US embassy cable - 04SANAA1959

UNCLAS SECTION 01 OF 02 SANAA 001959 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, PGOV, YM, ECON/COM, DEMOCRATIC REFORM 
SUBJECT: ADEN SHOWING SIGNS OF LIFE 
 
1. (SBU) Summary/Comment: On an 8/4-8/6 introductory visit to 
Aden, CDA met Deputy Governor Shaif, representatives of 
political parties, businessmen, security and Coast Guard 
officials and members of civil society.  The recent firing of 
a corrupt official running the Aden Free Zone, some increase 
in transshipment rates through the Free Port, and new 
investment opportunities bring renewed hope for Aden's 
future.  However, expats and local businessmen expressed 
continued frustration over corruption and bureaucratic delays 
at the Free Zone and Port.  Opposition party representatives 
underscored downward trends in democratic development and 
press freedom, but noted clear improvements in Aden's 
infrastructure and economic development.  The ROYG's new 
attention to long-standing management issues at the Aden Free 
Zone and Free Port indicate that the ROYG may now be taking 
Aden's significance to continued long-term economic stability 
seriously.  A visit to the independent daily "al-Ayyam" 
provided an opportunity to reinforce Mission message on USG 
policy goals in Yemen. End summary/comment. 
 
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Aden: Still Recovering from 1994 Civil War 
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2. (U) On 8/4 Deputy Governor of Aden and General People's 
Congress Party Chairman Abdulkarim Shaif described to CDA 
Aden's infrastructure development projects, including 
improvements to roads, electricity and telecommunication 
networks.  Rebuilding after the 1994 civil war, Shaif said, 
was a great challenge and the local government is working to 
alleviate several remaining problems, including the issue of 
19,000 families living in nationalized houses whose owners 
want to return. 
 
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New Management for Aden Free Zone and Free Port 
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3. (U) After the 2002 attack on the French tanker Limburg, 
shipping traffic through the Aden Free Port decreased by 75% 
to roughly 12,000 Twenty-foot Equivalent Units (TEUs) per 
month as a result of a 300% increase in insurance rates for 
transshipment.  In June 2003, the ROYG struck a deal to 
reduce insurance prices and shipping is slowly returning to 
Aden.  Today, an estimated 24,000 TEUs per month pass through 
the Aden Free Port, roughly 35% of the pre-Limburg rate of 
60,000 TEUs per month.  In early 2004, the ROYG bought out 
the Singapore operator of the Free Port and separated the 
management of the Free Port from the Free Zone.   A Dutch 
company, under contract by the ROYG, will soon be issuing an 
international tender for the running of the port. 
 
4. (U) Shaif referred to the 7/20 firing of the notoriously 
corrupt former Director of the Aden Free Zone General Dirham 
Noman as a positive step and explained that Governor Shu'aibi 
is now temporarily in charge of the Free Zone.  Shaif 
continued that the Port faced stiff competition from Dubai 
and Oman, but was confident that Aden's prime location would 
soon win back companies and trade would expand.  Shuaibi is 
presently writing a report on the Free Zone's future and will 
submit his recommendation to the Prime Minister and 
President. 
 
5. (U) General Manager of Aden International Marine 
Corporation Mohammed Assara, who operates a factory in the 
Aden Free Zone, said the Free Zone "is not what was 
expected."  Assara added that he now employs only 180 
persons, but had originally planned for 500.  Complaining 
that there was no central customs organization for the Free 
Zone,  Assara said he continuously looses 3-5 days in his 
shipping time working through needless bureaucratic hassles. 
While several Yemeni businessmen and members of civil society 
expressed optimism over the changes to the Free Port and Free 
Zone, expats were adopting a "wait and see attitude."  A PSI 
Shipping Agent told Pol/Econoff that while shipping rates 
seem to be higher, he expects them to drop significantly next 
month. He was pessimistic that management changes at the Free 
Port and Free Zone would alleviate long-standing problems. 
 
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Mixed Reviews on Democratic Progress; 
NGOs Seek Enhanced USG Support 
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6. (U) Islah Political Party Deputy Chairman Dr. Jamal 
al-Lawzi and Yemen Socialist Party Chief Ali Munnasar 
expressed concern over what they viewed as a downward trend 
in democratic development in Yemen.  Noting that the joint 
working party between Islah and the Socialist was "a work in 
progress," both pointed to what they viewed as an increased 
concentration of power by the GPC.  Pointing to GPC 
interference with counting procedures during the 2003 
parliamentary elections, Lawzi and Munnassar saw the GPC as 
the main source of corruption in Yemen.  In a separate 
meeting with Aden based NGOs,  representatives described 
their agendas to CDA, including poverty alleviation and 
empowerment of women.  CDA expressed willingness to work with 
members of civil society to encourage reforms and encouraged 
NGO leaders to form internal and regional networks in order 
to make better use of capacity-building training programs. 
 
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Al-Ayyam Editor Concerned over Shrinking Press Freedom 
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7. (U) On 8/6 Basha Basharheel, editor-in-chief of Aden based 
al-Ayyam newspaper, interviewed CDA on a wide range of 
bilateral and regional subjects.  The interview allowed CDA 
to reinforce Mission message on political and economic 
reforms as well as on U.S.- Iraq policy.  In an earlier 
conversation, Basharheel said press freedom is "shrinking 
considerably" and that self-censorship is practiced daily in 
editorial meetings.  In some cases, Basharheel added, 
Al-Ayyam has received a call from the President's office 
informing al-Ayyam that it is unacceptable to report on an 
issue, as in the case of the al-Honeish islands dispute. 
Other matters, such as Ali Muhsen Al-Ahmar's and Zindani's 
roles in cultivating religious extremism prior to the 1994 
civil war, Basharheel said, are simply understood as off 
limits.  Turning to Aden's overall development, Basharheel 
observed that many people have lost confidence in local 
councils because there is no visible accomplishment. 
However, Basharheel affirmed that Governor Shu'aibi is making 
progress in Aden and that his efforts to build infrastructure 
were widely praised. 
KHOURY