Business

Oil New Prices Reinforce Social Classes

National Yemen

NY Staff

The decision of the government to raise subsidies on oil derivatives sparked anger among the Yemeni people, who are suffering from poverty and unemployment. The reaction of the people was strongly against the decision and indicated that they would respond strongly through the ballot box in the upcoming presidential election and that President Hadi will be removed because of the popular anger against him.

International Reports confirm that 50% of the Yemeni population is under the poverty line and that the annual corruption in Yemen is estimated to be 5 billion dollars, at a time when Yemeni leaders of state have abandoned the people and support those who destroy them.

Humiliating Justifications:

No legal or ethical justifications have been provided by the Yemeni Government and presidency for the fateful decision that raised the price of gasoline and diesel by 60%. Their only justification is that the oil derivatives subsidies benefit smugglers in the Horn of Africa, so the decision came to abort those who are buying oil derivatives with the subsidized price and selling them abroad with the global price. Such justification is an insulting to the people and their feelings and their question is, who deserves punishment, the five smugglers or 25 million citizens?

More than a third of the state budget goes to security services and the military, but people have seen no security achieved or any army triumph. The state has the Interior and Defense Ministries, two intelligence services, military police, presidential intelligence, ground, sea and air forces, general prosecutors, and courts, but all these devices are unable to control some smugglers?

It is not the fault of people who suffer from the inability of the state. The Ministry of Transport announced that it has dozens of documents that can expose the smugglers and official accomplices with them, but the state didn’t practice its duty to protect the security of its citizens. If the government is unable to function it should stop the budget of these aging agencies and fund education, health and the livelihoods of people. The step of raising the subsidies on oil derivatives accompanied with the rise in prices of food and services is added to the Ministry of Transport’s raise in the transportation by 20%.

Social Classes:

Parties and political components condemned this decision despite their participation in the government, but they showed no intention for withdrawal from the government except for the Rashad Salafi party and al-Houthis movement who have no representation in government. The repudiation of the consequences of this decision resulted from a sense of fear in this pivotal moment in the history of Yemen.

Financial corruption, especially in the military, almost obscures the sun from Yemeni citizens. Yemen is on the brink of civil war, and the state’s survival is threatened by al-Qaeda in the south, al-Houthis in the north, and active internal forces. For example, the General People’s Congress (GPC) is divided between President Hadi and former President Saleh, and the Islah Party withdrew into the shadows after the painful blows it received by Houthis in Amran.

If the people’s anger isn’t enough to force the government to undo the decision by modifying the new price, the specter of social classes will return wrapped by the economy this time. In all human societies, they rely on the middle class in moving the wheel of the economy while the wealthy class focuses on luxury and searches for global brands, and the poor class waits for crumbs from tables. The government’s unstudied decision puts vertical pressure on the middle class and pushes it towards the abyss, which increases the gap between the wealthy and poor classes. It also has a considerable impact on agriculture, concentrated in the north of Yemen, that entirely depends on diesel for pumps of wells, plowing, harvesting and marketing. Yemen’s annually consumption of diesel is nearly twice as much as gasoline.

The poverty and employment will force people to join to al-Qaeda, illegal infiltrators to neighboring countries will expand, and the rise in crime rates associated with poverty and unemployment will increase in Yemen and in neighboring countries.

Accompanying Measures:

With or without the intent of the Yemeni government, it has refused to synchronize the decision with a package of administrative, legal, and financial procedures that will complete the process of reforms and get rid of corruption.

What must be emphasized is that the people have been ignored twice. First was in 2011, when the oil company fabricated a crisis in the era of the President Saleh when they said that the availability of gasoline was only diesel fuel, and then they sold regular gasoline at the price of diesel fuel and raised the price of 20 liters to 2,500 YR while it was 1,000 before. When the reconciliation government formed in late 2011, people had hope for the return of the price of gasoline to normal. At first, they promised then refused state treasury support and continued with the offending price without the consent of parliament.

On July 30 2014 matters became worse when the price was raised to 4000 riyals ($19 USD) for gasoline, and $20 for diesel, also without the consent of the parliament. Parliament, “the voice of the people,” was ignored, mainly because its legal period expired in April 2009, but it extended for itself two years and the Gulf Initiative extended it for an indefinite period.

The decision had to be accompanied by some measures including:

1-     Cancel cases of double jobs and phantom jobs, estimated at 300,000 jobs, more than half of them in the military and security institutions, which cost the state treasury more than 700 million dollars a month, as well as an application of the fingerprint system in the army and security.

2-     Find one government organization to handle the import, sale and distribution of petroleum products and collect its imports, because the current situation with three governmental organizations (the Ministry of Finance, the Oil Company, and Aden Refinery) are huge organizations for resource embezzlement and escaping responsibility.

3-     Reduce diplomatic representation abroad and close Yemeni embassies in states where there is no need for Yemen diplomacy, such as countries in Eastern Europe.

4-     Reduce the budget of the presidency to half, which takes billions of dollars annually without supervision or accountability.

5-     Cancel the tribal affairs budget, which reaches 65 million dollars from the state treasury annually, and its function to give salaries to tribal sheikhs without legal justification just because they are sheikhs.

6-     Reform tax collection, customs, and stop exemptions for the private sector that amounted to two billion dollars obtained by traders last year.

7-     Raise the wages of people who get their salaries from social security.

8-     Bring corrupt people to the courts for a fair and expeditious trail.

9-     Require the government and civil agencies to pay their debts. The Ministry of Electricity said the private sector is in debt nearly 300 million dollars, the Electricity Ministry owes the oil company 450 million dollars, the Defense Ministry owes the oil ministry 52 million dollars, Yemenis airlines owes oil companies 40 million dollars, and private sector companies owe oil companies more than half a billion dollars.

10-  Eradicate corruption in anti-corruption agencies.

After the Policy of Impoverishment:

Frequently, the government claimed that it was under pressure from the World Bank for the implementation of reform programs, the most important being the removal of subsidies on oil derivatives. Only two days after the removal of subsidies, Director of the Arab Region at the World Bank, Mirza Hassan, denies that the bank is trying to starve people in Sana’a and leaving the poor without protection from disasters resulting from economic decisions.

There are three main effects from raising the subsidies on oil derivatives. The most important thing is that it will destroy the middle class, which is driving the economy. Second, it will destroy agricultural activity centered in the north that more than 50% of the population depends on. Lastly, it erodes the values and principles of the February Revolution.