Overview | Government

This series of profiles of foreign nations is part of the Country Studies Program, formerly the Army Area Handbook Program. The profiles offer brief, summarized information on a country's historical background, geography, society, economy, transportation and telecommunications, government and politics, and national security. Derived from The Library of Congress.



Formal Name: Republic of Yemen (Al Jumhuriyah al Yamaniyah).

Short Form: Yemen.

Term for Citizen(s): Yemeni(s).

Major Cities: The capital of Yemen is Sanaa. Other major cities are Aden, Taizz, Al Hudaydah, and Al Mukalla.

Independence: North Yemen gained independence from the Ottoman Empire in November 1918, and South Yemen became independent from Britain on November 30, 1967. The Republic of Yemen was established on May 22, 1990, with the merger of North Yemen (the Yemen Arab Republic) and South Yemen (the People’s Democratic Republic of Yemen).

Public Holidays: Public holidays other than New Year’s Day, International Women’s Day, Labour Day, Corrective Movement Anniversary, and National Day are dependent on the Islamic calendar and vary from year to year. For 2007 the holidays are: New Year’s Day (January 1);); Muharram, Islamic New Year (January 20); Ashoura (January 29); International Women’s Day (March 8); Mouloud, Birth of Muhammad (March 31); Labour Day (May 1); National Unification Day (May 22); Corrective Movement Anniversary (June 13); Leilat al Meiraj, Ascension of Muhammad (August 10); first day of Ramdan (September 13); Eid al Fitr, end of Ramadan (October 13); National Day (October 14); and Eid al Adha, Feast of the Sacrifice (December 20).

Flag: Three equal horizontal bands of red (on top), white, and black.


Medieval History: In pre-Islamic times, the area that encompasses the present-day Republic of Yemen was called Arabia Felix—happy or prosperous Arabia—and was ruled by a number of indigenous dynasties in several different kingdoms. The most important cultural, social, and political event in Yemen’s history was the coming of Islam around A.D. 630. Following the conversion of the Persian governor, many of the sheikhs and their tribes converted to Islam, and Yemen was ruled as part of Arab caliphates. The former North Yemen came under the control of imams of various dynasties, the most important of which were the Zaydis, whose dynasty lasted well into the twentieth century.

Former North Yemen: By the sixteenth century and again in the nineteenth century, northern Yemen was controlled in the cities by the Ottoman Empire and in tribal areas by the Zaydi imam’s suzerainty. The Ottoman Empire was dissolved in 1918, and Imam Yahya, leader of the Zaydi community, took power in the area that later became the Yemen Arab Republic (YAR), or North Yemen. Underground opposition to Yahya began in the late 1930s, and by the mid-1940s major elements of the population opposed his rule. In 1948 Yahya was assassinated in a palace coup, and forces opposed to his feudal rule seized power. His son Ahmad succeeded him and ruled until his own death in September 1962. Imam Ahmad’s reign was marked by growing repression, renewed friction with the British over their presence in the south, and increasing pressure to support the Arab nationalist objectives of Egyptian President Gamal Abdul Nasser. From 1958 to 1961, North Yemen was federated with Egypt and Syria in the United Arab States. Imam Ahmad’s son Badr assumed power after Ahmad’s death but was deposed one week later by army officers, led by Colonel Abdallah al Sallal, who took control of Sanaa and created the YAR. Immediately upon taking power, the officers created the ruling eight-member Revolutionary Command Council headed by Sallal. Civil war ensued between the royalist forces, supported by Saudi Arabia and Jordan in opposition to the newly formed republic, and republicans, supported by Egyptian troops. In 1967 Egyptian troops were withdrawn, and by 1968, following a royalist siege of Sanaa, most of the opposing leaders had reconciled. In 1970 Saudi Arabia recognized the YAR.

Former South Yemen: British influence increased in the southern and eastern portion of Yemen after the British captured the port of Aden in 1839. It was ruled as part of British India until 1937, when Aden became a crown colony and the remaining territory was designated a protectorate (administered as the Eastern Protectorate and Western Protectorate). By 1965 most of the tribal states within the protectorate and the Aden colony itself had joined to form the British-sponsored Federation of South Arabia. Over the next two years, two rival factions—the Marxist National Liberation Front (NLF) and the Front for the Liberation of Occupied South Yemen (FLOSY)—fought for power. By August 1967, the NLF was in control of most areas, and at the end of the summer the federation formally collapsed. The last British troops were removed on November 29. On November 30, 1967, the People’s Republic of Yemen, comprising Aden and South Arabia, was proclaimed. In June 1969, a radical wing of the NLF gained power. The country’s name changed to the People’s Democratic Republic of Yemen (PDRY) on December 1, 1970.

Road to Unification: By 1972 the two Yemens were in open conflict. The YAR received aid from Saudi Arabia, and the PDRY received arms from the Soviet Union. Although the Arab League brokered a cease-fire and both sides agreed to forge a united Yemen within 18 months, the two Yemens remained apart. The following years saw continued unrest and conflict, culminating in the assassination of the president of the YAR in June 1978. A month later, the Constituent People’s Assembly elected Lieutenant Colonel Ali Abdallah Salih as president of the YAR. Renewed fighting broke out in early 1979, but in March the heads of state of the two Yemens signed an agreement in Kuwait pledging unification. In February 1986, after considerable internal warfare and bloodshed initiated by the president of the PDRY, he lost all his party and state positions, and former prime minister Haydar Abu Bakr al Attas was named president of a newly formed PDRY government. In October a general election took place for the national legislature. In the YAR’s first general election, held in July 1988, President Salih won a third five-year term. In May of that year, the two governments agreed to withdraw troops from their mutual border, create a demilitarized zone, and allow easier border crossings for citizens of both states. In November 1988, President Salih and the secretary general of the Central Committee of the Yemen Socialist Party (YSP), Ali Salim al Baydh, agreed on a draft unity constitution, which was approved by referendum in May 1991. The Republic of Yemen was officially declared on May 22, 1990. President Salih of the YAR became the president of the new republic, al Baydh was named vice president, and PDRY President Haydar Abu Bakr al Attas was named prime minister. Al Attas led a transitional coalition Council of Ministers whose membership was divided between the General People’s Congress (GPC; the party supporting President Salih) and the YSP (the party supporting Vice President al Baydh).

