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Yemen and Stability in the Persian Gulf: Confronting the Threat from Within

Authored by Dr. Stephen C. Pelletiere. | May 1996

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This study looks at Yemen, a small state which over the course of centuries has played a minor--but nonetheless important--part in the history of the Middle East. Yemen's importance derived from its strategic location. At various times great powers wishing to control the Red Sea/Indian Ocean area tried to take over Yemen. (See Figure 1.)

Now that the Soviet Union is no more and the United States alone is a superpower, Yemen's strategic value seemingly is at an end; U.S. policymakers apparently believe that, with Moscow out of the picture, the importance of Yemen has declined.

At the same time, however, tensions between Yemen and its neighbors have recently disturbed relations in the crucial Persian Gulf region. This study argues that, unless these tensions are resolved, the whole Persian Gulf system could be destablized, and thus U.S. policymakers must rethink relations with Sana'a. The study tracks how the current disputes over Yemen developed, and then describes how they are likely to affect Gulf stability, which America has pledged to uphold.


Under the New World Order, American interest in the Middle East has undergone fundamental change. Whereas in the past the area was of great strategic importance to Washington, now the strategic aspect is no longer of such concern. With the Soviet Union gone, the United States does not need to buttress its military might in obscure corners of southwest Asia. Economics is what counts today, and only those countries that are strong trading partners of the United States remain of interest.

In the Middle East only a handful of countries are commercially important to the United States;1 these are the so-called Gulf Cooperation Council (GCC) states.2 The United States has undertaken extraordinary measures to show its support of these small, but extremely influential, entities.

At the same time, other countries in the region, once the recipients of Washington's special regard, now are out of favor. One such state--which once was a key ally of the West--is Yemen. Situated on the Bab al Mandab (see Figure 1), Yemen formerly was the object of an intense struggle between the Soviet Union and the United States. Both tried to lure the Yemenis into an alliance, plying them with offers of military and economic assistance. This enabled Sana'a to maintain itself despite the fact that Yemen is among the poorest countries in the world.3

As soon as the Cold War ended, the United States found that it could dispense with having to worry lest Yemen fall into Soviet hands. In 1991, Washington cut Agency for International Development (AID) funds to Sana'a from $50 millon to just under $3 million.4

This was a blow to the Yemenis. Suddenly Sana'a was forced to depend on its own meager resources. To be sure, Yemen has oil, but this has only recently been discovered, and the Yemenis have scant infrastructure with which to develop their finds (a matter to be discussed below).

Not long after the cut was made, several disturbing events occurred--first, a major civil war blew up in Yemen, which the government barely was able to quell; next, Saudi Arabia tried to take over territory claimed by its neighbor; and, finally, Eritrea, at the end of last year, seized an island (Hanish al Kabir) garrisoned with Yemeni troops (see Figure 1).

Given the seriousness of these incidents, Washington's apparent continued indifference toward Yemen was hard to fathom.5

But then, just as this study was being readied for the printer, Washington did take action. It moved indirectly (through the International Monetary Fund [ IMF] ), but the effect was to bolster the regime in Sana'a, and this could only be welcomed.

Nonetheless, the study goes on to argue that Washington's moves may not be enough. More needs to be done, if this problem is not to fester, and ultimately grow into something large and dangerous.

U.S. policymakers seem to believe that threats to Gulf security come only from without, specifically from Iraq and Iran. In fact, significant dangers are developing from within the Gulf, and one of the most dangerous involves local discontents over Yemen.

Stability in the region requires adequate responses to the Saudi-Yemeni, Eritrean-Yemeni discords, and a changed approach to dealing with area security problems in general.

In the New World Order, policymakers must think systemically. If the United States is to maintain stability in the Gulf, it must be concerned with all of the states in the area; Washington cannot restrict its concern to the narrow focus of just a few. A seemingly inconsequential entity like Yemen can bring the whole Gulf system crashing down if its problems are not attended to.

The study opens with a look at the early history of Yemen, which forms the basis of the Yemenis' fierce national pride, and also what makes them so dangerous to offend. It then proceeds to detail the long rivalry between Yemen and Saudi Arabia, in which the Yemenis consistently have given as good as they got.

