After a nearly nine-year conflict, the war-torn country of Yemen is facing a currency crises of unprecedented scope. The former British Colony who found independence in 1967, has been plunged into civil conflict for nearly a decade after uprisings in 2011 attributed to the Arab Spring that swept the Middle East.
The Yemeni Rial is currently trading at nearly 1000/1 USD on the black market. To give that figure some context, just three years ago the Rial traded at 250/1 USD in 2017. The Crises has increased food scarcity and civilian instability as the currency continues to plummet. It is perhaps likely that the recent COVID-19 pandemic has exacerbated the insecurity in the region.
However, in 2017 Abd Rabbuh Mansour Hadi, the UAE/Western-backed President, determined to float the currency and crack down on black market currency sellers and money traders according to a 2017 report by the Economist. According to a report by Al-Fanar Media, the Central Bank was also moved from Sanaa the country’s former capital to Aden the temporary location; and in that same year, the Rial fell to 500/1 USD–and continues to weaken precipitously since that time.
Hadi who has been installed by UAE/US/UK, administrates Yemen outside of the country. He along with Western forces and the UAE have been battling to reinstate his government, despite local resistance. Hadi is the former vice president to Ali Abdullah Saleh. who was ousted from power during the Arab Spring and resigned in 2011.
Yemen, like Turkey occupies a strategic geopolitical position in the region. And like Turkey is facing currency irregularities with some degree of severity due to its geopolitical entanglements. Turkey, in contrast to Yemen, has been able to manage its currency issues by careful Central Bank manipulations. Erdogan, Turkey’s President even dismissed its Central Bank president to move forward with policies it felt would better protect Turkish currency interests and civilians.
Yemen, like Turkey occupies a strategic geopilitical position in the region. And like Turkey is facing currency irregularities with some degree of severity due to its geopolitical entanglements.
Yemen has not been so fortunate, or at liberty to make such maneuvers with a nation plunged into civil war. Currently, the Houthis in the southern region of the nation are battling against northern forces backed by Saudi Arabia, the US and Britain. The north and south of Yemen have a fairly long history of friction. The southern Houthis are among the Cushitic groups native to Yemen. They are akin to Somalis in the Horn of Africa. The Cushitic people also known as Afro-Arabs in the south are Sabeans, in the lineage of the famed Egyptian Kandake, the Queen of Sheba (Seba) before the onslaught of the Ottoman Empire and the Arabization of the region.
Instability in currency prices coupled with a long nine-years war has weakened the nation of 28.5 million and resulted in crises level food insecurity according to the World Food Program and various reports. UNICEF predicts famine if measures are not taken soon. The conflict along with COVID-19 has also hampered Yemens oil prospects. It is estimated that Yemen holds .02 percent of the world’s oil and has 3 billion barrel of oil on reserve. Incidentally, keeping smaller markets like Yemen out of the official oil market has been an ironic boon for nations hoping to keep the price of oil higher in the face of new petroleum resources in the Balkans leveraged by Russia.
Instability in currency prices coupled with a long nine-years war has weakened the nation of 28.5 million and resulted in crises level food insecurity according to the World Good Program and various reports.
Unfortunately for most developing nations and former British colonies, a steady currency and economic base seems always just out of grasp. Even when the nation is endowed with major natural and energy resources like oil and rubber. The old monetary system continues to strangulate nations during periods of war and instability; and in some cases in periods where growth should be consistent.
As Western nations continue to borrow from themselves and maneuver their Central Banks to increase liquidity in their economy and market, other nations are forced to seek aid and life-snatching loans whose interest rates devastate growth and prosperity for years to come. Many developing economies could become just like Yemen should the another humanitarian crises hit. Until developing economies begin to looking strategically at how they operate in the world economy, every downturn will decimate their economy and take years to rebuild.
China’s clever foresight has allowed it to think more critically about monetary policy to insulate from “outside manipulations” and provide security for their people and economy during uncertain times. It’s lucidity has not gained any Western friends, as its massive growth is often translated into threat for nation’s whose long-time hegemony continues to fade.
Unfortunately, many other nations (particularly developing ones) have not followed suit. However, there are some indications that Russia and India have begun diversifying and looking to protect their interests and economies more aggressively than in the past. It is unclear however what will become of Yemen and the growing instability of failed negotiations in a never-ending Arab Spring that instead has become a long, cold winter.