For nine months, I had the invaluable opportunity to investigate the Yemeni civil conflict and humanitarian crisis in greater detail with the U.S. Agency for International Development — particularly within the lens of foreign diplomatic involvement on part of Iran and Saudi Arabia. Below is a summarized excerpt of those findings that I wished to present.
For decades, the Red Sea has served vital U.S. and global commercial interests and thereby ranks as a top international security concern. Touted as an “economic artery,” the region facilitates over a tenth of global commerce while housing two indispensable, strategic waterways – the Suez Canal and the Bab al-Mandab. Collectively, these narrow channels serve as access points from the Indian Ocean to the Mediterranean – drastically shortening commercial shipping routes. Given its rapidly growing economic value, the Red Sea has been a hotbed of military involvement by the United States, members of the European Union, and the eight countries whose borders delineate the kilometers-wide inlet. And in times of geopolitical crisis – as has commonly been the case for the Yemen-bordered Bab al-Mandab – local civil conflict can pose disastrous challenges for global commercial security.
Since mid-October of last year, an insurgent, Yemeni Shi’ite military organization known as the Houthis has seized and conducted aerial attacks on cargo and naval vessels, with Department of Defense experts projecting at least 48 taking place in four months. The attacks are inextricably linked to Israel’s militant response in Gaza prompted by Hamas’ raid in an Israeli music festival on October 7th. Irrespective of the underlying motives, the Houthis’ attacks along the Bab al-Mandab strait directly resulted in a 30 percent decrease in container shipping as per the International Monetary Fund, which is thereby expected to hike shipping costs by five-fold and raise core goods inflation by nearly one percent internationally amid an already faltering global supply chain. To be clear, the economic impacts of the Houthi insurgency are not unique to the region. They do, however, speak greater volumes to the longstanding impacts of a bitter, ongoing civil war in Yemen that has precipitated civil disarray and a humanitarian crisis amongst its inhabitants – warranting a broader discussion of the domestic and international agents bitterly intertwined in civil conflict beginning in the 2010s.
To merely analyze the humanitarian crisis and the Houthis’ rise on the international stage in isolation of foreign diplomatic tensions would greatly oversimplify the obstacles that prevent political and macroeconomic development in Yemen. More specifically, Yemen’s civil insurrection is one many scholars have routinely identified within a series of proxy conflicts between Saudi Arabia and Iran – two political juggernauts in the Middle East with diametrically opposed religious values. This research deliverable is packaged with two fundamental objectives: to unravel the political factions involved in the Yemeni civil war and to assess strategic changes to abate its effects. To these ends, this begs the question: to what extent is the civil war in Yemen rooted in political tensions between Saudi Arabia and Iran, and how does this inform U.S. diplomacy efforts to spur economic development in the region?
Collectively, the Yemen civil war and the economic instability that stemmed from it has resulted in an overwhelming humanitarian crisis. The United Nations projects that of the 400,000 deaths between 2015-2022, 60 percent can be attributed to indirect causes such as food insecurity and the lack of accessible healthcare. 21.6 million additional Yemenis are in special need of protection services and humanitarian aid, and 4.5 million people are currently displaced from their homes. With disproportionate on already limited water resources expended on the cultivation of intoxicants such as qat rather than cereal-based grains, millions more are facing critical levels of dehydration that is expected to worsen. Only 65 percent of schools and 50 percent of healthcare facilities are still functioning after military engagements and airstrikes, while 90 percent of civilians have no access to publicly supplied electricity. Teachers, healthcare workers, and other valuable public sector employees have not received consistent salaries within the 9-year timeframe. Although not a primary focus of this deliverable, the humanitarian crisis and its consequences are nothing short of dire and tragic – an ongoing catastrophe that merely reinforces the economic woes Yemen is continuing to face. Without concerted efforts to reduce food insecurity, dehydration, viral epidemics, and safe learning environments, Yemen’s economic instability will remain rampant while holding back future generations from becoming valuable contributors to a stable workforce.
Given the dire nature of Yemen’s humanitarian crisis, the United States and USAID must strive to achieve realizable gains in Yemeni social stability and economic development as resources continue to dwindle without proper means of social and medical services. More specifically, this paper will now outline strategies that will attempt to achieve the following two objectives:
- Disentangle foreign proxy involvement in the Yemeni civil conflict and relieve the Houthi insurgency in the Red Sea
- Develop macroeconomic strategies that reduce the nation’s stress on its water and oil supply while leveraging human capital opportunities, laying the foundation for a post-oil service economy
By identifying Yemen as a prominent example of proxy warfare between Saudi Arabia and Iran, achieving the former objective will require alleviating tensions that have flared from political and religious factions at the domestic level. Unfortunately, achieving this objective does not necessarily imply a united Yemeni government as the end result. Ultimately, as the events of the previous thirty years have illustrated, maintaining nominal unity has come at the expense of disillusioned groups seeking retribution for the lack of legitimate political representation or pure animus towards their dissidents. Furthermore, the Houthis have now garnered a significant geographic stake through years of attrition and irregular warfare, governing in the northwestern provinces commonly associated with Zaydi Shi’ites. The Houthis’ identified political objective is to govern an internationally-recognized theocracy for Shi’ite Muslims. To relinquish this control form the Houthis forcefully has already proven to be a tall task – much less to seize this administrative authority through a position of weakened diplomatic strength. This is especially apparent given the Houthis’ current holdings along the Yemeni border along the Red Sea coupled with its control of the Marib province. When the focus is broadened to southern Yemen, we find that the remaining territories are divided amongst the Islamic State, the Saudi-led coalition, and another secessionist party seeking to re-establish a southern Yemeni state.
