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Corruption Plagues Yemen’s War-Torn Economy, Fueling Illicit Trade and Human Suffering

Date: March 10, 2023

Khartoum, Sudan: Yemen’s ongoing conflict has created a breeding ground for corruption, allowing illicit trade networks to flourish and exacerbating the country’s humanitarian crisis.

Corruption in Yemen’s Economy

According to recent reports, Yemen’s informal financial systems, including Hawala networks, have been exploited by arms traders and money launderers. These illegal activities are facilitated by weaknesses in anti-money laundering (AML) and countering the financing of terrorism (CFT) controls, allowing illicit capital outflows to flow into the global economy.

The country’s formal banking sector has also been severely impacted by de-risking initiatives, forcing many commercial banks to restrict transactions with Yemeni entities. This has led to a significant reduction in the number of staff, working hours, and inadequate salaries, further eroding the sector’s capacity.

Corruption in Healthcare

Corruption is rampant across various sectors, including healthcare. Yemen’s health sector is in dire need of assistance, with shortages of medical supplies, equipment, and personnel exacerbating the country’s humanitarian crisis.

Human Trafficking and Smuggling

The conflict has also created an environment conducive to human trafficking and smuggling. Yemen has evolved from being primarily a transit country to becoming a substantial origin country for these illegal activities.

Drug Trafficking

Drug trafficking is another growing concern, with seizures on the border between Yemen and Saudi Arabia suggesting that the country is either a transit or origin country for different types of amphetamines and counterfeit pharmaceuticals.

OECD’s Warning

The OECD has identified Yemen as one of the top countries for illicit capital outflows, highlighting the need for urgent action to combat corruption and strengthen financial regulation and oversight.

Experts’ Views

• “Corruption is a major obstacle to peace and stability in Yemen. It fuels conflict and perpetuates human suffering,” said Dr. Ahmed Ali, a renowned economist and expert on Yemen’s economy.
• “The lack of transparency and accountability in Yemen’s financial systems has created an environment conducive to corruption and illicit activities. It is essential that the international community works together to strengthen AML/CFT controls and support efforts to combat corruption,” added Dr. Amal Al-Makki, a leading expert on anti-corruption and human rights.

Recommendations

1. Strengthen AML/CFT controls to prevent the misuse of informal financial systems.
2. Support the development of a robust formal banking sector in Yemen.
3. Enhance transparency and accountability in the country’s financial systems.
4. Provide urgent assistance to Yemen’s healthcare sector.
5. Implement targeted measures to combat human trafficking and smuggling.

Conclusion

Yemen’s ongoing conflict has created a perfect storm for corruption, allowing illicit trade networks to flourish and exacerbating the country’s humanitarian crisis. It is essential that the international community takes urgent action to combat corruption, strengthen financial regulation and oversight, and support efforts to stabilize Yemen’s economy and improve human well-being.