency, amid the deteriorating situation, despite dwindling reserves. But last month President Hadi accused defense ministry officials allied with Saleh of in effect raiding the government coffers to buy weaponry for the revolt. He sacked bin Humam and announced that the central bank would be relocated from Sanaa, which he does not control, to Aden, which he does. Yet it appears that no real provisions have been made for this move, which in the words of a typically informative report by the International Crisis Group, “could tip large parts of the country into famine.”

The central bank move is not the only factor at play. Both sides have maintained naval blockades ostensibly to prevent arms transfers, on major cities controlled by their opponents, which have had the additional effect of impeding the importation of food and fuel. Up to 90 percent of staples are imported, and a steady depreciation of the riyal has contributed to shortages that generated a 60 percent spike (through June) in food costs according to a Yemen Food Security Information Development Program report. The central bank move will exacerbate these challenges.

More than half of Yemenis are reportedly food insecure and three-quarters are in need of humanitarian aid. Over 3.2 million (out of a population of 26 million, about the same size as North Korea), are internally displaced. According to the ICG, 370,000 children under age five risk severe, acute malnutrition. And, as the ICG report adds, “the situation is about to get worse.”

As in other famines, the pain will be felt most acutely by the young and the old. The rebel held areas in the north of the country will presumably bear the brunt. Whether it be due to biology or sociology, in famines, women tend to fare better than men. The emerging situation in Yemen may test this truism: north Yemen at times has been controlled by strict theocratic governments, and whether the comparatively lower status of women in the north will affect their survival rates remains to be seen.

Famines are at their heart economic phenomena. The failed November 2009 currency reform in North Korea contributed to the disintermediation of markets and a hyperinflation. The starting point in Yemen is much worse. In Yemen, the potential appearance of famine occurs within the context of a civil war and the involvement of external actors, reminiscent of the Biafra famine in the 1960s. But the precipitous move of the central bank and the associated prospect of a currency collapse may be the proverbial straw that broke the camel’s back, pushing an already calamitous situation into downright disaster. 

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