Yemen’s Political Crisis Deepens: A Dire Investment Landscape Amid Chaos

The resignation of Yemen’s Prime Minister Ahmed Awad Bin Mubarak in February 2024 marked a pivotal moment in the country’s ongoing political and economic collapse. With systemic corruption, fractured governance, and a humanitarian disaster unfolding, Yemen’s investment climate has become one of the most inhospitable in the world. This article examines the drivers of instability and their implications for potential investors.

Political Fragmentation: The Root of Instability

Bin Mubarak’s resignation underscored the deepening rifts within Yemen’s internationally recognized government, led by the Presidential Leadership Council (PLC). The PLC, formed in 2022 to unify anti-Houthi forces, has splintered into factions aligned with Saudi Arabia and the UAE. One bloc supports PLC head Rashad al-Alimi, while another backs UAE-backed Southern Transitional Council (STC) leader Aydarous al-Zubaidi. This division has paralyzed decision-making, with 18 PLC ministers previously demanding Bin Mubarak’s removal over his inability to implement reforms.

The PLC’s internal strife has also exposed staggering corruption. A leaked report revealed that PLC members collectively received over $2.98 million in monthly salaries since 2022—a stark contrast to Yemen’s 80% poverty rate. Public protests in Aden and elsewhere have erupted over collapsing services, including 20-hour daily power outages, further eroding trust in the government’s legitimacy.

Economic Collapse: A Currency Crisis and Humanitarian Catastrophe

Yemen’s economy has been in free fall for years, but Bin Mubarak’s resignation has exacerbated systemic failures. The Yemeni riyal has lost 90% of its value since 2014, plummeting to around 2,400 to the U.S. dollar by late 2024. This collapse, fueled by Houthi attacks on southern oil infrastructure and reduced Gulf financial support, has triggered hyperinflation. Basic goods are unaffordable for most Yemenis, with 17.1 million facing food insecurity.

The IMF highlights Yemen as a “fragility-affected economy,” reliant on dwindling international aid. Reduced official development assistance (ODA) has worsened fiscal instability, while central bank measures like banning hard currency trading have proven ineffective.

Regional Dynamics: Conflict and External Pressure

Yemen’s instability is further compounded by external interventions. The U.S. has intensified military action against the Houthis since early 2024, conducting nearly daily airstrikes since March 2025. These strikes, which have damaged critical infrastructure like the Ras Isa fuel port, risk prolonging the humanitarian crisis. Meanwhile, Saudi Arabia and the UAE continue to back rival factions, with Riyadh urging Bin Mubarak to remain in office until 2025 to avoid destabilizing the anti-Houthi coalition.

The Houthis, meanwhile, have doubled down on their agenda, detaining UN personnel and launching retaliatory attacks on Israeli targets. Their alignment with Iran-backed groups like Hezbollah deepens Yemen’s entanglement in regional proxy wars.

Investment Climate: A Toxic Mix of Risks

For investors, Yemen presents a toxic combination of political, economic, and security risks:
1. Legal and Regulatory Uncertainty: The PLC’s fragmentation and corruption make contractual agreements and property rights highly insecure. The Houthis’ de facto control over northern Yemen offers no reliable legal framework.
2. Infrastructure Vulnerability: Ongoing conflict threatens critical assets like ports and energy facilities. The Ras Isa strike in April 2025, which caused oil spills and civilian casualties, exemplifies the risks.
3. Humanitarian Spillover: With 80% of Yemenis needing aid, social unrest and labor shortages loom. The detention of humanitarian workers and collapsing public services (e.g., healthcare, utilities) create a volatile environment.
4. Sanctions and Compliance Risks: U.S. sanctions on the Houthis, including asset freezes, add legal hurdles for businesses operating in sanctioned areas.

Conclusion: No Viable Path to Recovery Without Peace

Yemen’s investment climate remains catastrophically poor, with no near-term resolution in sight. Key statistics underscore the dire outlook:
- The Yemeni riyal has lost 90% of its value since 2014, hitting 2,400 to the dollar.
- Over 80% of Yemenis live in poverty, with 17.1 million facing food insecurity.
- Public sector salaries, often paid irregularly, now cover only a fraction of basic needs.

The IMF warns that without a cohesive strategy to address corruption, currency collapse, and Houthi aggression, Yemen’s crisis will worsen. Investors should avoid the country until there is a credible ceasefire, PLC unity, and renewed international engagement to rebuild institutions. In the absence of these conditions, Yemen’s economy will remain a cautionary tale of how conflict and governance failure can erase investment opportunities entirely.