VZCZCXRO4585
RR RUEHDE RUEHDIR
DE RUEHYN #0256/01 0420956
ZNR UUUUU ZZH
R 110956Z FEB 08
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC 8964
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHLO/AMEMBASSY LONDON 0218
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUCPDOC/USDOC WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 03 SANAA 000256 
 
SIPDIS 
 
SIPDIS 
 
NEA/ARP FOR NATASHA FRANCESCHI AND ASHLEY BAGWELL, 
USAID/ANE/MEA FOR JWOOD 
 
E.O. 12958: N/A 
TAGS: AID EAGR EAID ECON EFIN ETRD GCC PREL YM
SUBJECT: SECOND POST-CONSULTATIVE GROUP FOLLOW-UP MEETING 
HELD IN YEMEN 
 
SANAA 00000256  001.2 OF 003 
 
 
¶1.  SUMMARY:  Republic of Yemen Government (ROYG) officials, 
Gulf Cooperation Council representatives (including the 
Secretary General) and a large number of bilateral and 
 
SIPDIS 
multilateral donors gathered in Sana'a on February 4 to 
discuss the status of the pledges allocated to Yemen and the 
progress made by Yemen on economic development projects and 
reforms since the November 2006 Consultative Group (CG) 
meeting in London.  The GCC Secretary General reported that 
USD 3.7 billion in pledges (70 percent of the total) have 
already been allocated to Yemen.  The ROYG Ministry of 
Planning and International Cooperation outlined progress made 
on the National Reform Agenda and next steps which the ROYG 
will pursue.  During the meeting, donors called for a curb on 
the rapid population growth, increased security on the 
ground, more coordination between GCC and non-GCC donors, and 
quick implementation of economic development projects.  END 
SUMMARY 
 
SECOND POST-CG FOLLOW-UP MEETING HELD 
------------------------------------- 
 
¶2.  The ROYG hosted the second Post-CG Follow-Up Meeting with 
Donors on February 4 in Sana'a.  Over one hundred ministers, 
diplomats, NGO representatives and GCC and non-GCC donors 
attended. (Note:  In November 2006, GCC and non-GCC donors 
pledged USD 4.7 billion to Yemen at a conference in London. 
The ROYG and donors have met every six months since to 
monitor progress in economic development and on the National 
Reform Agenda.  End note.)  In addition to the two 
aforementioned areas, participants in the second post-CG 
meeting discussed the ROYG's Development Program for 
2011-2015. 
 
PROGRESS MADE ON NATIONAL REFORM AGENDA, BUT CHALLENGES REMAIN 
--------------------------------------------- ---------- 
 
¶3.  Deputy Prime Minister for Economic Affairs and Minister 
of Planning and International Cooperation (MOPIC) Abdul-Karim 
al-Arhabi opened by stating that while Yemen's poverty rate 
decreased from 42 percent in 1998 to 35 percent in 2006, real 
economic growth declined to 3.2 percent in 2007, mainly due 
to the decrease in oil and gas revenues.  Al-Arhabi noted 
that the ROYG is eager to implement several development 
projects through the establishment of new implementing units 
and the strengthening of existing ones.  He told participants 
that ROYG has undertaken a number of reforms, including 
passage of the anti-corruption, public procurement and 
financial disclosure laws and establishment of an 11-member 
Supreme National Authority for Combating Corruption (SNACC). 
He anticipated Yemen would join the Gulf Cooperation Council 
by 2015.  (Comment:  Not all GCC members share his optimism. 
End comment.) 
 
¶4.  The World Bank's Regional Vice President for Middle East 
and North Africa, Daniela Gressani, emphasized that Yemen is 
at a critical juncture and that the ROYG should focus on 
implementation of its National Reform Agenda in order to 
promote development and create an environment for investment 
(Note:  The National Reform Agenda concentrates on fighting 
corruption, strengthening the independence of the judiciary, 
reforming the economic and financial sectors, developing the 
political system and modernizing the civil service system. 
End note).  She encouraged greater coordination between GCC 
and non-GCC donors. 
 
MAJORITY OF PLEDGES HONORED 
--------------------------- 
 
¶5.  GCC Secretary General Abdulrahman al-Atiyyeh expressed 
his desire to strengthen relations with Yemen and to 
integrate the Yemeni economy into the fabric of the GCC by 
¶2015.  He indicated that 70 percent of pledges (i.e. USD 3.7 
billion) have already been allocated toward 25 projects in 
Yemen.  He praised progress achieved on the National Reform 
Agenda since the last Post-CG Follow-up Meeting in June 2007, 
but urged the ROYG to increase ROYG budgetary allocations 
towards the National Reform Agenda, and to establish new 
implementation units and strengthen existing ones. 
 
