The impact of the war on Iran on the livelihoods and collapsing economy of Yemen

Given the dire humanitarian and economic conditions that Yemen has endured for nearly a decade, the specter of any new regional conflict looms as an existential threat to millions of Yemenis already suffering the ravages of civil war. Any potential military escalation targeting Iran cannot be viewed as a distant geopolitical event, but rather as a direct factor that will cast a dark shadow over the daily lives of Yemenis, exacerbating what is already the world’s worst humanitarian crisis.

Background to the crisis: Yemen on the brink of collapse

To understand the scale of the expected impact, it is essential to grasp the current Yemeni context. Since the outbreak of war in 2014, the Yemeni economy has virtually collapsed. The local currency (the Yemeni rial) has lost more than 80% of its value, leading to hyperinflation that has decimated the purchasing power of citizens. More than 24 million Yemenis, roughly 80% of the population, rely on humanitarian aid for survival. Furthermore, the country's infrastructure—hospitals, schools, and water and electricity networks—has been systematically destroyed, leaving the country entirely dependent on imports for its basic needs of food, medicine, and fuel.

The direct economic effects of the regional conflict

Any military confrontation in the region, especially one involving Iran, would inevitably disrupt vital global shipping lanes such as the Strait of Hormuz and the Bab el-Mandeb Strait, on whose eastern shore Yemen lies. This disruption would translate into several disastrous consequences for Yemen:

• Fuel and food prices are soaring: Yemen relies on imports for all its petroleum products and over 90% of its food. Any threat to shipping lanes will drastically increase insurance and shipping costs, directly impacting fuel and food prices in the local market and making them unaffordable for the majority of the population.
• Further currency collapse: Regional uncertainty will trigger capital flight and put pressure on weak currencies like the Yemeni rial. This will mean a new wave of currency devaluation, and thus a vicious cycle of inflation that will wipe out what little savings citizens have left.
• Humanitarian aid is dwindling: A large-scale regional conflict would divert the international community's attention and financial and relief resources away from the Yemeni crisis. Humanitarian organizations, already facing significant funding gaps, would find it even more difficult to secure the necessary support for their operations, threatening the lives of millions who depend on this aid.

Potential political and security repercussions

Politically, any conflict with Iran could further complicate Yemen’s already fragile landscape. Escalation could encourage local warring factions to abandon fragile peace efforts and return to violence, hoping to gain ground amidst regional chaos. In this sense, a war with Iran would not only exacerbate Yemen’s economic crisis but could also be the final nail in the coffin of any hope for stability and peace, plunging the country into an even deeper spiral of protracted suffering.