Attaining success in promoting economic development in either region will require a bottom-up approach that enables a stark transition away from oil revenues. In the first place, USAID and American diplomats would need to support and develop local capacity-building efforts – including teacher training courses, micro-finance enterprises, and exchange programs for government workers and academics to temporarily fill administrative, medical, and social needs for the Yemeni state. To these ends, the deliverable recommends financing these efforts via international organizations such as the International Monetary Fund and the World Bank to help pay for teacher and medical worker salaries that have been previously neglected by Yemeni authorities. In providing this assistance, American diplomats can use this strategy as leverage against Houthi militants by rendering these financial packages conditional on their retained cooperation. Any major deviations from desired action items, such as de-escalating militarist raids in the Red Sea, would result in economic sanctions that disadvantage them relative to their southern neighbors.
Once both states have garnered sufficient resources for effective governance, UN authorities can proceed through a “consultation and mediation” strategy to identify opportunity costs and payoffs for economic compromise. Rather than enable two central banks to wage economic sabotage on one another, external authorities can encourage each state to allow new banknotes, goods, and hard currency between rival borders. Though the Houthis would be renouncing their control over macroeconomic affairs in their northern state, a liberalized approach to trade can enhance their financial solvency issues while increasing economic activity in the capital Sana’a. This would collectively appreciate the Yemeni riyal against the U.S. dollar and render imports less expensive over time. Efforts to de-escalate economic conflict and enhance capacity-building efforts can be further enhanced by including private-sector actors in negotiation treaty settlements, as it is in the interest of the Yemeni government and its importers and banks to improve the flow of goods and funds. In May 2024, the United Nations Development Programme unveiled the Private Sector Engagement Strategy and the Mixed-Renewable Energy Investment Plan to increase private involvement in construction, streamline the financial sector, and expand access to renewable energy sources. This is an especially important consideration because Yemen has a historically underdeveloped financial services sector, so inhabitants rely primarily by the central banking system for local macroeconomic Similarly, USAID can embark in similar investment facilitation strategies that provide a stable political regime through which private companies can provide local inhabitants with access to reliable job opportunities, skill development programs, and market access support.
Ultimately, Yemen’s tumultuous political history speaks to a broader slate of geopolitical forces that aggravated pre-existing factions with varying ideological and religious dispositions. In this respect, Yemen is not unique in serving as a political battleground for Iranian or Saudi dominion: this deliverable has already examined two unique cases that exhibit differing historical contexts yet similar interventionist patterns in service of establishing a desired balance of power in the Middle East. To analyze Yemen’s civil conflict without those factors would be a great disservice in comprehensively understanding the Houthis’ rise to power and in forging meaningful diplomatic solutions to curb religious sectarianism and regional security threats that stem from it.
Altogether, in an executive summary fashion, the paper concludes the following points regarding the Yemen civil conflict:
- Saudi and Iranian intervention exploited decades-spanning tensions between Zaydi Shi’ites and Shafi’i Sunnis and Islamism with Western political philosophy by arming or developing alliances with like-minded political actors
- The Yemeni civil conflict began independently of direct external influence, but was exacerbated by military intervention on part of a Saudi-led coalition and Iran’s proxy engagement with the Houthis
- The conflict itself developed unique macroeconomic challenges by splintering the Yemeni economy into two disparate factions who sought to undermine the influence and power of their respective ideological opponent
- The Yemen civil conflict fits well within the cases of proxy warfare as examined in Iraq and Syria, which resulted in the nation descending further into commodity dependence on crude oil and petroleum
Existing conceptions of achieving domestic and economic security in the Red Sea region will fall measurably short of expectations without a measured strategy to mediate tensions with Houthi insurgents and Shafi’i Sunni inhabitants. To conceivably bring about social and economic stability, diplomatic efforts will need to include a bottom-up approach that develops a robust judiciary and financial services system that enforces claims to natural resources and ensures efficient use under larger-scale enterprises. By strengthening output in raw materials and promoting foreign investment in manufacturing and outsourced qat production, Yemeni civilians can retain agricultural self-sufficiency and feasibly pay off imports for finished goods without remaining increasingly vulnerable to volatile food and oil prices in the international market. Through additional capacity-building initiatives, USAID can sustainably increase Yemen’s governing abilities while addressing the country’s pressing environmental issues for years to come.
Multiple avenues exist for further analysis on the issue of the Yemen civil conflict. For starters, the humanitarian crisis was not a primary lens of analysis for this deliverable, and the topic itself warrants a broader discussion of its underlying causes and the need to increase enforcement of international humanitarian law. While the deliverable examined two cases of proxy warfare for notable ideological and economic incentives, the analysis would be greatly served by examining more cases, such as in Libya or in Lebanon, to affirm or modify current conclusions. Finally, it is worth noting that Yemen is an exceptional but not the only country – Middle Eastern or otherwise – afflicted by civil strife. The power dynamics exhibited by Saudi Arabia and Iran are not the only modern instances of proxy warfare, and the patterns exhibited from our analysis can be possibly self-evident on a different continent with a different environmental and political context. As the humanitarian crisis rages on in Yemen, bringing the nation’s civil conflict to a peaceful transition of power is the most crucial short-term goal, and it all begins and ends with the regimes in Riyadh and Tehran.