The latest casualty of Yemen's civil war? The economy

The war is decimating the small but essential middle class, eroding the backbone of an economy that was already the region's poorest and most dysfunctional before the violence erupted 21 months ago

The cement factory in Amran where Abdullah al-Haimi worked was destroyed by a Saudi-led coalition air strike (Sudarsan Raghavan/Washington Post)

​Abdullah al-Haimi walked through the wasteland, pointing out the damage at a now-closed cement plant. A warehouse here, broken beams protruding. A quarry there, littered with shrapnel.

In total, he said, the complex had been bombed 53 times in the past year and a half – all by Saudi-led coalition war planes, aided by the United States.

One strike at the main entrance killed 15 people, including an ice cream vendor outside the gate.

But for al-Haimi, a manager at the plant in western central Yemen, the greatest destruction has occurred far beyond the perimeter of the state-owned facility. The lives of the 1,500 employees, and thousands of relatives who depended on them, have been shattered.

“Those who died didn't die alone,” he said, his voice choking as sunlight poured into a warehouse through the gaping holes left by the strikes. “We died with them.”

In Yemen, it's not just the impoverished who are suffering. The war is also decimating the small but essential middle class, eroding the backbone of an economy that was already the region's poorest and most dysfunctional before the violence erupted 21 months ago.

A cooking gas factory destroyed by a Saudi-led coalition air strike in Hajjah, in Yemen’s north-west (Sudarsan Raghavan/Washington Post)

The air strikes have targeted nearly every industry, erasing countless jobs and dreams. An air, sea and land blockade by neighbouring Saudi Arabia has made fuel and food more scarce, causing prices to skyrocket in a nation that imports 90 per cent of its food and medicine. A banking crisis has added to the turmoil, leaving government workers unpaid and harming businesses.

A military spokesman for the Saudi-led coalition said in an email that all potential targets are scrutinised to ensure they are “genuine”. Asked specifically about the Amran plant, Major General Ahmed Asiri replied that in many cases, the Houthi rebels the coalition is fighting are “using former civilian sites for weapons and ammunition storage, as command and control centres, and for other military purposes”.

Christopher Sherwood, a US military spokesman, said the United States does not “participate in targeting, target selection or target engagement in support of the Saudi-led coalition in Yemen”.

Yemen's economic plight mirrors that of other nations gripped by civil war and political uncertainty after the Arab Spring uprisings more than five years ago. A recent UN survey found that the upheavals have cost the region $614bn (£500m) in lost growth since 2011.

Yemen has been in decline since its longtime autocrat, President Ali Abdullah Saleh, was forced out of power nearly five years ago. But any hope for growth vanished when the conflict erupted in March 2015. Now, the Houthis and Saleh's supporters are fighting militias nominally loyal to President Abed Rabbo Mansour Hadi, who fled when the rebels seized the capital, Sanaa, last year. They now rule the north west, while President Hadi controls swaths of the south and east.

Saudi Arabia and a coalition of Persian Gulf nations entered the conflict to reinstate President Hadi, while the United States, worried about Yemen's al-Qaeda branch and an emerging Isis presence, is aiding the Saudis by selling them weapons, refuelling their warplanes and providing intelligence and other support.

At least 10,000 people have been killed, including many civilians, and more than 3 million are displaced, according to UN statistics.

Some died in assaults on infrastructure. More than 200 businesses have been damaged or destroyed by air strikes since the war began, including dozens of factories and warehouses, according to the Sanaa Chamber of Commerce and Industry.

“These are not military facilities,” said Abdul-Hakeem Al-Manj, a legal adviser for the chamber, whose headquarters was obliterated by an air strike in January.

In some cases, he said, factories have been destroyed during clashes but it was difficult to determine which side was responsible.

But the impact is clear. Yemen's economy shrank by 34.6 per cent last year, according to UN estimates, and is expected to contract an additional 11 per cent this year.

Anwar Jarrallah understands why. His factories are running at a quarter of their capabilities, he said, and some months are shut down altogether. With air strikes hitting power plants, electricity is scarce or nonexistent. Fuel-driven generators are essential but expensive to run.

The seaport in Hodeidah, where much of what north-western Yemen imports and humanitarian aid arrives, was also attacked, disabling giant cranes and other equipment.

