How does terrorism affect a business? Yemen, as a case study

Written by Danielle Bennett

Yemen constitutes one of the poorest countries in the world, and thus has some of the closest ties to the United States. The country has no sustainable main exports and depends on foreign aid to survive and distribute resources to its 25 million citizens. On top of the lack of growth and dependency on stronger economies, this country is also becoming a site of increased terrorism.

According to the Global Terrorism Index and International Business Times, any country that is physically affected by terrorism is only economically affected in the short term. The Times argues that a strong economy has smarter citizens that have a long term confidence in the stock market, a stronger safety net and a more flexible central bank, and because of these factors the more established nations have not been as affected by terrorism as one might assume.

This means that according to the Global Terrorism Index, a more established economy, like the U.S., did not undergo much economic loss as a direct consequence of the 9/11 attacks, and France’s economy will not suffer a great deal because of the terrorist attacks at Charlie Hebdo this past January. GDP is only affected by the costs of terrorism aftermath, such as the rebuilding of infrastructure or the payment to service providers for care of terrorism victims.

A place where 1.6% of the world’s terrorism related deaths occur, Yemen suffers from a general lack of credit for consumers, an undeveloped financial sector, no stock market, and an overturning executive branch of government. In Yemen, businesses take over a month to start in comparison to less than 24 hours in the U.S., and the increase in terrorist attacks abroad and within Yemen have led to falling profits for the region’s businesses and government.

Abd Rabbuh Mansur al-Hadi, who has been president of Yemen since 2012, resigned from office in January and then rescinded his resignation on February by claiming that the non-Al Qaeda related Shiite Houthi militia that forced his resignation was “null and illegitimate.”

His resignation left many western nations scrambling to get ahold of new allies in the Middle East, and his recent escape from Yemen by boat has only increased this anxiety among some of the country’s allied nations such as the United States and Saudi Arabia.

Starting in February, some countries, including the United States, have taken the transference of power in Yemen as a sign of increased social and political turmoil. As an act of caution, these countries have even gone so far as to remove their foreign embassies from Yemen.

These mounting decisions are leaving Yemen, the location of the second most active Al Qaeda force in the world and former western policy ally, as one of the hardest countries to reach in the world. The key now is to find a way to save Yemen from economic and social turmoil as terrorism continues to threaten the consumer and investor confidence in the Yemeni economy.