Unrest and Civil War: In late 1991 through early 1992, deteriorating economic conditions led to significant domestic unrest, including several riots. Legislative elections were nonetheless held in early 1993, and in May the two former ruling parties, the GPC and the YSP, merged to create a single political party with an overall majority in the new House of Representatives. In August Vice President al Baydh exiled himself voluntarily to Aden, and the country’s general security situation deteriorated as political rivals settled scores and tribal elements took advantage of the widespread unrest. In January 1994, representatives of the main political parties signed a document of pledge and accord in Amman, Jordan, that was designed to resolve the ongoing crisis. But by May 1994, al Baydh had been dismissed from power and the country was in civil war. International efforts to broker a cease-fire were unsuccessful. On May 21, 1994, al Baydh and other leaders of the former South Yemen declared secession and the establishment of a new Democratic Republic of Yemen centered in Aden, but the new republic failed to achieve any international recognition. On July 7, 1994, Aden was captured by President Salih’s troops, thus ending the civil war. In August 1994, in an attempt to undermine the strength of southern military units loyal to the YSP, President Salih prohibited party membership within the armed forces; he also introduced amendments to the constitution abolishing the Presidential Council and establishing universal suffrage. In October he was reelected president and named GPC members to key cabinet posts; several ministerial posts were given to members of the Yemeni Islah Party (YIP), which had been loyal to Salih during the civil war.

1994 to Present: Following the civil war, Yemen’s currency, the riyal, was devalued; the cost of fuel doubled, water and electricity were in short supply, and food costs rose. Public demonstrations ensued, and the YIP was at odds with the GPC over economic reforms recommended by the World Bank. In the April 1997 parliamentary elections, the GPC garnered 187 seats and the YIP only 53 seats. A new Council of Ministers composed primarily of GPC members was named in May. The country continued to experience unrest due to economic hardship, coupled with increasing lawlessness, particularly against tourists. In September 1999, the first direct presidential election was held, reelecting the incumbent, President Salih, to a five-year term by an overwhelming margin. Constitutional amendments adopted in 2000 extended the president’s term by two years; President Salih was reelected in September 2006.


Location: Yemen is located in the Middle East at the southern tip

of the Arabian Peninsula between Oman and Saudi Arabia. It is

situated at the entrance to the Bab el Mandeb strait, which links

the Red Sea to the Indian Ocean (via the Gulf of Aden) and is one

of the most active and strategic shipping lanes in the world.

Size: Yemen has an area of 527,970 square kilometers, including the islands of Perim at the southern end of the Red Sea and Socotra at the entrance to the Gulf of Aden.

Land Boundaries: Yemen’s land boundaries total 1,746 kilometers. Yemen borders Saudi Arabia to the north (1,458 kilometers) and Oman to the northeast (288 kilometers).

Disputed Territory: A long-standing dispute between Saudi Arabia and Yemen was resolved in June 2000 with the signing of the Treaty of Jiddah. This agreement provides coordinates for use in delineating the land and maritime border, including the section in the eastern desert region of Yemen that potentially contains significant amounts of oil. Friction between the two countries in recent years over security of the borders appears to have been alleviated by the establishment of joint border patrols. Following years of dispute between Yemen and Eritrea over ownership of the Hanish Islands and fishing rights in the Red Sea, in 1999 an international arbitration panel awarded sovereignty of the islands to Yemen. Relations between the two countries remain strained, and Yemen continues to protest Eritrean fishing in the disputed territory.

Length of Coastline: Yemen has 1,906 kilometers of coastline along the Arabian Sea, the Gulf of Aden, and the Red Sea.

Maritime Claims: Yemen claims a territorial sea of 12 nautical miles, a contiguous zone of 24 nautical miles, an exclusive economic zone of 200 nautical miles, and a continental shelf of 200 nautical miles or to the edge of the continental margin.

Topography: Yemen occupies the southern end of the Arabian Plateau. The country’s mountainous interior is surrounded by narrow coastal plains to the west, south, and east and by upland desert to the north along the border with Saudi Arabia. The Tihamah is a nearly 419-kilometer-long, semidesert coastal plain that runs along the Red Sea. The interior mountains have elevations ranging from a few hundred meters to the country’s highest point, Jabal an Nabi Shuayb, which is 3,760 meters above sea level. The highland regions are interspersed with wadis, or river valleys, that are dry in the summer months. Most notable is the Wadi Hadhramaut in eastern Yemen, the upper portions of which contain alluvial soil and floodwaters and the lower portion of which is barren and largely uninhabited. Both the eastern plateau region and the desert in the north are hot and dry with little vegetation.

Principal Rivers: Yemen has no permanent rivers.

Climate: Temperatures are generally very high in Yemen, particularly in the coastal regions. Rainfall is limited, with variations based on elevation. The highlands enjoy a temperate, rainy summer with an average high temperature of 21° C and a cool, moderately dry winter with temperatures occasionally dipping below 4° C. The climate of the Tihamah (western coastal plain) is tropical; temperatures occasionally exceed 54° C, and the humidity ranges from 50 to 70 percent. Rainfall, which comes in irregular heavy torrents, averages 130 millimeters annually. In Aden the average temperature is 25° C in January and 32° C in June, but with highs often exceeding 37° C. Average annual rainfall is 127 millimeters. The highest mountainous areas of southern Yemen receive from 520 to 760 millimeters of rain a year. It is not uncommon for the northern and eastern sections of the country to receive no rain for five years or more. The Wadi Hadhramaut in the eastern part of Yemen is arid and hot, and the humidity ranges from 35 percent in June to 64 percent in January.

Natural Resources: Yemen’s principal natural resources are oil and natural gas as well as agriculturally productive land in the west. Other natural resources include fish and seafood, rock salt, marble, and minor deposits of coal, gold, lead, nickel, and copper.

