At unification, both the YAR and the PDRY were struggling, underdeveloped economies. In the north, disruptions of civil war (1962-70) and frequent periods of drought had dealt severe blows to a previously prosperous agricultural sector. Coffee production, formerly the north's main export and principal form of foreign exchange, declined as the cultivation of qat increased. Low domestic industrial output and a lack of raw materials made the YAR dependent on a wide variety of imports.
Remittances from Yemenis working abroad and foreign aid paid for perennial trade deficits. Substantial Yemeni communities exist in many countries of the world, including Yemen's immediate neighbors on the Arabian Peninsula, Indonesia, India, East Africa, the United Kingdom, and the United States. Beginning in the mid-1950s, the Soviet Union and China provided large-scale assistance to the YAR. This aid included funding of substantial construction projects, scholarships, and considerable military assistance.
In the south, pre-independence economic activity was overwhelmingly concentrated in the port city of Aden. The seaborne transit trade, which the port relied upon, collapsed with the closure of the Suez Canal and Britain's withdrawal from Aden in 1967. Only extensive Soviet aid, remittances from south Yemenis working abroad, and revenues from the Aden refinery (built in the 1950s) kept the PDRY's centrally planned Marxist economy afloat. With the dissolution of the Soviet Union and a cessation of Soviet aid, the south's economy basically collapsed.
Since unification, the government has worked to integrate two relatively disparate economic systems. However, severe shocks, including the return in 1990 of approximately 850,000 Yemenis from the Gulf states, a subsequent major reduction of aid flows, and internal political disputes culminating in the 1994 civil war hampered economic growth.
Since the conclusion of the war, the government has entered into agreement with the International Monetary Fund (IMF) to institute an extremely successful structural adjustment program. Phase one of the IMF program included major financial and monetary reforms, including floating the currency, reducing the budget deficit, and cutting subsidies. Phase two will address structural issues such as civil service reform. The World Bank also is present in Yemen, with 19 active projects in 2005, including projects in the areas of public sector governance, water, and education. Since 1998, the government of Yemen has sought to implement World Bank economic and fiscal recommendations. In subsequent years, Yemen has lowered its debt burden through Paris Club agreements and restructuring U.S. foreign debt. In 2004, government reserves reached $4.7 billion.
Current U.S. Government commercial activities are focused on advocating on behalf of U.S. companies, protecting existing American business interests in the country, and diversifying Yemen’s economy toward non-petroleum sectors of the economy.
Following a minor discovery in southern Yemen in 1982, an American company found an oil basin near Marib in 1984. A total of 170,000 barrels per day were produced there in 1995. A small oil refinery began operations near Marib in 1986. A Soviet discovery in the southern governorate of Shabwa proved only marginally successful even when taken over by a different group. A Western consortium began exporting oil from Masila in the Hadramaut in 1993, and production there reached 420,000 barrels per day in 1999. More than a dozen other companies have been unsuccessful in finding commercial quantities of oil. There are new finds in the Jannah (formerly known as the Joint Oil Exploration Area) and east Shabwah blocks.
In November 2005, Hunt Oil’s 20-year contract for the management of Block 18 fields ended. Despite agreement with the Government of Yemen on a five-year extension, the Republic of Yemen Government abrogated the agreement via a parliamentary vote that was not called for in the contract. The U.S.-based Hunt Oil company sued Yemen in a Paris-based International Chamber of Commerce commercial arbitration court in 2005. The court’s decision has been kept confidential, according to both sides’ wishes. Hunt Oil continues to operate in Yemen, although in a much smaller-sized oil exploration block.
Yemen's oil exports in 1995 earned about $1 billion. By 2005, exports had grown to approximately $3.1 billion and comprised roughly 70% of government revenue. Crude oil production has declined steadily in past years due to dwindling reserves, lack of maintenance on some equipment, and a lack of new investment in exploration activities.
Oil located near Marib contains associated natural gas. Yemen’s natural gas reserves are currently being exported in the form of liquefied natural gas (LNG), but plans are underway for Yemen’s gas to fuel several natural gas-fired power plants.
GDP (2007 est.) $22.5 billion.
Per capital GDP (2006 est.): $870.
Natural resources: Oil, natural gas, fish and seafood, rock salt, minor deposits of coal and copper.
Agriculture (est. 12.5% of GDP): Products--qat (a shrub containing a natural amphetamine), coffee, cotton, fruits, vegetables, cereals, livestock and poultry. Arable land (est.)--3%.
Industry (est. 42.8% of GDP): Types--petroleum refining, mining, wholesale and retail trade, transportation, manufacturing, and construction.
Services (est. 43.7% of GDP).
