YEMEN: World Bank Policy, As Seen by the Deprived

By IPS Correspondents Reprint | | Print |

Nabil Sultan

SANA,A, Jul 21 2005 (IPS) - Riots broke out in Yemen after an overnight decision by the government to more than double oil and diesel prices, under pressure from the World Bank and the International Monetary Fund. The government could be caught between the financial institutions on the one hand and its own people on the other.

That overnight hike in fuel price was more than any poor person could have taken in this impoverished country.

The Yemeni government lifted subsidies on all oil products Tuesday night. That led to a 100 percent rise in the price of oil, a 200 percent increase in diesel price and a 50 percent increase in the price of gas.

The decision followed sustained pressure from the World Bank and the International Monetary Fund (IMF) on the Yemeni government to cut subsidies and introduce sales tax, with the aim of limiting government spending.

Not many in Yemen, located on the southwestern tip of the Arabian Peninsula, knew of the estimated 300 billion dollars a year that Western countries pay just to their farmers, and the billions of dollars in subsidies to businesses one way or another. The IMF has not prevailed on Western governments to lift subsidies, but was successful in twisting the arm of the Yemeni government.

The price hikes announced are set to hit the poor particularly hard. The cost of essential transportation and of commodities dependent on transport is expected to rise dramatically.

"Government should resign", demonstrators shouted on the streets of Sana’a. "Curse upon the government", they said. And "No to more oppression and poverty".

In Sana’a demonstrators gathered outside the presidential palace and then marched down the main streets, attacking government and private institutions. Several offices either did not open Wednesday or had to close early.

Demonstrators stoned police who tried to scatter them with tear-gas. They hurled stones at the offices of the ministers’ council and at the house of vice-president Abdu Rabu Mansour.

Offices of the ruling People’s General Congress party were ransacked and destroyed in several governorates. A branch of the Al-Rafidain Bank was burnt in Sana’a, and demonstrators then tried to burn the building of the Yemeni Central Bank. Black smoke was visible all over Sana’a Wednesday.

In Marib 120km north of Sana’a, 11 oil and gas tankers were stopped from entering the town. Owners of oil and gas stations declared strike all over Yemen.

The government had announced early this year that it needs to lift subsidies on oil products in order to support reforms and to cut the budget deficit. It said a price hike was a global requirement. It declared it will not effect any price increase, but then chose to do so overnight.

Hamid al-Ahmar, member of parliament from the Islamic party Islah said the decision to increase prices was "mentally paralysed" and "not rational."

Prime Minister Abdul-Qader Ba-Jamaal appeared on national television to say that people had been too impatient in protesting against steps they do not understand. "If people had waited for one or two weeks, they would have seen the positive side of the decision," he said.

"There were corrupt elements who encouraged people to go for such destructive demonstrations," he added.

The opposition parties condemned the destruction but blamed the government. "The government has ignored calls for more extensive study of the economic reforms strategy," they said in a joint statement. "It is closing its eyes to the fact that 11 million Yemenis live below the poverty line." Yemen has a population of 21.5 million, and the per capita gross domestic product (GDP) is 510 dollars. That of the United States is 40,100 dollars.

"The government promise that it would keep prices down was a big lie," economist Saif al- Assali told IPS. "It had said that a lifting of subsidies would be accompanied by a new wages deal, but that did not come."

Ali al-Sarari, member of the Yemeni Socialist Party said the government is misleading people. "Saying that the price increase is a global demand is illogical," he told IPS.. "Our conditions will improve if the government honestly fights corruption and properly exploits natural resources."

The unrest comes just two days after President Ali Abdullah Saleh announced he would not seek another term in the elections due next year. He has ruled for 27 years.