Land Use: Only 2.9 percent of Yemen is considered to be arable land, and less than 0.3 percent of the land is planted with permanent crops. About 4,900 square kilometers of land are irrigated. According to the United Nations, Yemen has 19,550 square kilometers of forest and other wooded land, which constitutes almost 4 percent of total land area.

Environmental Factors: Yemen is subject to sandstorms and dust storms, resulting in soil erosion and crop damage. The country has very limited natural freshwater and consequently inadequate supplies of potable water. Desertification (land degradation caused by aridity) and overgrazing are also problems.

Time Zone: Yemen is three hours ahead of Greenwich Mean Time.


Population: Yemen’s latest census, conducted in December 2004, reported a population of 19.72 million persons, reflecting an average annual population growth rate of more than 3 percent. The U.S. government has estimated a population of 21.4 million persons as of July 2006, and the International Monetary Fund estimates 20.3 million persons. Yemen’s population has more than doubled since 1975 and has grown approximately 35 percent since the 1994 census, making Yemen the second most populous country in the Arabian Peninsula. Adding to the growth of the native population is the influx of Somali refugees into Yemen—an average of 1,000 per month in 2005. According to the Yemen government, there were more than 80,000 East African refugees in Yemen in 2006. According to the United Nations, Yemen’s population in 2005 was 26.3 percent urban and 73.7 percent rural; population density was 40 persons per square kilometer.

Demography: Yemen’s population is predominantly young. According to U.S. government and United Nations estimates, in 2006 about 46 percent of the population was under age 15; slightly more than half the population, 15–64; and less than 3 percent, 65 and older. The population was almost equally divided between males and females. In 2006 the birthrate and death rate were estimated to be 42.9 per 1,000 and 8.3 per 1,000, respectively. The infant mortality rate was estimated to be higher for males than for females—more than 64 male deaths per 1,000 live births, as compared with about 55 female deaths per 1,000 live births. The overall rate was almost 60 deaths per 1,000 live births. Despite an increase of 14 years in the last decade, life expectancy at birth in Yemen has remained low compared with other developing countries—60 years for males and 64 years for females, or 62.1 years overall. The country’s fertility rate was almost 6.6 children per woman in 2006.

Ethnic Groups and Languages: Yemen’s population is predominantly Arab, but it also includes Afro-Arabs, South Asians, and Europeans. Arabic is the official language; English is also used in official and business circles.

Religion: Virtually all of Yemen’s citizens are Muslims; approximately 30 percent belong to the Zaydi sect of Shia Islam and about 70 percent follow the Shafii school of Sunni Islam. A few thousand Ismaili Muslims, who adhere to Shia Islam, live in northern Yemen. Fewer than 500 Jews (a fraction of the former population) also live in the northern part of the country.

Yemen’s constitution declares that Islam is the state religion and that the president of the republic must “practice his Islamic duties.” The constitution also provides for freedom of religion, which the government generally respects but with limitations. The government prohibits the conversion and proselytizing of Muslims, requires permission for the construction of new places of worship, and permits non-Muslims to vote but not hold elected office. Public schools provide instruction in Islam but not in other religions, although Muslim citizens are allowed to attend private schools that do not teach Islam. In an effort to curb ideological and religious extremism in schools, the government does not permit any courses outside of the officially approved curriculum to be taught in private and national schools. Because the government is concerned that unlicensed religious schools deviate from formal educational requirements and promote militant ideology, it has closed more than 3,000 of these institutions and deported foreign students studying there.

The free practice of religion has met with some government opposition. In 2004 the government used military force to quell an armed insurgency led by a Shia cleric in the northern governorate of Sadah. In early 2005 and 2006, the government banned the observance of a religious holiday that is celebrated there by some Shia Muslims and reportedly limited the hours that mosques were allowed to remain open, reassigned imams thought to espouse radical doctrine, and increased surveillance and detention of members of the insurgent group. According to the U.S. Department of State, Yemen’s government, in an effort to curb extremism and increase tolerance, monitors mosques for inflammatory sermons and threatening political statements and uses police and intelligence agencies to screen the activities of Islamic organizations tied to international organizations.

Education and Literacy: According to the United Nations, the adult literacy rate for Yemen in 2003 was 29 percent for females and 70 percent for males. The overall literacy rate for the population age 15 and older was 49 percent. By comparison, low-income countries in the aggregate average an adult literacy rate of approximately 60 percent.

There is a direct correlation between the very high rate of illiteracy and the lack of basic education. Although Yemen’s laws provide for universal, compulsory, free education for children ages six through 15, the U.S. Department of State reports that compulsory attendance is not enforced. This deficiency is confirmed by United Nations statistics. In 2002 only 72 percent of Yemen’s school-age population was enrolled in primary school; enrollment was even lower for the female population—only 59 percent. In that same year, only 35 percent of the school-age population was enrolled in secondary school, including only 21 percent of eligible females. These low enrollment numbers (the lowest in the Middle East and North Africa region) are in turn a reflection of the countrywide shortage of the requisite infrastructure. School facilities and educational materials are of poor quality, classrooms are too few in number, and the teaching faculty is inadequate. In September 2004, the World Bank approved a US$65 million project to improve the quality of basic education (grades one through nine). Under this program, classroom facilities will be expanded and upgraded, curricula and educational materials improved, and the Ministry of Education’s capacity to implement new programs and resources strengthened. Yemen’s government has in recent years increased spending on education—from 4.5 percent of gross domestic product (GDP) in 1995 to 9.5 percent of GDP in 2003.

Health: Despite the significant progress Yemen has made to expand and improve its health care system over the past decade, the system remains severely underdeveloped. Total expenditures on health care in 2002 constituted 3.7 percent of gross domestic product. In that same year, the per capita expenditure for health care was very low, as compared with other Middle Eastern countries—US$58 according to United Nations statistics and US$23 according to the World Health Organization. According to the World Bank, the number of doctors in Yemen rose by an average of more than 7 percent between 1995 and 2000, but as of 2004 there were still only three doctors per 10,000 persons. In 2003 Yemen had only 0.6 hospital beds available per 1,000 persons.

