The conflict in Yemen has several implications not only on the people of the country and Middle East as a whole but also to potential investors. The current and recent conflicts have caused a lot of uneasiness with regards to the economy, security and political stability of the country. Therefore, an investor interested to invest in Kingdom of Saudi Arabia must consider the political, social, environmental and technological implications in Yemen using adequate intelligence on the implications of the situation to the investor.
The recent clashes in Yemen broke out on March 19th 2015 and they involve al-Qaeda militants, Houthi fighters and government troops. Ever since then, tension has been aggravated in the country occasioning some international investors to flee. Many countries including Saudi Arabia have been pulling their citizens out of the country. Saudi Arabia feels that it has a lot of stake in Yemen and will therefore lose a lot should the civil war escalate. The safety of the its citizens working in Yemen and the economic investments are a cause for worry for the kingdom of the Saudi Arabia. The kingdom has so many interests in Yemen. These personnel work in different sectors including in telecommunication, roads and bridges construction, fishery and oil extraction. This represents a very big stake of the kingdom. In this respect, the kingdom of Saudi Arabia has resorted to military incursions in Yemen. This move by the KSA government offers credible intelligence that Yemen is not the best place to invest in at least for now (Lee, 2015).
Yemen has numerous oil reserves and the politics around oil is a complex one. There are increasing fears that the Houthis fighters will conquer the seaport of Aden. If they do this, they will obstruct the waterway transport in the Gulf of Aden and cut oil supply to many countries. Apparently, the Gulf of Aden is an important waterway transport corridor to the rest of Asian countries like Saudi Arabia. Therefore, countries that rely on oil imports from the rest of Middle East such as Saudi Arabia, Iraq, Kuwait, Iran and Oman will have their supplies cut if the conflicts lead to the blockage of Bab el-Mandeb and Hormuz trade routes. This situation might force some of the countries affected like Saudi Arabia to intervene in the form of military and this will have negative implications in investments in Yemen (Barnato & Barnato, 2015).
Intelligence from the CNBC News reveals that terrorism and civil strife in Yemen is prone to cause major threats in the Gulf countries of the Middle East. This will subsequently cause tumbling of the prices of oil. This is a major cause of worry to investors. This is in view of the fact that increased oil prices will increase the cost of doing businesses. The government has intervened in the war in Yemen. This is prone to causing and spreading unrest and this has negative implications on the stocks of the country. This is not good news for any investor. Therefore, an investor will have to weigh his or her own risks before investing in this tumultuous part of the globe. The banking systems and economy of Yemen are on the verge of collapse. Based on these observations, this paper concludes investing in Saudi Arabia has a direct bearing on the war in Yemen (Barnato & Barnato, 2015).
References
Barnato, K., & Barnato, K. (2015). Why Yemen war may worry Gulf more than low oil prices. Retrieved Feb 12, 2016, from CNBC: http://www.cnbc.com/2015/03/24/why-yemen-war-may-worry-gulf-more-than-low-oil-prices.html
Lee, R. (2015). Implications of the War in Yemen on China. Retrieved Feb 12, 2016, from Aljazeera Center for Studies: http://studies.aljazeera.net/en/reports/2015/06/2015610104657143413.htm
