MINISTER OF INDUSTRY AND TRADE ON YEMEN'S ECONOMIC

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
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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