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R 220715Z SEP 09
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC 2791
INFO RUEHLO/AMEMBASSY LONDON 0262
RUEHRH/AMEMBASSY RIYADH 1674
RUEKDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC

S E C R E T SANAA 001692
NOFORN
SIPDIS
NEA/ARP AMACDONALD AND INR SMOFFAT
E.O. 12958: DECL: 09/19/2019
TAGS: EAID ECON PGOV PREL SENV YM
SUBJECT: DAS SANDERSON HEARS OF PROMISING ECONOMIC AND
WATER REFORM PROPOSALS THAT NEED PRESIDENTIAL PUSH
REF: SANAA 1549
Classified By: Ambassador Stephen Seche for reasons 1.4 (b) and (d).
¶1. (C) SUMMARY. In a September 15-16 visit to Yemen, Deputy
Assistant Secretary (DAS) Ambassador Janet Sanderson met with
ROYG officials, advisors, and European diplomats to discuss
some of Yemen’s most pressing social and economic challenges.
Foreign Minister Abubakir al-Qirbi pressed for a "strategic
dialogue" between the United States and Yemen in order to
ensure that the relationship is not dominated by security and
counter-terrorism issues. Economic advisors presented an
ambitious plan for achieving their top 10 priorities for
economic reform. Environment and Water Minister Adulrahman
al-Eryani urged that Yemen’s water crisis, increasingly a
driver of conflict and instability, be a major issue on the
bilateral agenda, and he asked for political, rather than
financial, support to put it there. European Ambassadors
grappled with how to press Saleh for political and economic
reforms, recommending high-level U.S. engagement with Saudi
Arabia, and advising U.S. officials to be blunt and "brutally
honest" in their conversations with President Saleh. With
respect to economic development and addressing the water
crisis, Yemeni advisors and officials have formulated
thoughtful and realistic reform proposals that will require
political -- specifically presidential -) will in order to
have any hope of being implemented. END SUMMARY.
DREAMING OF A "NEW CHAPTER" IN US-YEMENI RELATIONS
--------------------------------------------- -----
¶2. (S/NF) Foreign Minister Abubakir al-Qirbi told Ambassador
Sanderson in their September 15 meeting that Saleh’s primary
goal for his upcoming visit to Washington is to "start a new
chapter in Yemeni-US relations." (Note: The visit has since
been postponed and remains to be re-scheduled. End Note.)
According to Qirbi, over the past eight years, the
relationship has been "overshadowed by terrorism and
counter-terrorism," but a new chapter can begin with the
launching of a "strategic dialogue." Although the structure
and function of this proposed "strategic dialogue" remain
murky, Qirbi described it as a "mechanism to do regular
consultations on all issues" on the bilateral agenda, in
order to ensure that dialogue between the two countries is
continuous and forward-looking rather than reactive and
crisis-driven. In his parting words, Qirbi urged Ambassador
Sanderson to help make Saleh’s visit to Washington "a
landmark visit for better relations."
TOP TEN ECONOMIC PRIORITIES
---------------------------
¶3. (SBU) DAS Sanderson met with the group of
Western-educated ROYG officials behind the new Top 10
Economic Priorities (reftel). Deputy Finance Minister Jalal
Yaqoub described civil-service reform, particularly a new
program to attract 100 Yemeni expatriates to senior
government positions, as the key that would unlock the other
priorities on the list, including attracting new oil
companies, gradually lifting diesel subsidies, and sending
unskilled Yemeni laborers to GCC markets. DAS Sanderson
urged the group to view presidential engagement not as one
among a list of priorities, but an essential prerequisite for
the implementation of each item.
WATER SHORTAGE THREATENS STABILITY
----------------------------------
¶4. (S/NF) In their September 16 meeting, Dr. Abdulrahman
al-Eryani, Minister of Environment and Water, expounded upon
Yemen’s "insidious" water crisis and ways to ameliorate it.
Eryani described Yemen’s water shortage as the "biggest
threat to social stability in the near future." He noted
that 70 percent of unofficial roadblocks stood up by angry
citizens are due to water shortages, which are increasingly a
cause of violent conflict. He reported that small riots take
place nearly every day in neighborhoods in the Old City of
Sana’a because of lack of water, and he predicted that the
capital could run out of water as soon as next year.
According to Eryani, one of the major causes of Yemen’s
dwindling water supply is the lack of water governance.