The damage, coupled with the blockade, delays shipments of Mr Jarrallah's chicken feed and vaccines, by months sometimes. And now he has to hire a ship with its own crane and pay more in insurance.

Once his shipment arrives, it is often stuck for days at the port, incurring additional charges. Houthi officials also slap on fees. Then, Mr Jarrallah pays other “taxes” at Houthi checkpoints to ensure that his freight passes through, he said.

Meanwhile, the banking crisis has made business transactions nearly impossible. Western banks are unwilling to extend credit, and the Central Bank of Yemen stopped providing guarantees to importers, leaving them to self-finance shipments.

The situation worsened in September when President Hadi, to prevent the Houthis from accessing money, ordered the transfer of the central bank to the southern port city of Aden, where he governs in exile. Importers are now unable to readily acquire foreign currency that was already scarce, and 1.2 million public employees are no longer being paid.

“The air strikes, de facto blockade and collapse of the central bank have together precipitated the near-total collapse of Yemen's economy,” said Scott Paul, a senior humanitarian policy adviser for the aid agency Oxfam America. “These steps show that all of the main parties are willing to wage economic warfare and risk tremendous suffering by ordinary people in order to advance their positions.”

For Mr Jarrallah, acquiring letters of credit to pay for his imports has become harder and costlier. “A lot of merchants are reeling from these same problems,” he said at his office in Sanaa.

Across the country, the attacks have set off a chain reaction of misfortune.

In Amran, the cement factory's closure affected hundreds of truck drivers and distributors as well. The plant contributed funds to help provide sanitation services, support local schools and aid the disabled.

“It's not just us who are out of jobs,” said Haroun Al Sadi, another manager at the factory. “We even had a big water truck that provided free water for people. All this is gone now.”

Like other employees interviewed, he said the plant was never used as a military base or to store weapons. “It was targeted for political reasons,” Al Sadi said. “They want people to go hungry and then turn against the Houthis.”

Earlier this year, an air strike pummelled the only cooking-gas distributor supplying the north-western city of Hajjah and surrounding areas, more than doubling the black market prices.

“The attack increased the cost of living for 700,000 people,” said the owner's son, Yasser Yahya Selba, who still possessed the pieces of an American-made MK-82 bomb that hit one of the storage tanks.

At a street market in Sanaa known for its second hand sales, Khalil Al Ammari has been seeing a new kind of customer at his stall: the government worker.

In recent weeks, a stream of bureaucrats, soldiers, police officers and others who haven't been paid in three months have sold their possessions. Al Ammari said one government ministry worker even sold him his bed and said now he would sleep on the floor.

“The desperation, I think, is only going to grow,” Al Ammari said.

Samira Ali used to work in a government lab in the war-torn southern city of Taiz. Then she was displaced by an air strike and forced to move in with her sister in Sanaa. She has sold her jewellery and the shares she owned in a telecommunications company to help pay expenses.

“There's nothing left to sell,” lamented Ms Ali, who once earned $270 a month, about four times the average salary.

At a Houthi-organised protest against the central bank move, Hamoud Muhsein, an administrative aide in the mayor's office, explained his increasingly desperate situation. With five children to provide for, he had sold his car, some of his guns, even the gold his wife received at their wedding. Now, he's selling his refrigerator.

“Even if we did have electricity, we have nothing to put in the fridge,” he said.

At the Amman grocery store, prices of imported beans, rice, sugar and other staple goods have shot up 50 per cent. Owner Towfik Al-Raymi said most of his customers were employees from embassies, tourism agencies, oil firms and airline companies, but as their offices closed, fewer come now. Some haven't paid down their credit in months, and are begging him not to cut them off.

“If my customers don't pay I'll go bankrupt,” he said.

Al-Haimi began working at the cement factory in 1982. Now he, too, has sold his wife's wedding gold and other possessions. He can no longer afford tuition for his two daughters.

Al-Haimi walked past giant, rusting bulldozers, past an office that contained the remnants of an American munition that hit the plant. It was a CBU-105 cluster bomb made in July 2012 by Avco Corporation, now Textron, based in Rhode Island in the US.

“I was supposed to retire this coming year,” he said. “By then, we'll be living on the streets. If we had actually died, it would have been better for us.”

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