Other unification : economic prospects in a United Yemen

The North represents nearly 80% of the total estimated population of 10 million, the South nearly 66% of the estimated total land area of 528,000 sq km. The North brought to unification greater agricultural and industrial potential (much of it, paradoxically, in private sector hands), as well as a fairly well developed transportation network and substantial oil revenues; the South brought a more educated work force and relatively unexplored oil reserves. Despite the country"s small and basically service- oriented economy and its poor ratings in terms of leading social indicators such as life expectancy and child mortality, the economic prospects of a united Yemen initially seemed fairly bright. The Iraqi invasion of Kuwait darkened this picture considerably. First, long-term donor relationships were immediately threatened. Aid from Kuwait and Iraq were cut off, and relations with other donors were strained by Yemen"s support of Iraq, a position heightened by Yemen"s highly visible tenure on the UN Security Council. Second, remittance income from Kuwait, Iraq, and Saudi Arabia is threatened and will almost certainly decline; half a million migrant workers have already returned from Saudi Arabia. Third, UN sanctions cut off Yemen"s trade with Iraq and Kuwait. Fourth, the crisis has severely diminished Yemen"s attractiveness as an investment opportunity. Now more than ever, Yemen"s economic future hinges on the successful development of its oil and gas reserves. The one positive effect of the Gulf crisis for the Yemen economy is the rise in oil prices -- provided these are sustained.