US embassy cable - 03SANAA1193

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001193 
 
SIPDIS 
 
E.O. 12958: DECL: 05/27/2013 
TAGS: PREL, PGOV, EAID, YM, ECON/COM 
SUBJECT: DEPUTY PRIME MINISTER SOFAN: ECONOMIC ISSUES AND 
AVENUES FOR FUTURE COOPERATION 
 
REF: SANAA 1150 
 
Classified By: Ambassador E. J. Hull for reasons 1.5 b. and d. 
 
1. (C) Summary: Newly appointed Deputy Prime Minister and 
Minister for Planning and International Cooperation Ahmed 
Sofan outlined the new government's priorities to Ambassador 
in a courtesy call on May 26. Sofan also said that he expects 
the long-delayed gun-control legislation to pass Parliament. 
Welcoming President Bush's free trade proposal, Sofan 
reinforced his committment to cooperate fully with the USG on 
assistance-related issues. End Summary. 
 
2. (U) On May 26, Ambassador paid a congratulatory call on 
newly appointed Deputy Prime Minister and Minister of 
Planning and International Cooperation Ahmed Sofan.  Sofan 
was promoted in the recently formed cabinet from Minister of 
Planning and Development to Deputy Prime Minister and his 
ministry was given new oversight authority over international 
cooperation. 
 
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New Agenda: Economics and Combating Terrorism 
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3.  (U) Sofan highlighted three priorities for the new 
government's agenda: economic reforms, implementation of the 
poverty reduction strategy formulated by the World Bank, and 
enhancing counterterrorism activities. 
 
4. (C) Expressing concern over the effect of declining oil 
prices on the Yemeni economy, Sofan said that if oil prices 
fall below 25 USD a barrel the ROYG may seek donor support. 
Even now, he added that the public may be surprised at next 
year's budget, implying that there may be cuts.  Adding that 
regional economic cooperation has not fulfilled expectations, 
Sofan said that the Yemeni public may see a disconnect 
between their social welfare needs and the current economic 
reality. 
 
5. (C)  Sofan predicted that he thought Yemen would be more 
forthcoming in the political realm of combating terrorism by 
making its position very clear to the public.  On a related 
issue, the Ambassador raised the long-delayed gun control 
legislation -- which inter alia could ban private ownership 
of MANPADS -- and noted its passage would be an "important 
step." Sofan responded by saying that he thought they were 
going to succeed in gaining its passage. 
 
 
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Free Trade Agreement: Supportive, but 
Regional Integration Faces Hurdles 
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6. (C) Sofan supports President Bush's Middle East Free Trade 
Initiative because he believes it will offer better 
assistance to the private sector than other USG assistance 
projects.  He specifically asked for an American firm to help 
with Yemen's public relations and complained that the ROYG 
received very little assistance in that area from other 
donors. Programs funded by the USG through the National 
Democratic Institute to facilitate democracy, Sofan added, 
were helping Yemen's reputation.  However, he repeated, an 
American PR firm was the best solution to promote Yemen's 
tourism, business and image abroad. 
 
7. (C) Turning to the possibility of regional free trade 
agreements, Sofan recalled that in the past, internal Arab 
politics had frustrated regional trade promotion programs. 
Recalling the first Arab Free Trade Agreement in 1958, Sofan 
declared that no progress has been made since then to 
facilitate trade. Moreover, the U.S. Free Trade Agreement 
with Jordan has hurt Egyptian textile trade with the U.S. 
Sofan noted that the Gulf countries have similar economies 
and must compete against each other for business. 
 
8. (C) Instead, Sofan encouraged the USG to consider short 
term initiatives that would help the Yemeni economy and 
pledged that he would work with the USG to determine what was 
needed. For example, he thought the Ministry of Trade and 
Industry may need special experts on preparation of documents 
for World Trade Organization accession. 
 
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Civil Service Reform: The Slower Approach 
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8. (C)  Sofan reinforced the new government's committment to 
civil service reform, saying there was "no question of not 
doing it." Suggesting that as many as 300,000 civil servants 
would eventually have to be laid off, and that salaries would 
have to be raised to ten times the amount presently offered, 
Sofan said the new government would embark, of necessity, on 
a "slower approach" to civil service reform.  The government 
will focus on encouraging employees to retire, ending "double 
dippers" (people who hold jobs at more than one ministry) and 
minimizing the bureaucracy. Sofan added that the World Bank 
program on civil service reform would not be sufficient to 
carry out a complete overhaul of the civil serve and there 
may be areas for future USG cooperation. 
 
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Encouraging Increased Interaction 
--------------------------------- 
 
9. (C) Positively assessing USG and ROYG assistance 
cooperation, Sofan pledged to continue USG and ROYG close 
interaction, especially with the imminent arrival of USAID. 
Ambassador described the process that determines whether 
Yemen qualifies for the Millennium Challenge Account and 
pointed out that he may return to Sofan and ask for his 
specific help in certain categories where Yemen may fall 
short. Sofan agreed and pledged to work closely on MCA. 
Sofan closed by explaining that his new Ministry was created 
to centralize all interaction on assistance, with the goal of 
stemming corruption. Before, he added, too many Ministries 
were involved in making decisions on assistance and this 
process allowed for corruption. 
HULL