The Political Alliance in Yemen, with or Versus the Economic Reform (2nd in a Series) [Archives:1999/40/Law & Diplomacy]
M.A. in Economics
The Second Influential Group:
This includes the individuals and groups affected by these reforms, for they benefit from bribes, mediations, rent seeking, customs protecting, monopoly, smuggling, and taking law into their hands. The individuals of this category are very much influential and it is natural that they will continue behaving in the same way. They will seek to destroy, as well as prove this program a failure. Therefore, if the political forces are unified, strong, as well as stable, they will be able to provide the political feasibility for economic reforms and to:
1) take reform decisions and protect itself from pressure groups so that these pressure groups will not be able to hinder the implementation of these decisions.
2) protect the technocrat from the pressure groups.
3) carry out the compensation procedures for the benefit of the affected weak groups.
In this context, we wonder if the political coalition in Yemen is able to carry out all these tasks!
I will try to answer this by analyzing the nature of the economic and cultural levels and the performance of its individuals, its policies as well as decisions.
4- Composition: The Yemeni society is still a political one, and not yet an economic one. This means that the primitive life does still exist in our country. For example, we have a “Subsistence Economy”, very limited “social learning”, absence of political democracy, dominance of the primitive political parties as tribes and military ruling.
The conditions of this life reflect itself on the culture, behavior, performance of the individuals of the political coalition, especially proving that they belong to the 30s of this century.
The features of the political coalition performance:
a) Redistribute coalition which tends to form a “Predatory State”. The subsistence economy means the poverty of the society along with the individuals of the political coalition before they captive power. For whoever reaches a strong position in power, he looks at the country as a prey and as a source for gaining a tempting income as well as having a comfortable life. He considers his position a springboard for a rich financial haul as they have no qualifications. Therefore, their passions safeguarding their personal interests and their living in the lap of luxury and opulent comfort. They also tend to make a strong military as well as tribal base for insuring sticking to power as long as possible and at all costs. Therefore, these corrupt individuals do not work to bring about development. The economic reforms that are intended to correct resources may face a lot of political resistance and come to nothing.
b) The absence of the modern cultural economy: the primitivism of the society means the absence of social learning opportunities either by means of the education or by learning by doing. That is because the political coalition, like others in the society, possess a primitive culture that is not economic. Therefore, their economic policy is not aimed at privatization of resources in a productive way so as to provide encouragement as well as facilities to productive and hardworking businessmen. Most often their discriminatory policies lead to unpredictable economic crisis. They, furthermore, do not even consider the importance of the economic reforms and the importance of the local, as well as foreign economists to solve the crisis. They also tend to ignore the importance of participation, as well as support of the people to build the lawful, organizational framework necessary to carry out these reforms.
c) The absence of the political democracy for the primitive culture means that the society is dominated by chaos, inner political conflict, as well as incoherent bilateral relations. Therefore, the public participation becomes very low in the development process or reforms. The foreign assistance will also minimize dramatically. The local, as well as foreign expenses increase which will very much affect the success of the developing process and reforms.
a) Short Horizon: This horizon is specified. The government interference in the economic process has an impact on the market, as well as the society. Indeed, that role will be restricted to levy of taxes, nothing more.
The economic process passes through different circles, such as, investment, production and distribution.That means the distribution of the produced wealth among the factors of production and redistribution of income shoud be in a way that assures fair and active distribution of income, giving a suitable chance for each producing factor in reproducing wealth and sharing welfare.
In the investment circle, resources do exist in terms of producing factors such as, capital, work, lands and different contractual rights. The government has to intervene in this circle to make available an overall economic framework which allows using such resources in the next circle “production”. The government has no right in tampering claims of any portion in this circle. Then, in the production circle the government has to intervene so as to provide the main physical, as well as social structure, that is education and health. Thus, from the production there is an increase in producing wealth so as to distribute it in the third circle in which the government intervenes to supervise distribution and redistribution of wealth and income. We notice here that the government has a long sighted view that it totally relates itself to the economy in so far as its income is derived from economy and its interest lies in increasing taxes. Therefore, it will support economy in terms of creating high development levels which will be reflected in increasing taxes ratio. It will also seek participation in the economic decisions so as to serve the developing process. To gain the political legacy as well as political feasibility, it follows the system of democracy. Therefore, we find that the government is always in a strong contact with economy and society in terms of supporting its organization.