Health care services are particularly scarce in rural areas; only 25 percent of rural areas are covered by health services, as compared with 80 percent of urban areas. Emergency services, such as ambulance service and blood banks, are non-existent. Most childhood deaths are caused by illnesses for which vaccines exist or that are otherwise preventable. According to the Joint United Nations Programme on HIV/AIDS, in 2003 an estimated 12,000 people in Yemen were living with human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS).

Welfare: According to the United Nations, Yemen ranks 151st out of 177 countries on the human development index (HDI), a measure of life expectancy, education, and standard of living. Yemen has the lowest HDI rank among the Arab states. Several welfare programs are in place, but they have generally been considered inadequate to meet the needs of Yemen’s impoverished citizens (estimated to exceed 45 percent of the total population). The main social assistance program is the Social Welfare Fund, initially established to compensate for reductions in economic subsidies. This program provides 650,000 beneficiaries direct cash payments capped at US$11 per month and lump-sum payments for emergencies. In July 2005, the government announced it would extend coverage to an additional 200,000 beneficiaries. The Social Development Fund and the Public Works Project were established almost 10 years ago with World Bank funds. These programs attempt to raise living standards through various community development, capacity-building, and micro-financing programs; it has been difficult, however, to obtain the necessary commercial bank credit to make these programs viable. In early 2005, Yemen’s parliament adopted a government budget requiring that the government provide additional resources for social safety nets to lessen the impact of economic reforms that might result in higher consumer prices.


Overview: At the time of unification, South Yemen and North Yemen had vastly different but equally struggling underdeveloped economic systems. Since unification, the economy has been forced to sustain the consequences of Yemen’s support for Iraq during the 1990–91 Gulf War: Saudi Arabia expelled almost 1 million Yemeni workers, and both Saudi Arabia and Kuwait significantly reduced economic aid to Yemen. The 1994 civil war further drained Yemen’s economy. As a consequence, for the past 10 years Yemen has relied heavily on aid from multilateral agencies to sustain its economy. In return, it has pledged to implement significant economic reforms. In 1997 the International Monetary Fund (IMF) approved two programs to increase Yemen’s credit significantly: the enhanced structural adjustment facility (now known as the poverty reduction and growth facility, or PRGF) and the extended funding facility (EFF). In the ensuing years, Yemen’s government attempted to implement recommended reforms—reducing the civil service payroll, eliminating diesel and other subsidies, lowering defense spending, introducing a general sales tax, and privatizing state-run industries. However, limited progress led the IMF to suspend funding between 1999 and 2001.

In late 2005, the World Bank, which had extended Yemen a four-year US$2.3 billion economic support package in October 2002 together with other bilateral and multilateral lenders, announced that as a consequence of Yemen’s failure to implement significant reforms it would reduce financial aid by one-third over the period July 2005 through July 2008. A key component of the US$2.3 billion package—US$300 million in concessional financing—has been withheld pending renewal of Yemen’s PRGF with the IMF, which is currently under negotiation. However, in May 2006 the World Bank adopted an assistance strategy for Yemen under which it will provide approximately US$400 million in International Development Association (IDA) credits over the period FY 2006 to FY 2009. In November 2006, at a meeting of Yemen’s development partners, a total of US$4.7 billion in grants and concessional loans was pledged for the period 2007–10. At present, despite possessing significant oil and gas resources and a considerable amount of agriculturally productive land, Yemen remains one of the poorest of the world’s low-income countries; more than 45 percent of the population lives in poverty. The influx of an average 1,000 Somali refugees per month into Yemen looking for work is an added drain on the economy, which already must cope with a 20 to 40 percent rate of unemployment. Yemen remains under significant pressure to implement economic reforms or face the loss of badly needed international financial support.

Gross Domestic Product (GDP): For 2005 Yemen’s GDP was estimated to be US$15.7 billion. GDP per capita was estimated to be only US$900. According to the Central Bank of Yemen, real GDP growth is estimated to reach 4.6 percent in 2005, up from 3.9 percent in 2004, caused by expansion in the non-oil economy, particularly the manufacturing, agriculture, and transport, storage and communications sectors. However, economists have calculated a real growth rate of only 2.6–2.7 percent in 2004, increasing to a range of 2.8–3.8 percent in 2005, and estimate real GDP growth in 2006 to be in a range of 3.2–3.9 percent. The increase is attributed to increased oil production, which will slightly boost export growth, coupled with investment in new capital projects. All of these rates, however, fall far short of Yemen’s five-year (2006–10) development plan for sustained average annual real GDP growth of 7 percent. The World Bank has set a target of 7 percent GDP growth rate per year in order for Yemen to achieve sustained economic development.

Government Budget: In 1995, in order to comply with conditions stipulated by the International Monetary Fund (IMF), Yemen began an economic reform program, one component of which is fiscal policy reform aimed at reducing deficits and expanding the revenue base. However, the government has failed to significantly reduce its primary expenditure—subsidies, especially the fuel subsidy. In January 2005, Yemen’s parliament narrowly adopted a 2005 budget that forecast a reduced budget deficit of about 3 percent of gross domestic product (GDP). The budget was predicated on the adoption of a reform package that included a broad-based, 10 percent general sales tax (GST) and a 75 percent reduction in the fuel subsidy. Strong public opposition to these reforms led the government in July 2005 to defer the 10 percent GST for 18 months, adopting instead a hybrid 5 percent GST, and to modify the fuel subsidy reduction. Nonetheless, the cost of subsidies, primarily for fuel, rose dramatically (almost 90 percent) in 2005, accounting for the largest share (almost 25 percent) of total government expenditures and approximately 9 percent of GDP. These costs, coupled with a 24 percent increase in civil service wages and salaries and a 42 percent increase in defense spending, resulted in a government budget deficit of US$350.8 million, or more than 2 percent of GDP, in 2005. The government has budgeted a sharp (41 percent) rise in overall spending for 2006, which economists estimate will result in a fiscal deficit of US$800 million, or 4.2 percent of GDP.

