Demand, sanctions, and crisis in Yemen

March 29, 2020 Mariam Aref

A look at GDP, the law of supply and demand, and the ongoing humanitarian crisis

Government sanctions have played an important role in the development of political tensions throughout these past two centuries. Sanctions could be placed on a country for any number of reasons such as international disagreement with common practices within borders, the development of terrorist organizations, or the existence of negative-influence forces in a civil war. Civil war, naturally, has a difficult result on the inhabitants of the country that it is a part of. In some cases, the sanctions imposed on a country because of civil war lead to severe harm to the people of that country. A case of this can be seen in Yemen, a country that holds what the United Nations classifies as a ‘humanitarian crisis’. Yet, the world still continues imposing the sanctions that have led to the starvation of millions as we see with the case in Yemen. Although the war itself in Yemen has killed thousands of civilians since it began, starvation has developed as a large threat in this seemingly endless disaster. This starvation occurs due to rising food prices that people simply cannot keep up with.

Prices rise for many reasons, one of the main reasons prices are rising on food in Yemen is the placement of sanctions. Sanctions occur when governments ban or impose tariffs on trade*, flight, or investment into another country. They depend on one of the most important ideas in economics – the law of supply and demand, which simply states that as prices go up, the quantity demanded falls**. Several sanctions have been placed on Yemen, increasing food prices, causing job loss, and severing connections to other countries. Sanctions are justified by governments in order to attempt to maintain peace or keep weapons out of the hands of possible danger. Ideally, when sanctions are placed by several foreign governments on a country, they are set to help the people of that nation. However, as the sanctions have played out in Yemen, they have led to an increasingly difficult standard of living through the consistent increase in prices of food - a good that is already essential and as such much less flexible to price changes***. Ahmed, who was interviewed for The Guardian in an article posted in 2017, claimed that the price of a simple bag of sugar had increased to 14,000 rial – doubling from what it was. Yemen’s GDP is valued at 27 billion US dollars, with an annual growth rate of -2.7 percent (meaning it continues to fall) and a GDP per capita of 667.9 US dollars (meaning the average person receives 667.9 US dollars’ worth of income per year), as such, people are already unable to deal with increasing prices seeing as their income is decreasing and the country’s total annual production is falling.

Although the sanctions may not directly intend for this to happen, Yemen is on the verge of famine. Fourteen million people remain at risk of starvation and death. Basic services, such as schools, markets, and hospitals, are shutting down (Craig, 2017). Families are being displaced by the tens of thousands (United Nations, 2019). Today, about 70 percent of the Yemeni population is food insecure (Verhoosel, 2019), that is 20 million individuals. It is a humanitarian crisis by all means.

While imposing sanctions may protect against the weaponization of terrorist organizations and may contribute to increasing the peace in some situations, the way the war is playing out in Yemen something else needs to be done. As journalists are often not allowed to enter Yemen, the media remains fairly silent about the crisis at hand. Yet, the world should not stand by as millions of lives are lost in a silent war. Humanitarian aid needs to be sent or civilians need to be supported in gaining back some of their health, in leaving to someplace safer, in finding refuge. For international civilians, the least we could do is discuss this silent war and search for humanitarian ways to help. The crisis is ongoing but our silence should not be.

Notes for further understanding

* Taxes enforced on imported products are called tariffs and are a main type of sanction used. Tariffs decrease demand for foreign goods, and are often helpful in stimulating national markets as people buy more from local producers.

**this could also go the other way around – when the quantity demanded increases, the prices usually rise up to deal with the increase. You can imagine these situations happening by shifting the supply and demand curves. For example, if, for some reason, people start rushing to the market and buying a lot of pens, the demand curve will shift to the right because the quantity demanded at each price has increased. To deal with this shift, the equilibrium price will shift upwards, increasing the price for pens. On the other side, if producers have a better access to technology, they will be able to produce more pens at the same price, so the supply curve will shift right to present an increase in the quantity of pens they can sell at every given price. As such, the equilibrium price will fall to meet the new intersection of supply and demand – or, where there is no market surplus and no market deficit. You can find a simplified version of the supply and demand curves after this section.

*** this concept is known as elasticity and will be discussed in more detail in later articles

Supply, demand, and equilibrium

Sources:

“10 Million Yemenis 'One Step Away from Famine', UN Food Relief Agency Calls for 'Unhindered Access' to Frontline Regions | UN News.” United Nations, United Nations, news.un.org/en/story/2019/03/1035501.

Craig, Iona. “'Before I Had Everything to Eat. Now It's One Bite': Yemenis' Struggle for Survival.” The Guardian, Guardian News and Media, 26 Nov. 2017, www.theguardian.com/world/2017/nov/26/yemen-daily-struggle-for-survival-behind-divided-lines.

Roth, Kenneth. “World Report 2019: Rights Trends in Yemen.” Human Rights Watch, 17 Jan. 2019, www.hrw.org/world-report/2019/country-chapters/yemen.