x Abu Dhabi, UAEWednesday 24 January 2018

Yemen must grow into GCC

Analysis Widely known for its cultivation of the narcotic qat leaf and tourist kidnappings, the country must be brought into the region.

A man chew qat while he works at the Souq al-Milh market in the old city of San'a.
A man chew qat while he works at the Souq al-Milh market in the old city of San'a.

Yemen, widely known for its cultivation of the narcotic qat leaf and tourist kidnappings, may be an unlikely candidate for membership of the wealthy oil-producing nations of the GCC. So it was no surprise that recent discussions about the region's poorest country joining the GCC Federation of Chambers were lost in the noise of the UAE's surprise withdrawal from the monetary union. Earlier, Abdul Karim al Arhabi, Yemen's deputy prime minister, said Saudi Arabia was supporting the country's bid to join the GCC, which it hoped to achieve in 2015.

However, economists remain sceptical. The economic gap between Yemen and its GCC neighbours is enormous. Scenes of rugged-looking barefoot traders haggling over ceremonial daggers in Sana'a's souks are worlds apart from the gleaming new malls of Riyadh, Doha and Dubai, where top designer brands are on display. While Yemen's estimated population of 23 million is almost equal to that of Saudi Arabia, it is by far the poorest country in the Middle East.

Its estimated annual per capita income of US$900 (Dh3,305.25) compares with an average of $35,000 across the GCC, which consists of Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman. Some seven million Yemenis chew qat, a mildly narcotic leaf. Qat cultivation is straining the country's scarce water supplies with an estimated 145,000 hectares (ha) dedicated to growing the crop, up from about 80,000ha a decade ago.

Yemen also faces a myriad social problems and has a history of terrorist attacks, most recently in March when four South Korean tourists were killed in a bomb blast in the south, which was followed three days later by an attack on a South Korean delegation investigating the case. Last September, a radical group calling itself the Islamic Jihad attacked the heavily fortified US embassy in Yemen, killing 17 people, including civilians.

An unsteady ceasefire between rebels and government troops in the north may also make it an undesirable economic neighbour for the oil-rich Gulf states. But it may also provide an incentive for them to embrace the country. "Yemen could become a failed state," says John Sfakianakis, an economist with the Saudi British Bank (SABB) in Riyadh. "Bringing it under the GCC umbrella is a pressing topic. You already have one failed state on the other side of the ocean, Somalia, and you don't want to have another one on the Arabian peninsula itself.

"There has been a bit more dynamism in the issue recently. The momentum is increasing the more Yemen is showing signs that terrorism is beginning to take a strong foothold." Despite a lack of clear rules for the accession of a member state, Mr Sfakianakis says there are "definitely informal discussions". The GCC was created "in response to a four-fold threat from fundamentalist Iran, Baathist Iraq, the two poor and overpopulated Yemens, plus Soviet intervention in Afghanistan, which threatened involving the Gulf region in wider conflicts," according to the European Institute for Research on Euro-Arab Co-operation. Yemen was two countries until 1990.

By bringing it into the GCC, the group would go back to its roots of a political union with a strong security agenda. "The GCC was established as a security club," says Mustafa Alani, the program director of security and terrorism studies at the Gulf Research Centre. "You must deal with Yemen's security issue from the economic side. You must make the opportunity to open the door economically." So far, Saudi Arabia has been the most active in developing economic ties with Yemen.

"Take the nicest hotel you can find in Sana'a. It is run by the Saudis," says Mr Alani. Apart from private investment, Saudi Arabia has been the most generous with government grants for projects in Yemen such as education, water and power. Now, many economists and analysts are calling for the GCC to take more ownership in the economic development of the country and become more active in developing its economy, for example through the Arab Development Fund.

But for now, there has been little more than lip service paid to Yemen's entry into the select club of six. "King Abdullah (of Saudi Arabia) has said before that Yemen should be a full member, but no practical steps have been taken," says Mr Alani. Yemen's previous pushes to join the GCC (it first sought entry in 1996) have not been taken very seriously by the six members. "It is not going to happen any time in the near future," says a UAE government adviser who did not want to be named. In 2002, Yemen and the GCC signed a protocol defining relations that was considered a first step towards its full membership.

Most observers believe that GCC member states are willing to support a partial membership, but are hesitant about going all the way. "Until now I don't see them genuinely wishing for full membership," says Mr Alani. "There is no evidence so far." GCC countries could engage Yemen by allowing it into economic committees, or including it in the Customs Union. In 2002, Yemen joined some GCC-affiliated, non-political bodies related to health and sports.

Intra-regional trade in the GCC has risen strongly in recent years but off a relatively low level. Economists say the country may have to develop its economy before full membership of the GCC becomes a genuine proposition. "The economic gap is very wide," says Mohieddine Kronfol, the managing director at Algebra Capital. "On the other hand there is no real reason for Yemen not to be more economically productive. It has a nice location for trade, it has some oil and gas, but it needs a lot of investments."

Traditionally, Yemen's largest export has been its labour force. Up to two million Yemenis worked in Saudi Arabia until most were expelled when their country sided with Iraq in the First Gulf War. "Yemenis could replace expats from other Asian countries," says Mr Alani. The country could profit if it agreed on workforce contingencies with neighbouring countries, or if one day Yemenis had GCC identity cards.

But the notion of Yemenis moving around more freely may be threatening to many of their GCC neighbours, notably Saudi Arabia. "GCC countries are terrified and none of them want to be importing any of these social problems," says an economist who did not want to be named. This is particularly true for Saudi Arabia which shares Yemen's borders, he says. @Email:uharnischfeger@thenational.ae