Inflation: During the years immediately following unification (1990–96), Yemen experienced a very high average rate of inflation—40 percent. Economic reforms brought this rate down to only 5.4 percent in 1997, but high oil prices and cuts in the fuel subsidy in recent years have had a negative impact on the inflation rate, which has generally been on the rise despite some fluctuations. In 2004 efforts by the Central Bank of Yemen to tighten the money supply were offset by a weakening U.S. dollar, to which the Yemeni riyal is linked in a managed float, and by rising global commodity prices, resulting in an inflation rate of 12.5 percent. In July 2005, the government succumbed to public opposition and lowered the new general sales tax from 10 to 5 percent. This tax, coupled with reductions in government fuel subsidies and higher import prices, is expected to result in an estimated inflation rate of 15 percent in 2006, up from 11.8 percent in 2005.

Agriculture, Forestry, and Fishing: Agriculture is the mainstay of Yemen’s economy, generating more than 20 percent of gross domestic product (GDP) since 1990 (20.4 percent in 2005 according to the Central Bank of Yemen) and employing more than half (54.2 percent in 2003) of the working population. However, a U.S. government estimate suggests that the sector accounted for only 13.5 percent of GDP in 2005. Numerous environmental problems hamper growth in this sector—soil erosion, sand dune encroachment, and deforestation—but the greatest problem by far is the scarcity of water. As a result of low levels of rainfall, agriculture in Yemen relies heavily on the extraction of groundwater, a resource that is being depleted. Yemen’s water tables are falling by approximately two meters a year, and it is estimated that Sanaa’s groundwater supplies could be exhausted by 2008. The use of irrigation has made fruit and vegetables Yemen’s primary cash crops. With the rise in the output of irrigated crops, the production of traditional rain-fed crops such as cereals has declined. According to the Central Bank of Yemen, in 2005 the production of qat, a mildly narcotic and heavily cultivated plant that produces natural stimulants when its leaves are chewed, rose 6.7 percent and accounted for 5.8 percent of GDP; its usage in Yemen is widespread. According to the World Bank and other economists, cultivation of this plant plays a dominant role in Yemen’s agricultural economy, constituting 10 percent of GDP and employing an estimated 150,000 persons while consuming an estimated 30 percent of irrigation water and displacing land areas that could otherwise be used for exportable coffee, fruits, and vegetables.

Although Yemen’s extensive territorial waters and marine resources have the potential to produce 840,000 tons of fish each year, the fishing industry is relatively underdeveloped and consists largely of individual fishermen in small boats. In recent years, the government has lifted restrictions on fish exports, and production has reached one-quarter of capacity, yielding revenues valued at US$260 million in 2005. Fish and fish products constitute only 1.7 percent of Yemen’s GDP but are the second largest export. In December 2005, the World Bank approved a US$25 million credit for a Fisheries Management and Conservation Project to be launched in all coastal governorates along the Red Sea and the Gulf of Aden. This project is expected to improve fish landing and auction facilities, provide ice plants for fish preservation, and enable Yemen’s Ministry of Fisheries to undertake more effective research, resource management planning, and regulatory activities.

Mining and Minerals: Yemen is a small oil producer and does not belong to the Organization of the Petroleum Exporting Countries (OPEC). Unlike many regional oil producers, Yemen relies heavily on foreign oil companies that have production-sharing agreements with the government. Income from oil production constitutes 70 to 75 percent of government revenue and about 90 percent of exports. Yemen contains proven crude oil reserves of more than 4 billion barrels, although these reserves are not expected to last more than 15 to 20 years, and output from the country’s older fields is falling. According to statistics published by the Energy Information Administration, crude oil output averaged 413,300 barrels per day (bbl/d) in 2005, a reduction from 423,700 bbl/d in 2004. For the first eight months of 2006, crude oil output was flat, averaging 412,500 bbl/d.

Since the mid-1990s, the primary focus of Yemeni natural gas development has been the export of liquefied natural gas (LNG). In 1997, in order to commercially develop Yemen’s 16.9 trillion cubic feet of natural gas reserves, Yemen Gas Company joined with various privately held companies to establish Yemen LNG (YLNG). In August 2005, following years of setbacks, the government gave final approval to three LNG supply agreements, enabling YLNG to award a US$2 billion contract to an international consortium to build the country’s first liquefaction plant at Balhat on the Arabian Sea coast. The plant is expected to deliver a total of 6.7 million tons of LNG per year; initial shipments are expected by the end of 2008, with natural gas likely to flow to the United States and Korea. The Yemen government expects the LNG project to add US$350 million to its budget and enable it to develop a petrochemicals industry.

Industry and Manufacturing: The U.S. government estimates that Yemen’s industrial sector constitutes 47.2 percent of gross domestic product. Together with services, construction, and commerce, industry accounts for less than 25 percent of the labor force. The largest contributor to the manufacturing sector’s output is oil refining, which generates roughly 40 percent of total revenue. The remainder of this sector consists of the production of consumer goods and construction materials. Manufacturing constituted approximately 9.5 percent of Yemen’s gross domestic product in 2005. In 2000 Yemen had almost 34,000 industrial establishments with a total of slightly fewer than 115,000 workers; the majority of the establishments were small businesses (one to four employees). Almost half of all industrial establishments are involved in processing food products and beverages; the production of flour and cooking oil has increased in recent years. Approximately 10 percent of the establishments are classified as manufacturing mixed metal products such as water-storage tanks, doors, and windows.