Trade: Exports (2007)--$7.0 billion: crude petroleum, liquefied natural gas, refined oil products, seafood, fruits, vegetables, hides, tobacco products. Major markets--China, Thailand, India, South Korea, United States, Switzerland. Imports (2006)--$5 billion: petroleum products, cereals, feed grains, foodstuffs, machinery, transportation equipment, iron, sugar, honey. Major suppliers--United Arab Emirates, China, Saudi Arabia, Switzerland, Kuwait.
Exchange rate (2009): Market rate 210 rials per U.S. $1. The Yemeni rial (YR) floats freely based on an average of foreign currencies. Since the floating of the YR, the market usually reflects the official rate of exchange.
Yemen is a republic with a bicameral legislature. Under the constitution, an elected president, an elected 301-seat House of Representatives, and an appointed 111-member Shura Council share power. The president is head of state, and the prime minister is head of government. The constitution provides that the president be elected by popular vote from at least two candidates endorsed by Parliament; the prime minister is appointed by the president. The presidential term of office is 7 years, and the parliamentary term of elected office is 8 years. Suffrage is universal over 18.
President Ali Abdullah Saleh was re-elected to a second term in 2006; the next presidential elections are scheduled for 2013. In the April 2003 parliamentary elections, the General People's Congress (GPC) maintained an absolute majority. International observers judged elections to be generally free and fair, and there was a marked decrease from previous years in election-related violence; however, there were some problems with underage voting, confiscation of ballot boxes, voter intimidation, and election-related violence. Parliamentary elections scheduled for April 2009 were postponed until 2011 by a parliamentary vote extending the members’ term in office to 8 years. In the September 2006 local council elections, the GPC won a majority of seats on local and provincial councils. International observers judged the elections to be generally open and competitive, with another marked decrease in election-related violence.
The constitution calls for an independent judiciary. The former northern and southern legal codes have been unified. The legal system includes separate commercial courts and a Supreme Court based in Sanaa.
Principal Government Officials
President--Ali Abdullah Saleh
Vice President--Abd Al-Rab Mansur Hadi
Prime Minister--Ali Muhammad Mujawwar
Deputy Prime Minister and Minister of Interior--Rashad al-Alimi
Deputy Prime Minister and Minister of Planning and International Cooperation--Abdulkarim Ismael Arhabi
Minister of Defense--Mohammed Nasser Ahmad
Minister of Finance--Numan Salih al-Suhaybi
Minister of Foreign and Expatriate Affairs--Abu Bakr al-Qirbi
Minister of Industry and Trade--Yahya al-Mutawakil
Minister of Justice--Ghazi al-Aghbari
Minister of Oil and Mineral Resources--Ameer Salem al-Aidarous
Ambassador to the United States--Abdulwahab Abdulla Al-Hajjri
Ambassador to the United Nations--Abdullah al-Said
The Republic of Yemen maintains an Embassy in the United States at 2319 Wyoming Ave. NW, Washington, DC 20008 (tel: 202-965-4760).
Type: Republic; unification (of former south and north Yemen): May 22, 1990.
Constitution: Adopted May 21, 1990 and ratified May 1991.
Branches: Executive--president, and prime minister with cabinet. Legislative--bicameral legislature with 111-seat Shura Council and 301-seat House of Representatives. Judicial--the constitution calls for an independent judiciary. The former northern and southern legal codes have been unified. The legal system includes separate commercial courts and a Supreme Court based in Sanaa.
Administrative subdivisions: 22 governorates subdivided into districts.
Main political parties: General People's Congress (GPC), Islah Party, Yemeni Socialist Party (YSP).
Suffrage: Universal over 18.
National holiday: May 22 (Unity Day).
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Unlike other people of the Arabian Peninsula who have historically been nomads or seminomads, Yemenis are almost entirely sedentary and live in small villages and towns scattered throughout the highlands and coastal regions.
Yemenis are divided into two principal Islamic religious groups: the Zaidi sect of the Shi'a, found in the north and northwest, and the Shafa'i school of Sunni Muslims, found in the south and southeast. Yemenis are mainly of Semitic origin, although African strains are present among inhabitants of the coastal region. Arabic is the official language, although English is increasingly understood in major cities. In the Mahra area (the extreme east), several non-Arabic languages are spoken. When the former states of north and south Yemen were established, most resident minority groups departed.
Nationality: Noun and adjective--Yemeni(s).
Population (July 2007 est.): 22,230,531.
Annual growth rate: 3%.
Ethnic group: Predominantly Arab.
Religions: Islam, small numbers of Jews, Christians, and Hindus.
Education: Attendance (2004 est.)--80% for boys at the primary level and 50% for girls. Attendance was 55% for boys at the secondary level and 22% for girls. Literacy (2004 est.)--50% overall, including 70% of males, 30% of females.
Health: Infant mortality rate--76/1,000 live births. Life expectancy--62 years.
Work force (by sector): Agriculture--53%; public services--17%; manufacturing--4%; construction--7%; percentage of total population--25%.