The Middle East Channel

Yemen and the GCC: Benefits of Labor Market Integration

From the coast of the Red Sea to the western edges of Oman, Saudi Arabia is constructing a 1,100-mile patchwork of sandbags, fences, and electronic detection systems along its border with Yemen. The kingdom is rightfully concerned about its southern neighbor, which presides over a deteriorating security situation and the world's second-largest stockpile of weapons -- a combustible combination. Thousands of drug smugglers and arms traffickers have slipped across the border into Saudi Arabia, which has witnessed a recent spike in terrorist attacks launched by Yemen-based militants.

By sealing its border with Yemen, Saudi Arabia pursues its immediate security interests but fails to address the root causes of instability in Yemen -- where nearly half the population lives below the poverty line. Rather than inhibiting the cross-border movement of Yemeni citizens and workers, Saudi Arabia should work to better integrate Yemen and its labor force into the region's economy. Indeed, Saudi Arabia and the Gulf Cooperation Council (GCC) states can play a crucial role in stabilizing Yemen, and the Arabian Peninsula more broadly, through increased labor market integration.

Saudi Arabia has historically held its doors open for Yemeni workers, who entered the kingdom without visas and provided a source of cheap labor for the oil-rich country. The kingdom hosted more than a million émigré Yemeni workers during the 1980s. However, when former Yemeni President Ali Abdullah Saleh failed to condemn Iraq's invasion of Kuwait in 1990, Saudi Arabia and the neighboring Gulf monarchies expelled their Yemeni workers. Nearly one million Yemenis returned to their homeland, but the government's inability to absorb the deported workers triggered a subsequent economic downturn and contributed to the 1994 civil war.

Once again, Yemen is faced with a new wave of expelled workers as Saudi Arabia deals with an employment crisis at home. Approximately 200,000 Yemeni workers have already been deported since March, and on November 4, planned government raids on businesses and shops brought eerie silence to the streets of Riyadh. As the crackdown continues, the flood of repatriated nationals could plunge Yemen into deeper economic crisis.

However, it is not too late to get Yemen back on the road to recovery. The GCC must help by welcoming Yemeni workers into its labor market. Although it may be an unpopular move due to security concerns, labor market integration in the Gulf will bring long-term prosperity and stability to the region. Europe's recent experience with economic integration demonstrates the positive impact of labor mobility on new member states' economies and political systems.

Fifteen years after the fall of the Berlin Wall, eight former communist states in Central and Eastern Europe -- the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia -- entered the European Union (EU). During that period, the prospects of EU integration had attracted considerable foreign investment and incentivized policymakers to carry out democratic and market-oriented reforms based on the Copenhagen Criteria. The criteria stipulated that candidate countries must build stable democratic institutions that guarantee the rule of law, human rights, protection of minorities, and the existence of competitive market economies. Over time, the economies of the post-Soviet states improved -- unemployment fell, living standards rose, and budget deficits shrank. Democratic institutions also began to emerge. Today, as Western Europe suffers from an ongoing financial downturn, Estonia, Slovakia, and Slovenia are helping to bail out their western neighbors.

Drawing lessons from the EU enlargement process, granting Yemeni workers access to the GCC labor market could help jumpstart economic recovery in Yemen and stabilize the broader region. First, the inflow of remittances could save Yemen from its looming economic collapse. According to the Sheba Center for Strategic Studies in Yemen, Yemeni expatriates sent home around $1 billion in remittances in 2010. Yemen's deputy finance minister, Jalal Omar Yaqoub, estimated that remittances could generate twice the combined benefits from foreign aid, free trade, and debt relief. Bypassing corrupt and bureaucratic channels, remittances sent home directly can support families and improve their financial welfare.

Second, the GCC can provide job opportunities for Yemeni workers in the private sector. In Yemen, around 35 percent of the population remains jobless, and the youth unemployment rate is close to 50 percent. Moreover, the country is dealing with a host of existential challenges, including food insecurity, water shortages, and extreme poverty. To lift Yemen out of this cycle of scarcity, the GCC must help by extending work visas and permits to Yemeni workers, who exhibit linguistic and cultural affinity with their GCC neighbors and are willing to work in low-wage jobs that are traditionally filled by non-nationals.

