US embassy cable - 04SANAA2803

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 002803 
 
SIPDIS 
 
E.O. 12958: DECL: 11/02/2014 
TAGS: PGOV, KCOR, KMCA, YM, ECON/COM 
SUBJECT: DFM NOMAN DEPRESSED OVER RISING CORRUPTION IN YEMEN 
 
 
Classified By: Ambassador Thomas C. Krajeski for reasons 1.5 b. and d. 
 
 1. (C) Summary: In a candid and wide ranging discussion on 
November 2, Deputy Foreign Minister Mustafa Noman advised 
Pol/Econ Chief and Deputy that Post should convey to 
high-level ROYG officials the perils of corruption.  Noman 
advised the Embassy to communicate to journalists and 
businessmen more about Yemen's scores on the Millennium 
Challenge Account, and underscore the USG's commitment to 
avoiding political choices and sticking to the indicators. 
Noman offered insights into the recent failure of the 
economic reform package and noted Parliament's frustration 
over progress by the government to address serious concerns 
about where the ROYG's budget is spent. End Summary. 
 
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MCA: "Tell Them How Bad We Are" 
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2. (C) Noman called in Pol/Econ Chief and Deputy to discuss 
Yemen's Millennium Challenge Cooperation (MCC) threshold 
status.  Noting that Yemen's MCC scores are qat chew talk, he 
said that the journalists are questioning the U.S commitment 
to stick to the indicators.  In response to Pol/Econ Deputy 
affirming that the indicators are solid, Noman interjected 
"tell them (the government) how bad we are doing."  Noman 
explained that several Presidential advisors focus on Yemen's 
positive scores in Economic Freedom.  According to Noman, the 
real message that Yemen is failing in the "Governing Justly" 
category and that corruption is rising is not reaching 
President Saleh.  Noman said the Embassy in Washington began 
discussions with the Mongolians to understand how they were 
able to qualify for MCC and said the ROYG is looking for best 
practices.  Noman urged Post to brief journalists and 
businessmen on MCA qualification and what reforms the ROYG 
needs to take to qualify. 
 
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"Corruption is the New Value" 
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3. (C) Turning to corruption, Noman took note of Transparency 
International's new corruption index, where Yemen now ranks 
112 out of 145 countries and said, "I'm depressed." 
Characterizing corruption as spreading like "fire," Noman 
said, "corruption is the new value."  Pointing to three 
million dollar houses, Noman commented that some people 
question a persons' intelligence if he works for the 
government and does not boast houses and a wealthy lifestyle. 
 Jalal Yaqoub at the Ministry of Planning told Pol/Econ 
Deputy that when the TPI scores came out, many in the Yemen 
government were actually pleased and believed the new scores 
more accurately reflect the situation. 
 
4. (C) Noman raised a critical letter to President Saleh that 
appeared briefly on the website "Allaf" (NFI) in Saudi Arabia 
from a Saudi businessmen complaining about tendering 
procedures in Yemen.  The letter described his attempt to 
secure a contract with a governor in Yemen, who asked for a 
40 percent cut of the project's profit.  Noman said that the 
letter was on the website at four pm on November 1, but taken 
off that same evening when he checked again. 
 
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Reform failed Because Government 
Placed Whole Burden On Poor 
-------------------------------- 
 
5. (C) Noman said he believes economic reform failed because 
the government did not explain to Parliamentarians what they 
were going to do with the money and placed the burden of 
reform on the poor.  Saying "everyone knows we have to cut 
the subsidy," Noman reported that Parliamentarians complain 
that the Government was not taking commensurate cut backs on 
the reform package.  Noman noted real worries about the 
impact of the diesel subsidy reduction on Yemen's poor, but 
said Ba Jammal focused only on the economic benefits of 
diesel subsidy reduction and not where the money saved would 
be going or what the government itself was doing to reform. 
Noman said he was confident the reductions and economic 
reform would eventually pass and that Yemen faced a "hard 
deadline" on 
economic reform. 
 
6. (C) On the long-delayed tenders, Sofan said "yes everyone 
thinks Siemens will win" the  power contract, but Parliament 
will likely call corruption and make it the new Block 53, 
referring to Parliament's investigation into a corruption 
scandal. 
 
7. (C) Comment: Once again, DFM Noman proved to be one of 
posts' most candid and pro-reform ROYG interlocutors.  Noman 
mentioned that he had been in his job at the Ministry for a 
year and signs of his frustration are evident.  Yemen's new 
corruption scores are likely more reflective of the current 
state of affairs in Yemen. Post is looking into ways to work 
with G-8 colleagues to create a consistent message (and 
perhaps a common plan) that the ROYG must deal with 
corruption in the coming years or risk Yemen's democratic and 
economic progress.  End comment. 
KRAJESKI