Yemen is poised to lose millions of dollars in remittances while reabsorbing up to 200,000 newly unemployed workers as a result of Saudi Arabia's decision to expel tens of thousands of Yemeni guest workers.

A surge in the number of cash-strapped families and competition for already scarce jobs appears inevitable. An uptick in the number of unemployed men provides fertile ground for militant recruitment – a cause for concern far beyond the Arabian Peninsula.

The way Saudi officials spin it, it’s simply a matter of closing loopholes in laws governing guest workers and streamlining bureaucracy. But as streams of deportees continue to be sent home, they’ve inflamed longstanding resentment of Yemen’s northern neighbor.

Yemenis have traditionally flocked to Saudi Arabia and the Gulf States, fleeing high levels of unemployment (35 percent in 2003) to take advantage of job opportunities created since the discovery of oil in other parts of the Arabian Peninsula. Remittances, the money sent home by expatriate workers, are the virtual backbone of the Yemeni economy, contributing roughly $2 billion each year, constituting a bit more than 5 percent of Yemen's GDP.

And while more than one million Yemenis were expelled from Saudi Arabia in 1990 in response to Yemen’s perceived support for Iraq during the first Gulf War, more than a million Yemenis still work in Saudi Arabia today.

Long one of the poorest country’s in the Arabian Peninsula, Yemen’s economy took a further hit from the turmoil caused by its 2011 uprising, which spurred the end to longtime leader Ali Abdullah Saleh’s three decades in power, as unemployment surged and foreign investment dipped. The power vacuum that ensued has been a boon for militant and separatist groups across the country.

Many have raised fears that Saudi Arabia's deportation will end up affecting more than just the Yemeni economy. In popular memory, the deportations of 1990 are often tied to the outbreak of the 1994 civil war.

In Yemen’s far north, near the Saudi border, clashes between the Zaidi Shi’a Houthis, a rebel group that controls the bulk of the border province of Saada, and local Salafis have raged for more than two weeks. With deportees streaming across the border and through the province, it seems nearly inevitable that some of the newly destitute men will be pulled into the fighting.

On top of that, Al Qaeda in the Arabian Peninsula remains a strong presence, and allegedly recruits among men struggling to make ends meet.

“Some [of the deported workers] will be convinced to fight with the Houthis; others will be convinced to fight with the Salafis. Others will get recruited by Al Qaeda,” said a Yemeni official, speaking on the condition of anonymity due to the sensitivity of the topic. “The rest will return home, jobless—something that is enough of a disaster in itself.”

Even before 2011, Yemen’s oil rich neighbors were considered a potential solution to pervasive joblessness: a government-commissioned report drawn up by international consulting group McKinsey & Company the previous year listed increasing the number of Yemeni laborers in Saudi Arabia and other Gulf States as a key means for stabilizing the nation’s economy.

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Brandishing the report, many Yemeni officials have expressed hopes that neighboring states would open their doors to unemployed Yemenis as a way of aiding the government’s efforts to get things back on track. Saudi Arabia pledged $3.25 billion in financial aid in May 2012. But if claims of solidarity and support are more than rhetoric, analysts argue, nations like Saudi Arabia should be welcoming new guest workers rather than enacting stricter labor laws and cracking down on those already there.

“The economic impact of this event will be profound – not just due to the lost jobs themselves, but because many of the workers had shops [in Saudi Arabia] and were supporting large families back home,” says Abdulghani al-Iryani, a Sanaa-based political analyst. “The effects will cancel out – by many folds – the effects of any Saudi financial aid to Yemen.”