Energy: Yemen’s state-owned Public Corporation for Electricity (PCE) operates an estimated 80 percent of the country’s electricity generating capacity (810–900 megawatts) as well as the national power grid. Over the past 10 years, the government has considered various means of alleviating the country’s significant electricity shortage, including restructuring the PCE, integrating the power sector through small-scale privatization of power stations, creating independent power projects (IPPs), and introducing gas-generated power plants to free up oil supplies for export. However, because of inadequate infrastructure, large-scale IPPs and privatization proposals have failed to materialize, although several smaller-scale projects in Al Mukalla and Aden have been completed, and contracts have been signed for future projects. In 2004 Yemen’s diesel-run power plants generated 4.1 billion kilowatt-hours of electricity, a level of production that is insufficient to maintain a consistent supply of electricity. Although demand for electricity increased 20 percent between 2000 and 2004, it is estimated that only 40 percent of the total population has access to electricity from the national power grid, and supply is intermittent. To meet this demand, the government plans to increase the country’s power generating capacity to 1,400 megawatts by 2010.

Services: Economists have reported that Yemen’s services sector constituted 51.7 percent of gross domestic product (GDP) in 2002 and 52.2 percent of GDP in 2003. The U.S. government estimates that the services sector accounted for 39.7 percent of gross domestic product in 2004 and 39.3 percent in 2005.

Banking and Finance: According to economists, Yemen’s financial services sector is underdeveloped and dominated by the banking system. Yemen has no public stock exchange. The banking system consists of the Central Bank of Yemen, 15 commercial banks (nine private domestic banks, four of which are Islamic banks; four private foreign banks; and two state-owned banks), and two specialized state-owned development banks. The Central Bank of Yemen controls monetary policy and oversees the transfer of currencies abroad. It is the lender of last resort, exercises supervisory authority over commercial banks, and serves as a banker to the government. The largest commercial bank, the National Bank of Yemen, which is fully state-owned, and the Yemen Bank for Reconstruction and Development, which is majority state-owned, are currently being restructured with the goal of eventual privatization. Because of fiscal difficulties in both banks, in 2004 Yemen’s government adopted a plan to merge them; the new publicly owned Development Bank will have a minimum capital of US$50 million.

The large volume of non-performing loans, low capitalization, and weak enforcement of regulatory standards hamper Yemen’s banking sector as a whole. Numerous banks are technically insolvent. Because many debtors are in default, Yemen’s banks limit their lending activities to a select group of consumers and businesses; as a result, the entire banking system holds less than 60 percent of the money supply. The bulk of the economy operates with cash. Legislation adopted in 2000 gave the Central Bank the authority to enforce tougher lending requirements, and in mid-2005 the Central Bank promulgated several new capital requirements for commercial banks aimed at curtailing currency speculation and protecting deposits.

Tourism: Yemen’s tourism industry is hampered by limited infrastructure as well as serious security concerns. The country’s hotels and restaurants are below international standards, and air and road transportation is largely inadequate. Kidnappings of foreign tourists remain a threat, especially outside the main cities, and, coupled with terrorist bombings at the Port of Aden in 2000 and 2002, present a significant deterrent to tourism. As recently as September 2006, tribesmen in the Shabwa province, east of Sanaa, kidnapped four French tourists on their way to Aden. They were freed two weeks later. In October 2006, the U.S. Department of State reiterated previous warnings to U.S. citizens, strongly urging them to consider carefully the risks of traveling to Yemen. Britain’s Foreign Office has issued a similar advisory. Recent statistics for tourist arrivals in Yemen are not available, but in 2004 the number rose to 274,000 from 155,000 in 2003.

Labor: According to the U.S. government, the agriculture and herding sector employs the majority of Yemen’s working population (54.2 percent in 2003). Industry, together with services, construction, and commerce, accounts for less than 25 percent of the labor force.

According to the World Bank, Yemen’s civil service is characterized by a large, poorly paid work force and inadequate salary differential between high and low skilled jobs to attract and retain qualified workers. In 2004 the government increased civil service salaries by 20 to 40 percent in order to alleviate the impact of anticipated economic reforms that were never implemented. The result was a 20 percent rise in wage costs; civil service wages constituted 7 percent of gross domestic product in 2004. The 2005 budget reduced economic subsidies but in exchange required the government to make various concessions, including increasing civil service wages another 10 to 15 percent by 2007 as part of a national wage strategy.

The economic assistance package the International Monetary Fund (IMF) pledged to Yemen is contingent on the implementation of civil service reform, which the government has resisted because of the country’s estimated 20 to 40 percent unemployment rate. In 2004 the government claimed to have reduced the civil service labor force through retirements and layoffs, but it appears that the large salary increases have lessened the impact of any reforms. The IMF has stated that civil service salaries as a component of gross domestic product should be reduced 1 to 2 percent, a level that can only be achieved with continued reductions in the size of the civil service. It is unclear whether the national wage strategy, which may succeed in streamlining the system and removing irregularities, will in fact be able to reduce employment costs.

Foreign Economic Relations: During the 1990–91 Gulf War, Yemen supported Iraq in its invasion of Kuwait, thereby alienating Saudi Arabia and Kuwait, which both had provided critical financial assistance to Yemen. In addition to withdrawing this aid, Saudi Arabia expelled almost 1 million Yemeni workers. The resultant fall in expatriate remittances had a disastrous impact on Yemen’s governmental budget. The civil war of 1994 further drained the economy, and in 1995 Yemen sought the aid of multilateral agencies. In 1996 the International Monetary Fund (IMF) granted Yemen a US$190 million stand-by credit facility, and the following year it approved two funding facilities that increased the country’s credit by approximately US$500 million. The funding was contingent on Yemen’s adoption of stringent economic reforms, a requirement that the country had limited success in fulfilling. As a result, the IMF suspended lending to Yemen from late 1999 until February 2001. The extension of the two funding facilities, particularly the poverty reduction and growth facility (PRGF), through October 2001 was again contingent on Yemen’s commitment to economic reform. Because of Yemen’s failure to comply sufficiently with the terms imposed by the IMF, since 2002 the IMF has withheld US$300 million in concessional financing. Discussions over the renewal of the PRGF are ongoing. In 2000 Kuwait and Saudi Arabia resumed financial aid to Yemen.

