Published October 18th, 2000 - 02:00 GMT





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e - Al-Bawaba forecasts 






Political Outlook 


In mid-June, Yemeni President Ali Abdullah Saleh and Saudi Crown Prince Andullah Bin Abd al-Aziz signed a treaty on border demarcation between the two states. The two nations had been working since 1995 to define their 2,500-kilometer joint border. Both sides have since pulled back armed forces to a certain distance from the border. The new agreement will likely strengthen relations in all fields between the neighbouring states and in the future, create the possibility of Yemen joining the Gulf Cooperation Council. 


Economic Outlook 


Hopes are high among economic circles in Yemen that the Yemeni-Saudi border treaty will enable investors from both countries to establish joint plans for investment in industrial, agricultural and marine sectors. Potential is strong for projects in the free zone of Aden, which could increase exports of the two neighbouring countries. An upcoming visit by a Saudi business delegation, led by Ali Abdu Yamani, will undertake an economic feasibility study of the Aden industrial free zone.  


Immediately after the announcement of signing the Yemeni-Saudi border treaty, the Yemen Riyal jumped nearly 5 percent versus the U.S. dollar to a rate of YR 153 to 1 US$. Economic experts predict that in the case of slow and gradual normalization in commercial relations with Saudi Arabia, the Riyal will continue to appreciate steadily. Another factor behind the rise of the Riyal is the anticipated impact of the border treaty on long-term financial aid from Saudi Arabia, and the resumption of acceptance of Yemeni labour into Saudi markets. 


Meanwhile, Yemen is aggressively seeking to expand its liquefied natural gas (LNG) capacity. To this end, the Yemen LNG Co. is moving forward with the bidding of major packages for its plant, despite the lack of a single sales contract. Engineering, procurement and construction bids are due to be submitted in mid-September for the two main packages, which include the plant contract and the pipeline. Even though Yemen LNG has yet to conclude any sales and purchase agreements with international customers, contractors are still taking the bidding process seriously. Yemen LNG’s principal target markets are South Korea and India. 




The recently signed border demarcation treaty between Yemen and Saudi Arabia represents a milestone in Yemen’s regional relations. For years, attempts at joining the Gulf Cooperation Council (GCC) had been thwarted by Saudi Arabia. In the near future, the large Saudi market will open to Yemenite commerce, and Yemen should eventually join the six-member GCC, which is due to establish a common external tariff and gradually evolve into a customs union within five years. 

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