Next, the study deals with the period of unification, when north and south Yemen--formerly two separate countries--allied themselves. For a time after that, the future of Yemen seemed full of promise, but then, with the outbreak of the Second Gulf War,6 the bright hopes perished. Yemen sided with Iraq in that struggle, a step which cost it dearly, as the study will show.

The study ends with a call for a critique of U.S. policy which I maintain is leading towards a dangerous situation, one that could quite easily get out of hand. Thus, there is a need for a review by U.S. policymakers of the policy of the United States, not only towards Yemen, but for the entire Gulf.


1. For example, Marwan Bishara, writing in "Don't Throw Good Money After Bad Politics in the Middle East," The International Herald-Tribune, October 28-29, 1995, says, . . . in 1993, all the Arab countries combined, with the exception of Saudi Arabia and embargoed Iraq and Libya, garnered only $337 million in funds from international capital markets; that is roughly 0.4 percent of the total $80 billion raised by all developing countries." Also Thomas L. Friedman, "Egypt Runs for the Train," The New York Times, October 18, 1995, says, "Today the Arab Middle East attracts 3 percent of global foreign investment, while East Asia attracts 58 percent. Egypt exported and imported more goods and services 20 years ago than it does today. . . ." Friedman's article, "Almost Egypt," October 25, 1995, New York Times, makes a similar point. In addition, see "In the Middle East The Newest Rivalry Is Over Cash, Not Arms," The Wall Street Journal, December 18, 1995; "Peres warns on peace dividend," The Financial Times, October 25, 1995; and for the statistics on which many of these articles are based, see Claiming the Future: Choosing Prosperity in the Middle East, Washington, DC: The World Bank, 1995.

For articles on the cutoff of direct U.S. aid to the Middle East, see "GOP Foreign Aid Cuts Called Security Threat," The Washington Post, September 13, 1995; "Conferees Agree on Foreign-Aid Bill That Reduces Development Assistance," The Wall Street Journal, October 25, 1995; "New steps on debt relief," The Financial Times, September 14, 1995; "Debt and Africa's poor, The World Bank plans $11 bn debtor fund," The Financial Times, September 14, 1995; "Cutbacks from U.S. worry World Bank," The Rochester Democrat and Chronicle, September 25, 1995; "A Plea to Help Capital Flow to Third World," The New York Times, April 28, 1995; "Levels of aid for poor nations fall to 20-year low," The Financial Times, June 15, 1995; "Unicef criticizes economic reform's high human cost," The Financial Times, January 27, 1994; and "As Congress Sharpens Knives to Cut Foreign Aid, Critics Warn of Damage to U.S. Policy-Making," The Washington Post, May 18, 1995.

2. The GCC, founded in 1981, is made up of Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qater, Bahrain and Oman.

3. At the time of unification (1990), Yemeni unemployment was about 25 percent; it has subsequently risen to 50 percent. Inflation escalated from 55 percent in 1993, to 145 percent in 1994, and was anticipated to be 175 percent for 1995. Runaway inflation is fueled by the accelerating devaluation of Yemeni riyal, which reached 140 to the U.S. dollar at the end of March 1995; steadily rising budget deficits, which have gone from 18 percent of GDP in 1992 to 23 percent in 1994, and an anticipated 25 percent in 1995; and mounting foreign debt, which reached an all-time high of $7 billion in 1995. See the Country Profiles, under Yemen, for the years 1990 through 1994, The Economist Intelligence Unit, London; also Claiming the Future: Choosing Prosperity in the Middle East and North Africa.

4. There are indications that Yemen's aid will be completely cut in subsequent budget negotiations.

5. Yemen is a next-door neighbor to Saudi Arabia, which has the largest reserves of oil in the world. As the study will bring out, severe dislocations experienced in Yemen have their effect on the Saudis, and this, ultimately, could disturb the economy of the West. The stability of the free market system is therefore keyed to this part of the world.

6. Throughout the study, I will refer to Iraq's invasion of Kuwait as the Second Gulf War.