Some in the GCC have expressed concern about importing Yemeni labor at a time when GCC countries are contending with high unemployment rates among nationals. According to the International Monetary Fund (IMF), roughly 30 percent of Saudi young people were jobless in 2012, and fears of a disgruntled populace have pushed Riyadh to increase the quota for Saudi nationals to fill private sector jobs.

Although the kingdom is contending with its own employment crisis, absorbing additional laborers from Yemen will not harm its economy. On the contrary, Yemeni workers, who typically fill low-skill jobs that Saudi nationals do not desire, have historically provided an abundant source of cheap labor that boosted growth in the Saudi private sector. To achieve sustained growth, GCC markets need to generate jobs for their own job entrants. But they also need to fill job positions in sectors that are unpopular among GCC nationals, such as construction and agriculture.

Finally, the GCC can follow the EU model and use its labor market as leverage to push for necessary institutional reforms in Yemen. For instance, Saudi Arabia and other GCC members could encourage the Yemeni government to establish clear business regulations and laws that criminalize bribery. They could also push Yemeni policymakers to institute a government ID system to strengthen border security. Not only can the ID system alert security officials if traffickers exit or enter the country, it can also facilitate tax collection and allow GCC employers to conduct background checks on their potential hires. The institutional reforms that tackle both economic and security concerns will inevitably attract investments from countries in the Gulf, especially those that host a substantial Yemeni diaspora population.

Saudi Arabia and the GCC know all too well that a failed state in Yemen is a threat to regional security, which is why in 2011 the GCC helped Yemen achieve a political settlement and rescue it from the brink of a bloody civil war. Now, the GCC is hesitant to lend a hand when it comes to addressing Yemen's socioeconomic woes. By fencing the border and expelling émigré Yemenis, Saudi Arabia is alienating its impoverished neighbor and exacerbating the current crisis. Instead, Saudi Arabia and the GCC should bolster Yemen's economy by integrating its workers, as Gulf security is ultimately contingent on an economically stable Yemen.

Abdulwahab Alkebsi is the regional director for MENA and Africa at the Center for International Private Enterprise (CIPE).

FAYEZ NURELDINE/AFP/Getty Images

The Middle East Channel

West and Iran approach interim nuclear deal in Geneva

U.S. Secretary of State John Kerry and foreign ministers from Britain, France, and Germany are traveling to Geneva on Friday for talks aimed at achieving a diplomatic breakthrough with Iran regarding its nuclear program. Their impromptu visits have raised expectations that the P5+1 powers and Iran are close to brokering an interim, phased nuclear deal that would freeze Iran's nuclear program and remove Western-backed sanctions. On Friday morning, EU foreign policy chief Catherine Ashton convened a meeting with delegates from the P5+1 countries and Iran to discuss positions prior to drafting an agreement. The deal would likely take place in stages, where the first phase would freeze any advances in Iran's nuclear program and offer Iran limited sanctions relief in return. Iranian Foreign Minister Mohammad Javad Zarif expressed confidence that both sides could issue a joint statement Friday announcing an "end goal" to be reached "hopefully in less than a year" with confidence-building measures that would address immediate concerns. However, both Iran and the United States would face potential sources of opposition at home. Hardline elements within the Iranian regime may scorn an agreement with the West, while some members of the U.S. Congress have called for the expansion of sanctions against Iran, even during negotiations. Additionally, Israeli Prime Minister Benjamin Netanyahu has voiced grave concern regarding the proposed agreement: "This is a very bad deal and Israel utterly rejects it. Israel is not obliged by this agreement and Israel will do everything it needs to do to defend itself and defend the security of its people." But U.S. President Barack Obama pushed back against criticism Thursday, saying that the U.S. would offer "very modest relief" from sanctions, which could be reversed if Iran fails to comply with the terms of the agreement.