In October 2002, bilateral and multilateral lenders led by the World Bank agreed to give Yemen a four-year economic support package worth US$2.3 billion, 20 percent in grants and 80 percent in concessional loans. This funding is almost eight times the amount of financial support Yemen received under the IMF’s PRGF. However, in December 2005 the World Bank announced that because of the government’s continued inability to effect significant economic reforms and stem corruption, funding would be reduced by more than one-third, from US$420 million to US$240 million for the period July 2005–July 2008. In May 2006, the World Bank adopted a new Country Assistance Strategy (CAS) for Yemen for the period FY 2006 to FY 2009, providing a blueprint for fostering the country’s fiscal and human development improvement. The bank pledged to contribute approximately US$400 million in International Development Association (IDA) credits over the CAS time frame. At present, Yemen owes approximately US$264 million to Japan, one of its largest donors. In December 2005, the Japanese government pledged to write off US$17 million of the debt. That same month, Germany pledged to increase its annual aid to Yemen to US$83.6 million over the next two years; funding will go primarily to education and water improvement projects. In November 2006, the United Kingdom announced that aid to Yemen would increase 400 percent, to US$222 million through 2011.

Yemen is a member of the Arab Fund for Economic and Social Development, which since 1974 has contributed to the financing of economic and social development in Arab states and countries through loans and guarantees. In March 2004, the Arab League provided US$136 million to Yemen to finance infrastructure improvements. At a mid-November 2006 meeting in London, a group of bilateral and multilateral donors pledged US$4.7 billion over four years (2007–10) to fund economic development in Yemen. The goal of the meeting, which was jointly chaired by the World Bank and the government of Yemen, was to provide sufficient economic aid to Yemen to enable it to qualify for future Gulf Cooperation Council (GCC) membership. More than 55 percent of the aid, which is primarily in the form of grants, will come from the GCC. Yemen was granted observer status at the World Trade Organization (WTO) in 1999, and its application for full membership is currently under negotiation.

Imports: Imports totaled an estimated US$4.7 billion in 2005 and are projected to increase to US$5 billion in 2006 and to US$5.4 billion in 2007. Yemen is a net importer of all major categories of products except fuels. Principal imports are machinery and transport equipment, food and livestock, and processed materials. According to the United Nations, Yemen imports more than 75 percent of its main dietary staple—wheat. The principal source of Yemen’s imports in 2005 was the United Arab Emirates (13.4 percent of total imports); the bulk of these imports are actually re-exports from the United States and Kuwait. Yemen received 10.6 percent of its total imports from Saudi Arabia and 9 percent from China.

Exports: In 2005 Yemen’s exports totaled US$6.4 billion. Exports are expected to increase to reach a record US$8.6 billion in 2006 as a result of strong oil revenues. Petroleum is Yemen’s main export, accounting for 92 percent of total exports in 2004 and 87 percent in 2005. Yemen’s non-oil exports are primarily agricultural products, mainly fish and fish products, vegetables, and fruit. In 2005 Asia was the most important market for Yemen’s exports, primarily China (37.3 percent of total exports), Thailand, and Japan. Chile was also a primary export market (19.6 percent of total exports).

Trade Balance: Yemen’s import and export values have increased and decreased dramatically in the past 10 years owing to shifts in global oil prices. As a result, the country’s trade balance has fluctuated significantly from a deficit of almost US$800 million in 1998 to a surplus of US$1 billion in 2000. Rising oil prices resulted in a surplus of US$817 million in 2004 and a surplus of US$1.7 billion in 2005.

Balance of Payments: In recent years, Yemen has reported increasing non-merchandise deficits. These deficits have, however, been offset by record export earnings, which have resulted in large enough trade surpluses to keep the current account in surplus—US$175.7 million in 2003, US$524.6 million in 2004, and US$633.1 million (about 4 percent of gross domestic product) in 2005.

External Debt: In 1990 the newly unified Republic of Yemen inherited an unsustainable debt burden amounting to roughly 106 percent of gross domestic product. Debt rescheduling by the Paris Club creditor countries in the 1990s coupled with assistance from the World Bank’s International Development Agency resulted in a drop in Yemen’s debt stock to US$5.4 billion (an estimated 39 percent of gross domestic product) by year-end 2004. According to the Central Bank of Yemen, Yemen’s debt stock was US$5.2 billion (an estimated 33 percent of gross domestic product) by year-end 2005. According to the U.S. government, Yemen’s reserves of foreign exchange and gold were US$6.1 billion in 2005.

Foreign Investment: Yemen does not have a stock exchange, therefore limiting inward portfolio investment. Portfolio investment abroad is also very limited, with the result that portfolio flows are largely unrecorded by authorities. In the early 1990s, net direct investment was at its peak as foreign investors tapped Yemeni oil reserves, but since 1995 net direct investment flows have been negative because cost recovery for foreign oil companies has exceeded new direct investment. A five-year US$3 billion liquid natural gas (LNG) construction project involving a consortium of foreign companies is planned following government approval in August 2005. Such a project raises the prospect of increased foreign investment in the future as LNG facilities are built.

Currency and Exchange Rate: Yemen’s currency is the Yemeni riyal (YR), which was floated on the open market in July 1996. Periodic intervention by the Central Bank of Yemen has enabled the riyal to gradually depreciate approximately 4 percent per year since 1999. Its valued averaged YR191.5 per US$1 in 2005, and has averaged YR197.5 in 2006. In late November 2006, the exchange rate was about YR198 per US$1.

Fiscal Year: Yemen’s fiscal year coincides with the calendar year.


Overview: As a direct consequence of the country’s poverty, Yemen compares unfavorably with its Middle Eastern neighbors in terms of transportation infrastructure and communications network. Roads are generally poor, although several projects are planned to upgrade the system. There is no rail network, efforts to upgrade airport facilities have languished, and telephone and Internet usage and capabilities are limited. The Port of Aden has shown a promising recovery from a 2002 attack; container throughput increased significantly in 2004 and 2005. However, the expected imposition of higher insurance premiums for shippers in 2006 may result in reduced future throughput. The announcement in summer 2005 that the port’s main facility, Aden Container Terminal, would for the next 30 or more years be run by Dubai Ports International brings with it the prospect of future expansion.

