There are many reasons for Yemen’s multiple economic and political problems, of which the clearly dominant one is its epic level of corruption. Corruption worldwide is monitored and measured in the annual Transparency International Corruption Perception Index. The Index measures corruption on a 1 (most corrupt) to 100 (not corrupt) scale. The nations with the lowest scores are currently Yemen (score of 17). Syria (13), South Sudan (13) and Somalia (12). The least corrupt nation is currently Denmark, with a CPI of 90, followed by Finland and New Zealand, each with 87. Nations with the most corruption tend to be poor and chaotic. The opposite applies to nations with low levels of corruption. Yemen has been identified as a chronic and long-term victim of corruption.
One side effect of the chaos and corruption is the absence of a public health system. That means children do not receive vaccines for common, and sometimes fatal, childhood diseases like measles. This disease had been eliminated in nations with a nation-wide health system that makes it possible to vaccinate enough (often all) children to eliminate certain diseases, like measles. Worldwide there are many nations where measles persists because too many children are not vaccinated. Measles is sometimes fatal for the unvaccinated and so far, this year 60 Yemeni children a month have died from measles. Even more children die each from a cholera epidemic that started in 2016 and continues.
Most of the Islamic terrorists in Yemen belong to AQAP (Al Qaeda in the Arabian Peninsula) or the much smaller and more violent ISIL (Islamic State in Iraq and the Levant). Both Islamic terror groups operate in the south and east. AQAP sometimes cooperates with southern separatists. AQAP and most southerners are Sunni Moslems while the rebels are Shia. Most southerners just want peace and some prosperity. There are enough devoted separatists in the south to provide sanctuaries and support for AQAP.
Yemen has Saudi Arabia to thank for the decline in weapons smuggling over the last year. The Saudis were subject to years of Shia rebel attacks on Saudi targets using cruise and ballistic missiles smuggled in by Iran. This was expensive for Iran and getting more difficult and expensive because of increased anti-smuggling efforts,
A major reason for rebels agreeing to a ceasefire was a decline in Iranian support due to lack of funds plus unrest at home. The Iranian weapons, cash, advisors and smuggling network supercharged the Shia rebels, enabling them to keep fighting the more numerous and better armed force arrayed against them. Iran has been openly supporting the Shia rebels since 2014 and later admitted that less visible support had been supplied since 2011.
Information based on interceptions by American and other warships in the naval blockade of rebel-controlled coastlines indicates that Iranian smuggling of weapons to the rebels continues but at a lower intensity and consists mainly of infantry weapons rather than cruise and ballistic missiles used to attack Saudi Arabia. The Saudis are negotiating directly with the Iranians about the fighting in Yemen and how to reduce it. This is part of an effort, brokered by the Chinese, to improve relations between the Saudis and Iran and reduce the tensions in the Persian Gulf and Yemen.
All this smuggling cost Iran a lot of money, both for the smuggled cargos and personnel including shipyard technicians to modify the boats to carry smuggled cargo. The crews of these boats are also well paid for the risks of getting caught and jailed. Iran has been short of cash since economic sanctions were revived in 2020 and increased in 2022 because of Iran support for Russian forces in Ukraine. There were also higher costs for preparing the boats and bonuses for the crews limiting the amount of smuggled cargo that reaches the Yemen rebels. Those expenses were one of the reasons for the nationwide anti-government protests which began in September 2022 and continue. The IRGC (Islamic Republic Guard Corps), which guards the religious dictatorship that has ruled Iran since the 1980s, also handles Iran’s many foreign wars including Yemen, Syria, Lebanon, Gaza and now Ukraine. Iran controls the leadership of the Yemen rebels, in large part because Iran supplies weapons. With that weapons pipeline disrupted during the last three months, the rebels responded by observing a ceasefire with their many opponents.
IRGC leaders were reluctant to give up gains made in Yemen and are unsure when or if they can revive support for the Yemeni Shia because of the growing economic sanctions on Iran as well as the demands of supporting Russia in Ukraine. Because of the sanctions imposed in 2017, the Quds force saw its budget cut by half ever since. This meant major reductions in Quds activities in Iraq, Syria and Lebanon.
Yemen was always the least expensive Quds operation and did not suffer noticeable aid cuts after 2017. Yemen was the only IRGC operation that was able to attack arch-enemy Saudi Arabia directly and that counted for something. The Yemen operation was allowed to continue. This was only possible if the smuggled weapons from Iran kept getting through. The Iranian weapons smuggling has now been greatly reduced. This sharply limits Iran’s ability to directly attack Saudi Arabia by arming Shia rebels in Yemen. The Shia rebels in Yemen received over a thousand ballistic missiles and UAVs between 2016 and 2021. Most of the ones fired were aimed at southwestern Saudi Arabia. Less than one percent of those UAVs and missiles hit anything of consequence in Saudi Arabia. Since then a few more have been fired at Israel and been intercepted by Israel and the US Navy.
Iran sought to carry out a similar campaign against Israel using Iran-backed militias in Syria. That hasn’t worked so far because Israeli intelligence capabilities and airstrikes have been much more effective in Syria than Saudi efforts in Yemen, despite the facts that Israel and Saudi Arabia have similar aircraft, smart bombs and air defense systems.
Iranian smuggling efforts have been less effective over the last few years because the international naval blockade has been detecting and intercepting more of the Iranian smuggling efforts. The Saudis had already put a stop to cross country smuggling via Oman. The Iranians have not tried to revive it, in part because Oman has backed the halt to Iranian smuggling.
It wasn’t just weapons smuggling the Saudis helped stop; there is also khat produced in Yemen and smuggled into Saudi Arabia. Khat production has been a major problem for Yemen as well as the Saudis. Much of the Yemeni agricultural crisis is caused by the fact that Yemen's economic situation has been rapidly deteriorating since the late 20th century. This is largely because the government has done nothing to address the problems of overpopulation, water shortages and khat. The last item is a narcotic plant that is chewed fresh, requires a lot of water to grow and is worth a lot of money in Saudi Arabia where it is illegal and has to be smuggled in. While Yemen contains most of the only arable land in the Arabian Peninsula, only one percent of Yemen is suitable for agriculture. Rather than produce food, most Yemeni agricultural production is of khat and nearly all of that is smuggled into Saudi Arabia. In the last year Saudi Arabia has increased its efforts to halt khat smuggling and that has had some success. During the first half of 2023, 26 tons of khat and a ton of the more potent, as a narcotic, hashish was seized and destroyed before it could get to Saudi Arabia. Hashish is a concentrated form of cannabis, produced by removing the sticky resin, which is the most narcotic portion of the cannabis plant. Put simply, khat is for relaxation while hashish is for intoxication, it will get you high and largely unable to function. Saudi Arabia bans both khat and hashish as harmful to the welfare of the population. Most khat and hashish is consumed by young (adolescent and early 20s) Saudi males and expatriate workers. Alcoholic beverages are specifically banned by Islamic scripture while khat and hashish are not. Alcoholic beverages are bulkier and leave a scent of alcohol in your breath while khat and hashish do not. Khat and hashish do have harmful side effects as they reduce inhibitions and the ability to safely operate vehicles or machinery of any kind. While the Saudi border guards are seizing more khat and hashish from Yemen, some always get through and most of the customers in Saudi Arabia can afford to pay more when supplies are short.