However, in our case we can imagine that the government intervene to have its portion from the first circle. This is why it is controlling lands, states, donations, mediations, participating in the private investment, monetary issuing, speculations that may block investment, incurring public debt and getting involved in the market as a creditor with a high interest competing in t e arms of the quality and preventing those investors from necessary resources for their investments. The government also allocates a very small portion of its budget revenues for investment expenses: about 4% for the years 93-96, and spending the rest for the regular heads. The government does not also provide the lawful, organizational, and secure, political stability, protecting contracts and necessary rights for private investment. As a result of this some of the resources of the first circle are spent in combating bribes, mediation, monopoly, extending procedures. This is actually an unproductive use. Thus, there is no production, no development, no enough taxes. The level of taxes for the years 92, 95, 96 is about 48% of the general revenues of the country and 50% of its regular expenses. Indeed, the government should depend at least on taxes to cover its regular expenses. If it does not depend on that, this means that it gets its resources through its interference in the first circle. Thus, it does not depend on economy to finance itself, nor does it depend on the society to elect all its organizations. This goes to prove that it is totally separate from economy as well as society. This also shows the shortsightedness of the political coalition that leads the government which is not at all in coherence with the long course of economic development.
Therefore, we notice that the political coalition that exists in Yemen is short lived, transitory and has political as well as military objectives. Such a coalition frequently ends up in war or political conflicts. As a telling example, we can talk about the political coalitions that have taken place in the South after independence. We find that these coalitions were soon set off. On the other hand, the political unsuitability in the North and the political crises took place along with the occurrence and setting up of some political coalitions during the revolution of 1962.
b) A weak Political Coalition: As regards the development process and economic reforms we find that the political coalitions are weak vulnerable to the strong pressure groups that exist within these formed coalitions. Therefore, the current political coalition seems to be divided, for it was formed, from the beginning, of two levels; the first level is the coalition summit which is limited and restricted to a specific number of people who have the objective of monopolizing potentials and decisions. However, it is doubtless that this summit finds itself at a fix for it needs support from those below them. So they allow forming a separate supporting coalition. This separate supporting coalition is formed from those below and will consist of organizations and individuals from the military, administration, including party, media, some other organizations and some well-known socialites. So to solve the problem of financing this coalition and keeping it a way from the process of decision making, its members are inevitably those who have no conscience and who accept illegal money. As a result they resort to practices such as bribes, chaos, mediation, smuggling, rent seeking, violating rules giving security a cold shoulder. Furthermore, they do not show an interest to participate in the process of decision making. In course of time this inferior and low coalition has become dominant and influential. Hence, this coalition and its members have formed what is called the pressure groups and frame its rules. It may become dangerous even to the coalition summit itself.
Amidst the political and economic crises the summit of the coalition will be exposed to the local as well as outside pressures so as to introduce the reforms. The summit finds itself accept such reforms, However, the lower level is far from such pressures and will work to subvert these reforms to preserve its status quo. However, the summit could not force such reforms on it for this lower level will use its support as a threat to do whatever they want. It may even rebel against power. Therefore, the summit of the coalition becomes very weak. It is most often resorted to compromised solutions. This will lead to loss of its credibility. On the other hand, it is difficult to think of the lower level coalition as unified. However, its individuals may be in competitive conditions. Therefore, the whole coalition does not exist and is weak, too. Its weakness may go on and the main evidence to that is the losing of the government credibility and force. The coalition may appear so weak at the face of difficulties and new missions. For the sake of example, we find that the ruling coalition in the South and in the North before the unification appeared to be very strong which was mainly because of the limited geographical area that it controlled. It is also so because of the foreign support as well as the absence of the political opposition. However, the political coalition appeared to be very weak which was bestowed to the great expansion of the country, political as well as economic crises, the increased number of the political opposition and because of pressures for reforms. For all these reasons the development process is hurdled and an increased public dissatisfaction is in evidence. Chances for new pressure groups by those influential people are also accessible.