Roads: Relative to Yemen’s size, the road transportation system is very limited. Yemen has 71,300 kilometers of roads, only 6,200 kilometers of which are paved. In the north, roads connecting Sanaa, Taizz, and Al Hudaydah are good, as are intercity bus services. In the south, roads are generally poor and in need of repair, except for the Aden–Taizz road. In November 2005, the World Bank approved a US$40 million project to upgrade approximately 200 kilometers of intermediate rural roads and approximately 75 kilometers of village access roads as part of a larger effort to strengthen Yemen’s capability for rural road planning and engineering. Plans are underway to build an estimated US$1.6 billion highway linking Aden in the south and Amran in the north. The road will include more than 10 tunnels and halve the travel time between the southern seacoast and the northern border with Saudi Arabia.

Railroads: Yemen has no rail network, but in 2007 the government, in coordination with the United Nations Economic and Social Commission for Western Asia, will fund a study to examine the feasibility of establishing a rail network. The study will focus on establishing a 2,000-kilometer coastal line, a 1,000-kilometer line linking the key energy centers in the interior, and a 600-kilometer line to parallel the proposed north-south highway.

Ports: Yemen’s main ports are Aden, Al Hudaydah, Al Mukalla, and Mocha; Aden is the primary port. In addition, Ras Isa serves as the loading point for oil exports, and a small amount of cargo passes through Nishtun.

Facilities at Aden consist of the Maalla Terminal and the Aden Container Terminal (ACT), which opened in March 1999. The port can handle roll-on-roll-off and container cargoes, as well as tankers. In November 2003, following the October 2002 bombing of the French supertanker Limburg off the Yemen coast and the resultant dramatic drop in throughput at the Aden port, the Port of Singapore Authority sold its majority stake in the ACT back to the Yemeni government. In June 2005, Dubai Ports International was selected to manage and operate the ACT (and possibly Maalla Terminal) under a 30-year or longer contract; the Yemeni government will remain a minority shareholder. The Port of Aden has recovered well from the 2002 bombing. In 2004 it had annual traffic of approximately 2,000 vessels and 318,901 twenty-foot-equivalent units of containers, mostly handled by the ACT. For 2005, the port handled 317,897 twenty-foot-equivalent units of containers, more than double the amount for 2003. For the first seven months of 2006, the port handled 207, 687 twenty-foot-equivalent units of containers. However, in May 2006 the London insurance market’s Joint War Committee placed Yemen on its list of “areas of perceived enhanced risk,” which is expected to add a war-risk insurance premium to ships operating in the country’s coastal waters. This added premium, coupled with the availability of more secure ports in neighboring countries, will likely result in reduced throughput in Yemen’s ports in the near future.

Inland Waterways: Yemen has no waterways of any significant length.

Civil Aviation and Airports: Yemen has 46 airports, 16 of which have paved runways. Of the 46 airports, five are international—Aden International, Sanaa International, Taizz, Rayyan, and Al Hudaydah. A major reconstruction and expansion of Aden International was completed in 2001, including a new runway that can handle large, long-haul aircraft. Plans to make that airport a regional cargo hub, with an “air cargo village,” by 2004 appear to have failed. Although construction began in January 2003, by year’s end the managing company had dissolved, and there has been no further progress on this project.

Yemenia is the national airline; it absorbed the former national carrier of South Yemen in 1996. It is expected that Yemenia, which is currently 49 percent owned by the Saudi Arabian government and 51 percent owned by the Yemen government, will eventually be privatized, but there has been resistance from the Saudis. In 2001 the airline carried 858,000 passengers. Because the airline’s existing fleet of 12 airplanes is rapidly becoming outdated, in 2002 three new aircraft were leased for eight years, and in early 2006 the airline announced plans to acquire six new aircraft, with options for an additional four, beginning in 2012.

Pipelines: According to the U.S. government, as of 2004 Yemen had a total of 1,262 kilometers of pipeline. This total includes pipeline designed for gas (88 kilometers) and oil (1,174 kilometers).

Telecommunications: TeleYemen is the exclusive provider of international telecommunications for Yemen—fixed-line, telex, and Internet services—and is one of the mobile-phone operators. In 2003 the government-owned Public Telecommunications Corporation assumed full control of TeleYemen, and a year later it awarded a five-year management contract to France Telecom.

According to the U.S. government, Yemen had only 220,000 Internet users in 2005. This low number is attributed to the high cost of computer equipment and connections in combination with the population’s low level of income, as well as to the restricted bandwidth available on Yemen’s outdated telephone network. In 2005 TeleYemen announced it would invest in the FALCON high-capacity loop cable system, which will improve Internet access, including broadband capability, and also expand international call accessibility.

The cost of running a landline or owning a mobile telephone is out of reach for most of Yemen’s poor population, resulting in very low telephone usage rates—3.9 fixed-line subscribers and 9.5 mobile subscribers per 100 persons in 2005. The U.S. government reported 798,100 landlines in use in 2004 and 2 million mobile subscribers in Yemen in 2005. The technology used for domestic lines includes microwave radio relay, cable, and Global System for Mobile Communications (GSM). In 2001 two private companies won 15-year licenses to provide mobile phone services. Although their programs to expand services resulted in a 147 percent increase in mobile phone subscriptions between 2003 and 2004, and almost doubled subscriptions between 2004 and 2005, threats to internal security coupled with poor consumer payment history remain obstacles to future growth. In August 2005, the government awarded a contract to a joint venture between China Mobile and a group of Yemeni investors to take a 55 percent stake in Yemen’s third mobile network; the government will retain a 25 percent share. In August 2006, the same conglomerate was awarded a contract for a fourth mobile network.

The state-run Republic of Yemen Television and Republic of Yemen Radio operate the country’s television and radio networks, respectively. According to the U.S. government, as of 1998 Yemen had six AM, one FM, and two shortwave radio broadcast stations and seven television broadcast stations, plus several low-power repeaters.

Index for Yemen:
Overview | Government


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