¶6.  Prime Minister Ali Mujawar praised the partnership 
between donors and Yemen in order to overcome the country's 
development challenges and highlighted serious steps 
undertaken by ROYG to increase political participation. 
Nevertheless, he added that Yemen still faces daunting 
challenges with respect to high population growth, high 
 
SANAA 00000256  002.2 OF 003 
 
 
unemployment, increasing poverty, the scarcity of water and 
lack of institutional capacity. 
 
NEXT STEPS FOR YEMEN GOVERNMENT 
------------------------------- 
 
¶7.  After the opening remarks session, the ROYG Director 
General of Cooperation with Europe and the Americas at the 
Ministry of Planning and International Cooperation, Nabil 
Shaiban, reported on progress made in the five target areas 
of the National Reform Agenda and on the status of donors' 
pledges. (Note:  A complete copy of the ROYG's Report for the 
Second Post-CG Follow-Up Meeting may be obtained from 
NEA/ARP.  End note.)  He also told participants that the ROYG 
plans to finalize the Public Investment Program (PIP) of 
2007-2010, strengthen the capacity of the government, 
establish a project tracking and reporting system, continue 
the National Reform Agenda and establish a fast track 
Parliamentary approval process for donor-financed economic 
development projects. 
 
¶8.  A representative from the GCC Secretariat praised Yemen's 
progress on the National Reform Agenda since June 2007, but 
urged the ROYG to enhance the capacities of implementing 
units, implement planned economic development projects and 
improve coordination between GCC and non-GCC donors.  A World 
Bank representative stated that Yemen continues to face a 
difficult economic situation and called for alignment of the 
PIP with the Development Plan for Poverty Reduction and 
Reform (DPPR).  He offered World Bank technical assistance on 
rapid implementation of National Reform Agenda and PIP 
projects.  The French DCM, representing the traditional 
non-GCC donor community, warned that the deteriorating 
security situation and high population growth undermines 
economic development in Yemen and the ROYG's ability to meet 
its Millennium Development Goals of poverty eradication by 
¶2015.  He encouraged progress toward democracy as a 
precondition for stability and development. 
 
DONORS CALL FOR GREATER GOVERNMENT ACTION 
----------------------------------------- 
 
¶9.  Participants raised a number of issues during the open 
discussion session.  The German Ambassador, a UN 
representative and the USAID Director expressed concern that 
the ROYG was not doing enough to combat rapid population 
growth, which was outstripping economic growth.  Connected 
with population growth is high inflation, which has raised 
the prices of basic commodities by over 100 percent since 
¶2006.  The ROYG Minister of Industry and Trade, Yahya 
al-Mutawakel, appealed to donors to help the ROYG confront 
this problem, especially concerning wheat prices. 
 
¶10.  The British Ambassador best summed up the opinions of 
many in the audience that "Yemen's challenges are real and 
now.  Time is of the essence.  The ROYG needs to quickly 
implement its economic development projects."  Many believed 
that the capacity of the ROYG needs to be improved and that 
the Yemeni economy needs to be diversified away from the oil 
and gas sector.  The USAID Director underscored the problem 
of security, especially in underserved governorates like 
Mareb and al-Jawf, where implementers of health, education 
and infrastructure projects were prevented from visiting 
project sites or were hijacked in their vehicles by tribesmen. 
 
¶11.  The Deputy Minister of Education, Abdul-Karim 
al-Jarbawi, complained that there was still a major gap in 
ROYG investment expenditures for education.  In this regard, 
all donors called for better incorporation of the PIP and 
DPPR in the ROYG national budget and for closer coordination 
between the GCC and non-GCC donor communities.  A European 
Community official and Yemeni Women's Union Chair Ramzia 
al-Iryani opined that involvement of civil society in reform 
projects would be crucial.  Women's National Committee Chair 
Rashida al-Hamdani asked that more women be included in 
capacity training and economic development project 
implementation units. 
 
COMMENT 
------- 
 
¶12.  Many donors have commended the ROYG for progress made in 
the National Reform Agenda.  The fact that donors have 
already given Yemen 70 percent of pledges promised in 
November 2006 is a good sign of their commitment to Yemen. 
 
SANAA 00000256  003.2 OF 003 
 
 
However, in order to keep the donor community engaged, the 
ROYG will need to rapidly implement its NRA, PIP, and DPPR 
programs.  Progress in these areas will ensure continued 
foreign direct investment in the future.  END COMMENT 
 
SECHE