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Delegates at a ministerial conference in London on 7 March were urged to release more funds to help Yemen. However, such funds will be divested in a strategic vacuum, and paves the way for a perfect storm for Yemen and the International community.
By Zaid Hassan, Reos Partners
Yemen is the newest country on the Arab Peninsula with one of the youngest populations in the world. Half of Yemen's twenty-four million people are under the age of fifteen. At the same time, however Yemen represents one of the world's most ancient civilisations, mentioned in Hadith, with Sana'a being one of the oldest continuously inhabited cities in the world.
Yemenis face increasingly daunting problems including: weak government institutions; declining resources; regional lawlessness; conflict; insufficient development and humanitarian responses; and political deadlock. This is leading to an increasingly dire humanitarian situation and civil unrest, which threatens to spill over beyond Yemeni borders.
The population is set to double within the next two decades. 90 per cent of wheat and 100 per cent of rice is imported. The near exhaustion of aquifers and streams threatens to make Sana'a the first capital in the world to run out of a viable water supply.
These facts are, of course, not new.
The international community's principle strategic response to the crisis in Yemen is the Friends of Yemen initiative. Launched by then Prime Minister Gordon Brown, the Friends of Yemen is essentially a gathering of major donors and the Yemeni government. The fifth Friends of Yemen meeting took place a week ago, held in London jointly chaired by the UK and the Kingdom of Saudi Arabia. This fifth gathering continues, to its credit, to actively keep Yemen squarely on the international agenda.
As a strategy, however, the Friends of Yemen process is unlikely to significantly impact Yemen's trajectory. The process does not address any of the underlying challenges that Yemen is facing. Any successful strategy must clearly address three requirements for action; 1) resources, 2) capacities and 3) strategic direction.
The current status quo in Yemen is sustained by billions of dollars in international aid and cash handouts, providing emergency fuel, infrastructure development, water and sanitation and education.
The recent meeting focused in part on the USD $8.1 billion in pledges made at the last Friends meeting in New York. This sounds like a lot of money (only Saudi Arabia has disbursed its pledged funds). But how much money however does Yemen actually require?
An internal study conducted for the Government of Yemen in 2010 estimates that for Yemen to reach its growth potential (estimated by the World Bank at 4.4% growth in non-oil GDP annually till 2020) requires an annual investment of approximately USD $30 billion per year. The same study suggests that Yemen requires a minimum USD $2.8 billion of private sector investment matched by USD $1.250 billion per year from donors. In short, even if pledges for USD $8.1B were met (currently only 10% of pledged money has been released) Yemen would not be on track to achieve its growth targets. It is hard to imagine an annual investment of USD $3B in FDI flowing into Yemen anytime soon.
Then there's the issue of Saudi largesse. It's rumoured that the current status quo in Yemen is maintained by anywhere between USD$ 3-4 billion of direct handouts from Saudi Arabia to Yemeni non-state actors. If, as some analysts predict, the Kingdom goes into a succession crisis in the next year, this source of funding could entirely dry-up, as Saudis turn inwards to resolve a potential explosive situation. This could lead to a massive additional gap in funding that will directly cause a food and fuel crisis across Yemen that the international community is ill prepared to address. (The current UN Yemen Humanitarian Response Plan is short USD $700M.)
Even if we assume a miraculous best case resource scenario, where Yemen has all the resources it needs, there is the issue of capacity. It's a basic truth that for any strategy to be successful requires implementation capacity. In the Yemeni case this is a tremendous challenge.
A few years ago one Yemeni Deputy Minister was overheard to remark that he employs a staff of eighty people and only five of these people are useful. His point was that he didn't have the capacity to implement anything much. While he may have been exaggerating, there are countless cases of young democracies failing to address their more pressing challenges simply because there is no capacity to do the work.
3) Strategic Direction
The success of any strategy is dependent upon setting clear strategic direction, both internally within Yemen and externally. Where exactly are funds going to be deployed? To what end does capacity need to be built? How exactly are Yemen's growth and stability challenges going to be met?
To put it another way: Yemen is running out of water and oil. Some projections say that this will happen by 2018. Loss of oil revenue will mean that Yemen does not have the reserves to import food. What exactly is being proposed to address these fundamental challenges? As resource challenges bite, the security situation will unravel and demands for Southern secession will increase. What is the 'competitive counter-punch' being proposed?
There is, unfortunately, no joined up strategic approach being proposed. The international community, in sticking to a neo-Soviet aid model, is all but guaranteeing that the fledgling Yemeni experiment in democracy will unravel in the years to come.
Finally, the success of any national strategy requires extensive buy-in across different sectors of society. The task of a political leadership, of a President or Prime Minister, is to facilitate this buy-in, to bring people along, to cajole, to cut deals where needed and to pull in favours where possible. This would be a formidable task for any Yemeni leader even if there were a strategy to be rolled out.
Yemen is facing the perfect storm of systemic challenges. As a country it is facing down problems that the rest of us may well be facing in the coming decades. While there is plenty of activity, much of it is akin to flying a plane on auto- pilot in a storm.
Three steps can be taken in order to address the situation:
1) Develop a more inclusive international process.
The current Friends of Yemen process is a Track-1 process between governments. It accepts recommendations from civil society actors and has very little engagement with the business community. If the international community believes that Yemenis need to engage in an inclusive process, than we must recognise that the same is true for us.
2) Support national stability through sectoral stability
The current approach to investment in Yemen has no underlying strategy. A sector-based approach would provide a strategy. This would mean focusing international and domestic efforts on the key sectors that Yemen as a country cannot survive without, this would include food and agriculture, water, energy, healthcare, and the financial sector. A key indicator of stability would be increased FDI flows into these areas, which is the only way for Yemen to meet its growth requirements.
3) Don't plan, prototype
Yemen is a fragile state. This means that the context for any development work is extremely complex and fast moving. Traditional planning based approaches are completely unsuited to such contexts. Instead, a rapid prototyping based approach should be taken, where a broad portfolio of efforts is incubated. A rapid cycle approach would provide increased capital to any efforts that show signs of success. Ownership of initiatives should be spread across different stakeholders, with evaluation focused on making assessments in order to identify the most effective delivery partners. This would help alleviate the strain on government for delivery.
Yemen as a country desperately requires a real strategy. Instead what we currently have is a strategic vacuum. Until this vacuum is honestly addressed, any political settlement will be subject to realities on the ground, which will ultimately overwhelm efforts. Neither Yemen nor the international community can afford this.
Zaid Hassan (@zaidhassan) co-founded Reos Partners in 2007 where he serves as Managing Partner of the Oxford office. Reos Partners is an international organisation dedicated to supporting and building capacity for strategic action in complex social systems, which also has offices in Cambridge (MA), the Hague, Johannesburg, Melbourne, Sao Paulo and San Francisco.