Exclusive: Civil war costs Yemen $14 billion in damage and economic losses - report

[August 17, 2016]  By Yara Bayoumy

WASHINGTON (Reuters) - The cost from damage to infrastructure and economic losses in Yemen's civil war is more than $14 billion so far, according to a confidential report seen by Reuters that highlights the effort needed to rebuild the country, where more than half the population is suffering from malnutrition.

"The conflict has so far resulted in damage costs (still partial and incomplete) of almost $7 billion and economic losses (in nominal terms) of over $7.3 billion in relation to production and service delivery," said the May 6 joint report by the World Bank, United Nations, Islamic Development Bank and European Union.

The internationally recognized Yemeni government of President Abd Rabbu Mansour Hadi is battling the Iran-allied Houthis in a bitter civil conflict, and is also facing the al Qaeda in the Arabian Peninsula militant group.

The 16-month civil war has killed more than 6,500 people, displaced more than 2.5 million and caused a humanitarian catastrophe in a country with a per capita gross domestic product the World Bank last estimated at only $1,097 in 2013.

The Preliminary Damage and Needs Assessment report is an internal working document that is not being publicly released.

"These preliminary findings are not only partial, but also evolving" because the conflict is ongoing, the report said. The assessment, it said, was conducted between late 2015 and early this year.

A survey by Yemen's education ministry cited by the report showed that of 1,671 schools in 20 governorates which suffered damage, 287 need major reconstruction, 544 were serving as shelters for internally displaced persons, and 33 were occupied by armed groups. Based on a sample of 143 schools, the estimated cost of the damage was $269 million.

Citing the Ministry of Public Health and Population, the report said 900 of 3,652 facilities providing vaccination services were not operating in early 2016, leaving 2.6 million children under 15 at risk of contracting measles.

HEALTH SYSTEM

In Taiz, Yemen's third-largest city, the public health system has nearly collapsed, with half the public hospitals damaged or inaccessible.

"There has been a surge in civilian morbidity and mortality as an indirect consequence of the conflict," the report said.

The report could assess residential damage only in the cities of Sanaa, Aden, Taiz and Zinjibar, and data collection was cut off in Oct. 2015 -- only about seven months into the conflict. That data alone found an estimated $3.6 billion in damage.

An armed boy walks as he attends a gathering held by tribesmen loyal to the Houthi movement to show support to a political council formed by the movement and the General People's Congress party to unilaterally rule Yemen by both groups in Sanaa, August 14, 2016. REUTERS/Khaled Abdullah

The cost to reconstruct damaged energy facilities in the four cities was an estimated $139 million, most going to repairing damaged or destroyed power plants.

A shaky cease-fire between the government and the Houthis, who practice a variant of Shi'ite Islam, took effect in April and brought some respite from the war, which started when the rebels pushed the government into exile in March 2015. Peace talks broke down earlier this month, though, and Saudi-led air strikes on the Houthis who control the capital Sanaa have resumed.

The report said that immediate attention must be focused on restoring import financing, particularly for food and fuel, which is caught in a conflict between the Saudi-backed government and the central bank in rebel-controlled Sanaa.

The government asked international financial institutions to cut off the bank, alleging that it was misusing state funds. The bank, which provides foreign exchange for imports, has denied the allegations.

"As long as the conflict is ongoing, it's key to keep going the basic imports needed to avoid a humanitarian crisis. That is a very critical issue right now," the IMF's Yemen Mission Chief Albert Jaeger told Reuters. "The best the international community and donors can do is to find a way to get the government and the central bank to cooperate to get at least the humanitarian side of things going."

Air strikes by Saudi-led forces in Yemen that hit a school and a hospital are being investigated by a body set up by the coalition to look into civilian casualties, a spokesman said on Tuesday.

Ten children were killed when their school in Saada province was bombed on Saturday, and 14 people were killed by a strike on a hospital in neighboring Hajjah province on Monday.

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