Yemen, continued

Last month, I attempted to unpack the massive poverty in Yemen. Lacking in resources and infrastructure, and floundering amid corruption, the country has its fair share of issues.

Nevertheless, the city of Sana'a is one of the fastest growing in the world (at 7 percent annually). But here's the catch: new numbers reveal that by 2017, the country will run out of economically viable water supplies and will stop profiting from oil.

John Stuart Mill wrote that eventually, all growth will end and progress will level. To him, this would be the ultimate sign that equality and prosperity had been reached. But Yemen does not fit this model, for he also wrote that "in the backward countries of the world … increased production is still an important object." (1)

Yemen is an unusual case within Mill's models. Most countries he examined were experiencing unprecedented growth, with no clear stopping point in sight. In effect, Yemen has an expiration date for its progress. With an economy based almost entirely on oil (90 percent of exports, 75 percent of government revenue), and an oil supply that is on the verge of disappearing, Yemen's "stationary state" is more than just a political construct. And what happens when Yemen reaches the point of no development in one of the world's most tumultuous regions? "For the safety of national independence it is essential that a country not fall much behind its neighbours," Mill wrote. Is Yemen doomed politically too, then?

Additionally, the breaking point make come sooner than expected. "Yemen’s crunch point will come long before the oil wells finally run dry," a local newspaper wrote. "The government currently needs to cover rising domestic consumption, as well as a fixed allocation to oil companies to cover their initial and ongoing investment costs. As production levels drop towards consumption levels, the share of crude oil sales available to support the national budget is shrinking. … High global prices place a unique strain on the national budget."

Mill advocated for international cooperation — and Yemen, though strong in pride, has expressed a need for foreign aid. This has long been the UN's solution, but is this only delaying the inevitable? Is foreign aid a permanent solution, or just a band-aid fix that will fall apart when the international economy can no longer support it?

_____

(1) Mill, John Stuart. "Principles of political economy with some of their applications to social philosophy."

Unwrapping an impoverished nation

A recent Slate article asks, "Why is Yemen so poor?" Compared to its neighbors, the small Middle Eastern country is floundering.

Yemen is heralded as an oil-funded nation. But it has lost much of the oil that brought in cash (output has declined 40 percent in 6 years), and yet the product still accounts for 80 percent of the government's income. Nearly half of the country's employable men are farmers, but the majority do not even grow food. Instead, they concentrate on qat, a drug illegal in most Western countries, forcing Yemen to import more than 75 percent of its food supply. To make matters worse, many of the adult men spend their income — a quarter of it, on average — on the qat.

Widespread insurgencies leads the nation to spend more than 6 percent of its GDP on military expenses — making it the seventh biggest spender in the world. (Not-so-coincidentally, the other six are also in the Middle East.) Yemen has become a safe haven for terrorists, leading Senator Joe Lieberman (I-Conn.) to dub the nation "tomorrow's war."

Despite being a republic, the nation is one of the most corrupt in the world. The Yemeni army can barely be trusted to show up for duty, let alone protect itself from terrorist insurgents.

So in the question of what makes a country prosperous (or not), what are the variables to look at? Government, geography, resources … At first glance, Yemen looks like it could have it all. (1)

Government? They have a republic — in definition. As many as 70 percent of Yemeni government officials have taken bribes.

Geography? Well … the desert can be a deterrent. But the nation clearly has abundant farm land. However, food does not always drive a profit — at least not when compared to drugs. Qat commands a price six times that of food.

And what about resources? The Yemen economy is dependent on oil, as the 80 percent figure demonstrates, and the oil supplies are drying up. Experts predict that the wells will run dry within 10 years. Total reliance on one product is dangerous, especially in the case of a natural resource. Charlie Brown once said that "all good things must end" — a fate Yemen has not entirely prepared for.

Does the answer lie in culture? History? Or does it just teach us that all is never as it seems?Yemen proves that ideal circumstances can — and do — turn sour, and that prosperity follows that decline.

___

(1) Weil, David. Economic Growth. Boston: Pearson Education Inc., 2009