Hundreds of privately owned, unregulated rigs are used to
drill private wells deep into the earth in search of water.
The owners of these drills are "running wild, drilling holes
everywhere. We need to control these private rigs." A major
obstacle to doing so is that fact that the rig owners are
powerful individuals )- army officers, sheikhs, members of
the president’s family, and certain government ministers -)
who are "untouchable" by the law. Another major cause is
agriculture. Up to 85 percent of water is used for
agriculture, and half of that is for growing the narcotic
drug qat.
¶5. (S/NF) Eryani said that one "very easy way to make water
use more efficient" is to lift diesel subsidies. Cheap
diesel is leading to the water crisis because, on the one
hand, "many farms would no longer be sustainable if their
owners were paying the right price for diesel," and on the
other, it fuels the private rigs that are running rampant
across the country. Eryani also recommended greater water
conservation and even water harvesting at the household
level. He urged that water become part of the bilateral
agenda. In his opinion, the greatest support the US
government can provide is "political, not financial," in
order to elevate the water issue on the political agenda in
Yemen and in its relations with donors.
EUROPEAN AMBASSADORS: GET SAUDI TO BACK REFORM
--------------------------------------------- -
¶6. (S/NF) In a September 16 lunch with European Ambassadors,
much of the discussion focused on what levers of influence
could push the Saleh regime to reform. First and foremost,
they said, is Saudi Arabia, which plays a critical role in
Yemen due to the considerable financial support it provides
to both the Saleh regime and hundreds of Yemeni sheikhs on
its payroll. (Note: It was noted that KSA reportedly has
given the ROYG $300 million in recent months, to prosecute
its war against the Houthis and attend to other pressing
needs. End Note.) The participants agreed that even if KSA
could be convinced to demand more reform from Saleh in return
for its support, if unnerved by instability in Yemen, KSA
would likely break ranks and infuse Yemen with cash, without
reform strings attached. The Ambassadors agreed that
threatening to cut off development aid is not an effective
lever for demanding political reform. According to the
German Ambassador, "Saleh doesn’t care if we give $80 million
or $200 million in development aid. What he wants is
political support against the Houthis and the Southern
Movement."
¶7. (S/NF) The Ambassadors cautioned that Saleh will try to
use his meeting with Obama - whenever it might occur - as an
endorsement of the war against the Houthis and other
policies. In order to gain some reforms from Saleh, the
British Ambassador advised, "The brusker, the blunter, the
better. Saleh doesn’t understand anything if it’s framed
diplomatically." The British Ambassador suggested getting
Saleh out of his comfort zone by discussing imperative
economic reforms, as his capacity to argue against them is
much weaker. With respect to Qirbi’s proposed strategic
dialogue, the Ambassadors thought that it could be beneficial
in two ways. First, it could help correct course, so that
the entire US-Yemeni relationship does not get thrown
off-course by incidents that inflame public sentiment and get
embroiled in domestic politics. Second, it could provide a
framework for ramping up aid over time provided that certain
conditions are met along the way.
NEW BILATERAL ASSISTANCE AGREEMENT
----------------------------------
¶8. (U) Ambassador Sanderson attended a signing ceremony at
the Ministry of Planning and International Cooperation
marking a bilateral assistance agreement to fund essential
development projects in the fields of health, education,
democracy and governance, agriculture, and economic
development. The agreement will provide over $30 million in
FY2009 in the first tranche of incremental funding for the
three years agreement. USAID has already put out a tender to
fund one of the ROYG’s Top 10 Economic Priorities, a program
to attract the "top 100 talent" into the civil service, and
is looking for ways to support other elements of the
initiative.
COMMENT
-------
¶9. (S/NF) Ambassador Sanderson’s interlocutors were pleased
that she chose Yemen for her first visit to the Maghreb and
Gulf region. They were also pleased that she focused on
economic development and the water crisis, fundamental reform
issues that are often overshadowed by seemingly more urgent
security concerns. On both fronts, Yemeni advisors and
officials have formulated thoughtful and realistic reform
proposals. Their successful implementation requires
political -- specifically presidential -- will. To date,
President Saleh has not demonstrated significant interest in
these two issues, but the U.S., Saudi Arabia, and European
donors should continue to pressure him to tackle them before
the situation deteriorates further. END COMMENT.
SECHE