Yemen: Deformed Workers’ State or State Capitalism?
Let us now discuss the issue of the class character of South Yemen – or the People's Democratic Republic of Yemen (PDRY) as it was officially called – between the early 1970s and 1994.
At the same time that the former Soviet Union was collapsing, South Yemen, which was considered by bourgeois scholars to be a “socialist” state, and North Yemen, which no one ever thought was a “socialist” state, reunited. The gains in education and health services of the workers and the poor, especially women, in South Yemen, were to a large degree lost. Human Rights Watch reports about the terrible conditions in the health sector:
“People with HIV and AIDS are routinely denied care within Yemen’s health care system, Human Rights Watch said in an October 2014 letter to the Yemeni Minister of Health released today. Yemeni authorities should end discrimination by health workers against people with HIV and ensure patients’ equal access to healthcare services, as mandated by a 2009 law.” 
Likewise, the UN’s World Health Organization gives a grim picture of the development in the past two decades:
“Since the reunification of Yemen and the economic crises of the early 1990s, health spending had declined dramatically with a consequent deterioration of state-guaranteed services. Widespread poverty is exacerbated by the side effects of the structural adjustment programmes adopted by the government. Today, Yemen’s health situation is one of the least favourable in the world, and more than half of the Yemenite population lacks access to health care. This is partly due to the lack of reachable provider facilities, mainly in rural areas where more than two out of three citizens are excluded from health care. The other relevant factor that affects accessibility is the inability of the poor population to pay for health care. Only a minority has access to any type of pre-payment scheme for covering personal expenditure in case of illness. The cost of treatment, the main determinant for having access to health care services, makes poor people drop out of the health.” 
Likewise there has been a significant deterioration in the education sector which negatively affected particularly women.
“Just prior to Southern independence from Britain only 15.3 percent of South Yemeni women could read, and only 231 girls attended secondary school. Within the Socialist period’s first decade, not only were primary and secondary rates for girls and boys equal, but women outnumbered men in the fields of medicine and education at the university level. (…) The contrast with the experience of Northern women during the same period could hardly be starker.When the Imamate was dissolved in 1962, there were no government schools for girls in Yemen.” 
The gains of the workers, peasants, and poor in PDRY were the result of the nationalization of parts of the economy and the more egalitarian polices of the government. The fact that bourgeois scholars call this socialism reflects their admission that socialism is better for the workers and poor than capitalism. But, unfortunately, the PDRY was not socialism and not even a workers’ state, i.e., a transition to socialism, nor even a deformed workers’ state but rather a regime of state capitalism.
Massive nationalization even under one-party rule is not the litmus test that allows us to differentiate between state capitalism and a deformed workers state. The real test is whether the local capitalist class was eliminated as a class. The case of South Yemen is very interesting, as it went very far on the road leading towards the creation of a deformed workers state. However, it retained a form of state capitalism. The old state apparatus was destroyed to a large degree, a section of the local bourgeois escaped after the nationalizations, the organized workers supported the left wing of the FLN, but still the local bourgeois was not eliminated as a class. While many bourgeois scholars claim that South Yemen became a “socialist” state, a review of all the information leads to the conclusion that in the PDRY there remained a regime of state capitalism.
Yemen was an agrarian, largely nomadic society until the British occupation of South Yemen at the beginning of the 19th century. The port of Aden and the oil refinery at Little Aden (the peninsula that encloses the western side of Aden’s harbor), built originally by British Petroleum in the 1950s, led to the appearance of local comprador capitalists and a small industrial working class. South Yemen was a part of the British Empire from 1839 to 1967, when they were driven out by the anti-imperialist struggle.
“The first trade union was started by pilots in 1952. After Queen Elizabeth visited Aden in 1954, strikes and protests intensified and by 1956 all workers were unionized, with workers fighting for better social and working conditions, with the support of youth and students. Increasingly these struggles clashed with the occupation regime and the uprising took up the demand for independence for the South. The independence movement was strongly influenced by the Arab nationalism of Nasser in Egypt. Initially a peaceful movement, the Aden TUC turned to armed struggle after a bomb explosion killed trade unionists protesting at the airport.” 
The struggle for independence from British imperialism was at the same time a struggle among the different nationalist organizations and eventually the more radical wing of the FLN won and transformed itself into the Socialist Party of Yemen, a “Marxist-Leninist” (i.e. Stalinist) party. This left wing nationalized a large section of the economy and parts of the capitalist class fled to North Yemen. However, the private sector survived.
During the struggle to liberate South Yemen from the British rule three rival petty-bourgeois nationalist movements struggled for control of Yemen. Least important was the South Arabian League, formed around the Sultan of Lahej. It was also the most conservative force, backed by Saudi Arabia.
Then there was the Front for the Liberation of Occupied South Yemen (FLOSY). FLOSY was strongly influenced by Egypt’s president Gamal 'Abd al-Nasir's. It was based in Aden and had close connections with the Aden Trade Union Council (ATUC).