Syria

Syrian government forces launched a major military offensive near Aleppo on Friday, recapturing parts of a military stronghold -- "Base 80" -- seized by rebels in February. The fighting resulted in significant casualties on both sides and exposed some Aleppo neighborhoods to heavy bombardment, according to the British-based Syrian Observatory for Human Rights. Meanwhile, the Western-backed Syrian National Coalition is reportedly considering an invitation for informal talks with Syrian government representatives in Moscow. Though the details are unconfirmed, the meeting would likely discuss the delivery of humanitarian aid and establishment of humanitarian corridors in Syria.

Headlines

  • A series of attacks across Iraq, including a suicide bombing against an Iraqi military base north of Baghdad, killed at least 30 people Thursday.
  • Palestinian officials claim that Israel is responsible for the death of Palestinian leader Yasser Arafat.
  • Egyptian Foreign Minister Nabil Fahmy announced that Egypt will hold parliamentary elections between February and March, followed by a presidential election in early summer.
  • Jordan is considering pursuing the nonpermanent seat at the UN Security Council rejected by Saudi Arabia as Arab states privately discuss who might replace the Saudis.

Arguments and Analysis

'How to stop the fighting, sometimes' (The Economist)

"When Hussein el-Husseini moved into a modest flat with a sea view in Beirut in 1983, the surrounding streets were littered with the detritus of an eight-year-old civil war. When Mr Husseini became Speaker of the Lebanese parliament the following year, the war still had six years to run. By the time it ended it had claimed 150,000 lives.

Yet the solution, says Mr Husseini, was clear more or less from the beginning. The country's various religious groups, each with its own militias, had to share power. Lebanon could not be conquered by one side, nor divided among all. Its people are too mixed; Mr Husseini's prominent Shia Muslim family includes Christians and Sunnis, and that is par for the course. 'But the militias were against it,' he says.

Attempts by Mr Husseini and others, notably the tycoon Rafik Hariri, to reach the obvious but fugitive solution took him to the outside powers sponsoring the militias: America, France, Iran, Israel, Syria and Saudi Arabia. He was repeatedly rebuffed until, in 1989, finally despairing of the war, the outsiders agreed to stop paying their proxies. Mr Husseini quickly convened representatives from the various communities and militias in Taif, a resort in Saudi Arabia. After a lot of haggling, they signed an accord that led to peace a year later.

Ending civil wars is hard. Hatreds within countries often run far deeper than between them. The fighting rarely sticks to battlefields, as it can do between states. Civilians are rarely spared. And there are no borders to fall back behind. A war between two states can end much where it began without the adversaries feeling in mortal danger. With nowhere safe to go home to, both sides in a civil war often feel they must carry on fighting if they are to escape slaughter. As those fighting in Syria know, defeat often looks like death, rather than retreat."

'Yasser Arafat: from beyond the grave' (The Guardian)

"The Swiss forensic report, which found that results taken from Yasser Arafat's body 'moderately support' the proposition that he was poisoned with polonium-210, will surprise few. Speculation about his sudden illness was rife before the Palestinian leader died in a Paris hospital in 2004. Traces of the same poison have already been found on his underwear and a toothbrush handed over by his widow. The evidence is not conclusive, and Mr Arafat did not lose his hair or suffer from bone marrow symptoms, both of which are normally triggered by acute radiation syndrome. Neither do we know the results of French or Russian tests.

All of this happened nine years ago and, as the Palestinian Authority and Israel are already engaged in talks, there is an argument for saying that both sides should look forwards rather than backwards. If polonium poisoning is definitively identified as the cause of his death, it is unlikely that anyone will be able to prove beyond reasonable doubt where the poison came from or who administered it. The finger of suspicion points strongly at the military forces that were holding Mr Arafat prisoner in his own compound and controlling everything that went in and out -- including food and water. Last year, senior aides to Ariel Sharon, the prime minister at the time, insisted Israel had nothing to do with it. But for Mr Arafat to have been personally targeted, the poison itself would have had to have been administered from someone inside the besieged compound. If the truth of what happened to Mr Arafat is destined to stay entombed in the murk, why not concentrate on the here and now?"

-- Joshua Haber & Mary Casey

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