US embassy cable - 03SANAA1702

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001702 
 
SIPDIS 
 
E.O. 12958: DECL: 07/14/2013 
TAGS: ETRD, EIND, ECON, YM, ECON/COM 
SUBJECT: MINISTER OF INDUSTRY AND TRADE ON YEMEN'S ECONOMIC 
OUTLOOK 
 
Classified By: Ambassador Edmund J. Hull, for Reasons 1.5 (b) and (d). 
 
1.  (C)  Begin summary:  Ambassador and USAID Representative 
met with newly-appointed Minister of Industry and Trade Dr. 
Khaled Rajeh Sheik on July 12.  The courtesy call was part of 
a series of discussions with newly-appointed ROYG officials 
to ascertain their priorities and convey U.S. commitment to 
development and security.  Issues discussed included the 
creation of tourist zones, the World Economic Forum, Yemen's 
accession into the WTO, PL-480, and USAID's mission.  Also in 
attendance were Dr. Abdul Ghani and PolOff (notetaker).  End 
summary. 
 
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Industrial Zones 
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2.  (C)  During a 7/12 courtesy call, Ambassador 
congratulated Dr. Khaled Rajeh Sheik on his appointment as 
Minister of Industry and Trade, and welcomed the opportunity 
to discuss the Minister's program.  Sheik announced a ROYG 
plan to establish three industrial zones - one each in Aden, 
Hodeidah, and Mukalla.  ROYG will initiate this process, he 
explained, by creating laws to legalize such areas.  The goal 
is to create profit generating ventures like Jabil Ali in 
Dubai, but on a much smaller scale. 
 
3.  (C)  Sheik also discussed the importance of connecting 
Yemen to her gulf neighbors, noting that regional trade was 
only in its infancy.  He mentioned ongoing trade in fruits 
and vegetables, but noted that trade in meat was forbidden 
because of cases of Rift Valley disease in the region, 
especially in Saudi Arabia.  However, he added, smuggling of 
meat does occur.  Overall, said the Minister, "with ongoing 
projects with the European Union (EU) and the World Bank, 
ROYG is on the right track." 
 
4.  (C)  Ambassador agreed that U.S.-Yemen cooperation on 
industrial zones may be a possibility.  An initial focus 
should be on improving Yemen's image in the world arena with 
development and security initiatives -- for example, by 
increasing maritime security with the creation of a Yemen 
Coast Guard.  Other initiatives designed to improve technical 
skills, like community colleges, he added, are also important 
to long-term success.  Concurrently, the Ambassador suggested 
highlighting a successful Yemeni corporation like the Hayeel 
Saeed Company to further strengthen Yemen's public image. 
 
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World Economic Forum 
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5.  (C)  Minister Sheik positively reflected on his 
experience as head of Yemen's delegation to the World 
Economic Forum in June.  He said that Yemen, Jordan, and 
other Arab countries supported the remarks made by Secretary 
Powell, and agreed upon the importance of cooperation. 
Citing a WEF debate on the effects of terror on trade, Sheik 
welcomed U.S. support for ROYG industries that have been 
affected by terror.  He also expressed interest in the 
free-trade zone outlined by Secretary Powell at WEF, although 
he noted that a great deal of work would be required to bring 
the proposal to fruition. 
 
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World Trade Organization 
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6.  (C)  Minister Sheik confirmed that ROYG has asked the 
U.S., the EU, and Australia to support Yemen's accession into 
the World Trade Organization (WTO).  He said that ROYG is 
committed and will continue to engage until an agreement has 
been reached, and while the average period before accession 
is six years, ROYG wants to see Yemen accede in as little as 
three. 
 
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PL-480 
------ 
 
7.  (C)  Announcing $15 million (USD) in funds for PL-480 in 
FY-2004, Ambassador said these funds should be used to 
encourage sustainable development in Yemen.  He stressed that 
the health of the Yemen economy is internally and externally 
significant because security, financial and political 
stability, and investor confidence are all interrelated. 
Ambassador noted that USAID has experience in this type of 
development and AID Yemen would tap experience elsewhere -- 
e.g. Egypt. 
 
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USAID 
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8.  (C)  USAID Representative Douglas Heisler explained that 
USAID's development plan for Yemen is two-fold: 1) 
short-term: strenghtening the local level, including 
agriculture and agriculture-related business; and 2) 
long-term: working with ministries, the World Bank, and other 
donors to identify long-term opportunities for sustainable 
trade and investment. 
 
HULL