The loss of the war in 1994 torpedoed the aspirations of southern independence and led to the occupation of the southern territories. The Salih regime took the following actions to permanently marginalize, destabilize and suppress the south:

After the war, the entire South Yemeni army was dissolved. The military personnel, including soldiers and officers, were forced into retirement. Hundreds of thousands of employees were affected. Likewise, police and civil servants were forcibly retired. High state ranks in the south, such as governor positions, were granted to North Yemenis.

Factories which had been state property of the PDRY were looted and plundered, or sold below price to people loyal to the regime. Factory workers lost their jobs. Besides the numerous factories that had to cease their operations, regime supporters and high-ranking officers of the Salih regime confiscated land equivalent to the size of the state of Bahrain. Multitudes of South Yemenis were dispossessed and their civil rights stolen.

Aden, the capital of the PDRY – once a flourishing port city with one of the most significant harbors in the world in the 1950s (second only to New York) – was proclaimed the economic capital of the unified country. However, the promises of economic prosperity were not fulfilled, and the harbor business operated far below its capabilities. Moreover, investment in infrastructure failed to appear. Large scale corruption discouraged investment in the commercial and economic sector. Northern elites became shareholders in any investment in the south, and they profited from any such business that existed. Because of the discontinuation of operations in numerous factories, the private sector has been so weakened that, to this day, scarcely any employment is available. A majority of the southern population is unemployed today. Particularly among young people, the unemployment rate is very high.

Furthermore, the Salih regime has profited for more than two decades from the exploitation of southern oil. Approximately 80 percent of oil in Yemen is situated in the southern governorates of Hadramawt and Shabwa. The local population are excluded from profits from the oil; however, they do suffer from the consequences of oil exploitation, such as poisoned ground water. International companies which produced oil in the south paid enormous sums to gain oil concessions from the Salih regime. Moreover, North Yemeni generals charged for the protection of the oil companies and their facilities. They made millions in profit.