Impoverished Yemen is facing new instability with thousands of its nationals working in Saudi Arabia being expelled after the kingdom issued new labour laws to tackle its own employment crisis.
Officials in Sana'a confirmed that thousands of Yemeni expatriates had been deported in recent days after a controversial change in the Saudi labour law, officially designed to curb the "overwhelming number of foreign workers flooding the country" – the majority of whom are Yemenis.
Yemeni workers have seen their residency permits torn up by Saudi officials, AFP reported . Saudi media have also reported on the crackdown and there have been demonstrations in Sana'a and elsewhere in Yemen.
The Yemen Post newspaper decried what it called a "witch-hunt". The Yemeni defence ministry's website estimated that up to 2,000 Yemenis had been deported daily since the regulations went into effect late last month.
An estimated 800,000 to 1 million Yemenis live in neighbouring Saudi Arabia, remitting about $4bn (£2.6bn) annually. Yemen is the poorest and least developed country in both the Gulf and the Arab world, running out of oil and water while facing grave internal security challenges and a tense "dialogue" on national reconciliation.
Yemenis have traditionally provided a source of cheap labour in Saudi Arabia, though 1 million workers were thrown out in 1990 after the Sana'a government supported Saddam Hussein's invasion of Kuwait, a close Saudi ally. That cost Yemen an annual $3bn in remittances and accelerated an economic crisis which contributed to the start of a civil war between north and south Yemen in 1994.
The amendment to Saudi Arabia's labour law stipulates that foreign workers are forbidden from running their own business and must remain strictly linked to their original sponsors for all work-related activities. It means that Yemenis who sought employment other than that provided by their sponsor, or after they left their initial sponsor, now face deportation. Yemeni sources have warned that up to 300,000 people could be expelled.
Many Yemenis have circumvented Saudi sponsorship rules by paying one sponsor/employer while working for another or setting up their own independent businesses.
Saudi Arabia, the region's superpower and biggest economy, is part of a wide-ranging international effort to support its poor neighbour through the so-called Friends of Yemen forum, composed of Arab, western and international donors and co-chaired by the UK.
Yemen had called on Saudi Arabia to postpone the decision, hoping to find a compromise on the labour law.
"With Yemen's economy having been put on life support for the past two years, only getting by through international aid, one can only imagine what a disastrous blow to the economy 300,000 Yemeni returnees would represent," the Yemen Post commented.
Saudi policy towards Yemen is lubricated by an estimated $3bn-$4bn of direct cash handouts to tribal leaders and other figures. But experts say that opening up Saudi and other restricted Gulf state labour markets would be of huge and wider benefit.
Saudi Arabia, jittery since the Arab spring, is motivated by a wish to move away from its reliance on cheap foreign labour, which has crippled the kingdom's private sector and blocked job opportunities for the two-thirds of its own citizens who are under 30.
The IMF had forecast Yemen's economy to grow 4% this year but it warned that risks to the economic outlook include concerns about al-Qaida, attacks on oil and electricity facilities and the political transition after President Ali Abdullah Saleh stepped down in February 2012 after a popular uprising.