Yemeni reform process takes steps forward and back

Published March 5th, 2001 - 02:00 GMT

Personal weaponry remains a highly popular accessory in Yemen, where men frequently walk about with curved “Jambya” daggers strung to their waists and rifles slung over their shoulders. The combination of these and fierce political rivalries created a lethal mix in the weeks leading up to and the days’ following February’s municipal election. Some 20 Yemenis were killed during the election campaign, and another 20 died violently during the polling itself. In the days that followed, more people lost their lives. 


But, despite the bloodletting, there was a genuinely festive atmosphere in the country, which had not seen a democratic municipal election in the 11 years since the north and south were reunited under one flag. In an effort to decentralize the manner in which Yemen is governed at the local level, 10,000 candidates competed for approximately 7,000 council slots. And, when the votes were counted, it was reported that President Ali Abdullah Saleh's General People's Congress party had secured 61 percent of the seats, beating out the Islamic opposition party, Al-Islah. In a number of districts, ballot confusion was blamed for voting delays. A date for new elections in those areas will be announced. 


A more controversial issue that was also decided on the polling day was a proposal to amend the nation's constitution to extend the terms of the president and members of the national parliament. The Supreme Elections Committee said the referendum was passed by 73 percent of the voting population. What this effectively does is guarantee that Saleh, who first rose to power as president of North Yemen in 1978, will remain in office until the year 2013. Human rights groups have attacked these constitutional changes, charging that they are merely means to consolidate the ruling party’s hold on power. 


The Yemeni authorities had intended the election to demonstrate to the outside world—and particularly to foreign investors—that the country was ready to enact the political and economic reforms necessary to put it firmly on the world’s business map. 


Yemen remains one of the Arab world’s poorest countries, with an average annual per capita income of $280. But its case for international recognition is not necessarily hopeless. Successful monetary policies, carried out under the supervision of the IMF and World Bank, have increased its central bank’s foreign reserves to four billion dollars, sufficient to cover 12 months of imports. In addition, inflation has been curtailed to around four percent in 2000—from a high of 70 percent in 1995—while rising oil prices have also enabled Yemen to repay some of its domestic and foreign debt.  


Yemen has also benefited from significant debt relief. Earlier this year, Japan extended Yemen reprieve amounting to $3.04 million, while Saudi Arabia agreed to reschedule $249 million in Yemeni debt, reducing its obligations by approximately 75 percent and extending repayment to 40 years. The two neighbors also signed a deal in which Saudi Arabia would extend $300 million in fresh loans to Yemen to finance a number of road and electricity projects. 


Yemen’s notoriously poor physical infrastructure is being upgraded. Soon to be launched are two cell phone operators, who will rival the monopoly wireless operator, TeleYemen, which is a joint venture between the state and UK-based Cable & Wireless. The new operators are SabaFon, an initiative of Egypt’s Orascom Telecom, and SpaceTel, whose principals include Lebanon’s Investcom and Oman’s Al-Zubeir Group. Initial plans call for the two operators to invest a total of approximately $190 million over 15 years, with an expected annual growth in wireless communications use of 50-100 percent for the foreseeable future.  


But most of Yemen’s economic hopes are vested in its oil sector, which only recently received a major boost when a decades’ long border dispute with Saudi Arabia was resolved, opening up potentially lucrative areas of the country for exploration and exploitation. Now, having signed prospecting agreements with several foreign oil companies, Yemen aims to double its production total to one million barrels per day over the coming five years. 


Yemen has 63 oil fields, and the country’s recoverable reserves are estimated to equal 5.7 billion barrels. Foreign involvement in Yemen’s oil sector is picking up, but for the most part involvement is limited to the minor leaguers, as the country’s still precarious political, economic and security situation continues to keep most of the majors away. 


Yemen also has 16.9 trillion cubic feet worth of natural gas reserves, making the country a potential producer and exporter of LNG. The bulk of Yemen's gas reserves are concentrated in the Marib-Jawf fields, operated by the Yemen Exploration and Production Company (YEPC). A possible market for this product is India. 


On paper, therefore, Yemen’s economic prospects appear reasonable indeed. But much depends upon how the country is viewed in the boardrooms of companies in the developed world. There, the deciding factor is likely to be Yemen’s long-term economic and political stability, and in that respect the jury is still out.  


As a result of recent economic reforms, Yemen’s macroeconomic situation has improved, but its high population growth rate of 5.8 percent per annum has prevented these fiscal improvements from filtering down to the individual level. This makes political reform all the more crucial. But, whether the ordinary Yemeni citizen considers the recent municipal elections and constitutional referendum as having improved their situation, still remains to be seen. — (Albawaba-MEBG)

© 2001 Mena Report (

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