Finally, there was the National Liberation Front (NLF). The NLF was a loose movement amongst which the strongest faction was related to the Arab National Movement. (The Palestinian PFLP and DFLP also emerged out of this radical pan-Arab nationalist organization.) The NLF has its base amongst the lower popular strata outside of Aden, including in the North. It initiated an armed struggle against the British occupation in October 1963.
As the British were ready to leave South Yemen a military conflict between the NLF and FLOSEY took place and the NLF won. The latter declared independence in the South on November 30, 1967. The new state was named the People's Republic of South Yemen. This new republic consisted of the southern provinces of Yemen -- Aden, Lahij, Abyan, Shabwa, Hadramawt and Mahra.
Later, in 1970, it was renamed the People's Democratic Republic of Yemen after a radical wing of the self-proclaimed Marxist NLF came to power and all political parties were forced to join the Yemeni Socialist Party (YSP). The PDRY became the Arab world's first “Marxist” state. The Soviet Union, China, Cuba, and radical Palestinians established close ties with the new state. 
In 1967 the new government was made of three factions. One was led by Qahtan Al-Shaabi an Arab socialist, who was orientated towards Nasser‘s Egypt, Algeria and Syria. His support was mainly in the army. Another one was led by Salim Rubi Ali, a populist influenced by China who became the first president. The third one was led by his successor Abdel Fattah Ismail. He was pro-Moscow and established a “vanguard party” rather than a mass party. Qahtan Al-Shaabi was soon to be overthrown by the more radicals. The left called for a purge of the army and the government. However, the army leaders fought against the more left radicals and at the beginning they won.
Haytham became the new Prime Minister and a coalition with the left existed for a time. The army was purged and popular militias were organized by the left. Land reforms were carried out. The left removed Haytham from power in 1971. At first Ismail won and close relations with the USSR were established. The new internal security force was trained by East Germany and the Cubans trained the militias. In 1972 the old NLF became the Socialist party of Yemen.
Soon the new regime implemented a number of radical social and economic reforms. A Central Planning Organization (CPO) was established which in 1972 produced a three year plan followed by five years plan for 1976-81. However, in contrast to the degenerated workers states in the USSR, China or Eastern Europe, the reforms aimed to establish a strong state-capitalist sector in order to modernize the country but not with the goal of liquidating the law of value.
The result was a mixed economy with a strong state-capitalist sector alongside a private capitalist sector. Land ownership was dramatically equalized, but the economy retained many features of a traditional agrarian economy comparable to that of North Yemen, which was just embarking on its first commercial and industrial projects.
“Production systems in the South included subsistence agriculture on family land mixed with herding on commons, sharecropping on pre-capitalist estates, and wage labor on modern farms. In Aden and Lahej, where ownership was most distinctively class-divided, the revolutionary regime expropriated the largest holdings as well as religious endowments (waqf). The number of expropriated estates increased from 18 to 47 between 1975 and 1982 with the addition of some smaller properties of unpopular landlords. These state farms, with modern equipment and wage labor, managed most farm land in Aden governorate and nearly a third in Lahej just to the north. Redistributed land, nearly two-thirds of the South's cultivated area, was classified as cooperative. Over a quarter, mostly in the east, remained private.” 
The state-capitalist sector dominated the central industry like power, water and the oil refinery. At its highpoint it controlled about 60-70 percent of the value of industry in the South. Mixed companies produced cigarettes, batteries and aluminum utensils. Wholly private firms were either small-scale plastic, clothing, glass, food and paper-goods manufacturers or traditional carpentry, metal, pottery or weaving industries.
It is important to bear in mind, in the words of Sheila Carapico, that “at best, the North's capitalist orientation and the South's socialism represented tendencies or goals, for both were really "mixed" economies.” As she notes, the South never was an entirely state-owned economy. The nationalizations of 1969 affected foreign financial, trade and services businesses. Between 1973 and 1976, consolidation of state and joint industrial ventures continued, reducing the contribution of private domestic firms to industrial production from 51 percent to 38 percent, and the contribution of foreign firms from 36 percent to 10 percent. In fishing, however, foreign investors replaced some cooperative production. By 1976, private domestic and foreign firms held about 40 percent of the construction market, and local private transportation had over half the market. Cooperatives were credited with 71 percent of agricultural output, and the state with the rest, but livestock production was over 90 percent private.
Later, the state-capitalist regime focused on promoting private investment. This was formulated in the regime's plan for 1981-1985. In fact, during the first three years of the plan private sector participation exceeded expectations by eight percent, mostly in agriculture and local private fishing. The 1988 census reported that of nearly 35,000 establishments, 75 percent were private, 21 percent governmental, and the remainder cooperative or joint ventures. As a result only 25 percent of the work force was employed in state-owned enterprises in 1988. 
This drive towards reduction of the state-capitalist sector was accelerated by the decline of the USSR – the main ally of the South Yemen regime. Once the so-called Marxist Leninists saw themselves deserted by Gorbachev, the darling of the US and European imperialists, they decided to save their good life by joining the capitalist class of the North. To ensure as little resistance as possible these “Marxist-Leninists” spread the illusion of a bright future on the horizon. They were also motivated in their desire to unite with the North by potentially large profits to be gained from a rational exploitation of the newly found oil and gas deposits.
Obviously the unification of North and South Yemen was a fusion of equals. The ruling class in the North was the dominant part despite the attempts of the Socialist Party to claim victory.
“When the unification of Yemen was declared in 1990, the south Yemenis thought that they had finally succeeded in achieving their old slogans that called for safeguarding the Yemeni revolution, unity, and democracy. For a long time, school students in south Yemen chanted these slogans and sung the praises of unification. But the years that followed the reunification of Yemen were sufficient to turn this dream into a nightmare for most south Yemenis.” 
Once the Northern capitalists took over South Yemen, they started to loot the South’s economy. Jomana Farhat describes this accurately:
“For example, up to 46 governmental and public sector institutions and establishments were forcibly seized, including the Monetary Authority and the General Establishment for Flour Mills. Aqel also said that more than 28 state-owned factories were appropriated, including manufacturers of textiles, dairy products, and agricultural equipment. But this did not stop with the public sector. About 11 mixed private-public and privately-owned production plants were also seized, in addition to around 33 state-owned farms with a total area of approximately 28,000 acres, scattered throughout the southern provinces. The 56,000 employees of these establishments were fired after the war of 1994. Furthermore, 86 agricultural and service cooperatives were confiscated, in addition to properties owned by agricultural associations. Their members, who are estimated to number around 16,449, were in turn denied access. Similarly, the fishing fleet belonging to the People's Democratic Republic of Yemen was looted, having once been the second largest Arab fleet of its kind.” 
In conclusion, in the 1960s the NLF led a revolution backed by the working class and the peasants. What kind of a revolution was it? Yemen, like many other former colonies, did not go through a bourgeois democratic revolution. The main tasks of the democratic revolution are liberation from the imperialists, an agrarian revolution, and equality of all before the law. While the YSP was able to carry out some of the tasks of the democratic revolution it was unable to free the country from imperialist domination. While it succeeded in implementing a number of social and economic reforms, it did not abolish capitalism altogether.
At the same time, its existence was dependent on the economic support of the Soviet Union which was a degenerated workers’ state until 1991. Once the Soviet Union collapsed, the PDRY collapsed as well.
However, this must not make us ignore the important achievements of the revolution. The national liberation movement – led by the petty-bourgeois nationalist NLF and supported by the working class and the fallahin – succeeded in driving out the British imperialists which occupied the country since 1839. After the revolution took place and the left wing of the NLF took power, the new regime called its state “socialist” while in fact it was state-capitalist. Nevertheless, it was an important achievement that properties that previously were robbed by the imperialists were nationalized as well as part of the property of the local capitalists.
The revolutionary events in South Yemen in the late 1960s and early 1970 show that a socialist revolution would have been possible if a revolutionary workers’ party had existed. Building such a party remains the central task for revolutionaries in Yemen as well as internationally.
 Human Rights Watch: Yemen: HIV Patients Denied Health Care, November 3, 2014, http://www.hrw.org/news/2014/11/03/yemen-hiv-patients-denied-health-care
 Steven C. Carton (Editor): Middle East in Focus: Yemen, Santa Barbara 2013, p. 110
 Mirfat Sulaiman: Letter From... South Yemen, in: Socialist Review No. 385 (November 2013), http://socialistreview.org.uk/385/letter-south-yemen
 For an overview of the first tumultuous years see Fred Halliday: Revolution and Foreign Policy. The Case of South Yemen 1967-1987, Cambridge University Press, Cambridge 1990, chapter I; Laurie Mylroie: Politics and Soviet Presence in the People Democratic Republic of Yemen, RAND 1983; Paul Dresch A History of Modern Yemen, Cambridge University Press, Cambridge 2000; Global Security.Org: South Yemen History, http://www.globalsecurity.org/military/world/yemen/yemen-south.htm
 Sheila Carapico: The Economic Dimension of Yemeni Unity, in: David McMurray, Amanda Ufheil-Somers: The Arab Revolts: Dispatches on Militant Democracy in the Middle East, Indiana University Press, Bloomington 2013, p. 130
 Susanne Dahlgren: The Snake with a Thousand Heads. The Southern Cause in Yemen, in: Middle East Research and Information Project, Middle East Peport No. 256 (Fall 2010), http://www.merip.org/mer/mer256/snake-thousand-heads; See also Dilip Hiro (Editor): Inside the Middle East, Routledge, Oxon 1982; Manfred W. Wenner: Yemen, Economy, Britannica, http://www.britannica.com/place/Yemen/Economy