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2004-12-20 10:07:00
Embassy Sanaa
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						C O N F I D E N T I A L SECTION 01 OF 02 SANAA 003130 


E.O. 12958: DECL: 12/14/2014

Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b and d).

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 003130


E.O. 12958: DECL: 12/14/2014

Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b and d).

1. (C) Summary. Pol/Econ Deputy had a wide ranging
discussion with Abdul Wahab Thabet, Chairmen of the Thabet
brothers, the second largest company in Yemen. Thabet
vigorously criticized three of the most powerful ROYG
ministers for corruption, and stated that on economics
President Saleh, "doesn't get it." Thabet was very
forthcoming on corruption problems, and said that opposition
to economic reform will cease if the ROYG made real progress
on corruption and administrative reforms. End summary.

-------------- --------------
Minister of Finance: The Biggest Obstacle to Change
-------------- --------------

2. (C) According to Thabet, Deputy Prime Minister and
Minister of Finance al-Salami represents the biggest obstacle
to economic reform and real progress on tackling corruption.
Thabet explained that attempts by the Central Bank to
reorganize are thwarted by the Minister of Finance. Salami,
he said, also forced out the former Customs Chairman Hafedh
Mayed for trying to reduce tariffs, particularly on cars.
The new customs chairman, Dr. Zobaidi Thabet is, according to
Thabet, "worthless and not focused on stopping smuggling."
And in any case, questioned Thabet, is it really smuggling if
the government officially allows it to happen?" Thabet
thought it unlikely that Salami was on his way out, but
removing him is the only way to affect real change in Yemen.
(Comment: Salami is likely going nowhere except perhaps up,
although his departure would signal a sea-change in Yemen
economic development. End comment.)

Prime Minister Ba Jammal -- "Useless"

3. (C) Characterizing Prime Minister Ba Jammal as "useless,"
Thabet said he was supposed to be out two months ago. (Note:
Ba Jammal's rumored departure is talked about openly in all
circles and most interlocutors report that it is only a
matter of time. End note.) When queried abo
ut possible
successors, Thabet dismissed rumors that Deputy Prime
Minister and Minister of Planning Ahmed Sofan may take the
PM's place. According to Thabet, the most commonly mentioned
candidate is Sanaa University Rector Salah Ba Surah, whom
Thabet dismissed as "incompetent." He noted that the third
rumored successor, Aden Governor Shuaibi, should not be
elevated to PM because Aden Governorate was the "size of a
job he can handle." Thabet said that several businessmen are
lobbying for Foreign Minister Qirbi to take over as PM.
(Comment: Qirbi as PM would change the post-unification
tradition of having a PM from the South. Thabet said that
Qirbi being from the al-Bayda region -- on the border --
would likely be acceptable for both Southerners and
Northerners. End comment.)

-------------- --------------
Sofan Involved with Aden Port Tender Mismanagement
-------------- --------------

4. (C) Claiming that Sofan is all talk and short on
follow-through, Thabet complained that while he may be the
darling of some Western officials, in his opinion he was part
of the problem. Thabet claimed that Sofan and PM Ba Jammal
are in cahoots, interfering with transparancy efforts in the
tender process for the Port of Aden. Thabet said that under
the auspices of the Rotterdam Management Group, several
companies were short-listed for the tender to operate the
Port -- Dubai and Hutchison Whampoa were the leading
contenders. According to Thabet, Sofan and Ba Jammal
convinced the tendering board to approve all 13 bidding
companies for final review, including their own company, the
former operator of the Port, which has been roundly
criticized as inept and corrupt. Thabet implied that Sofan
and Ba Jammal's company may win the contract. (Comment:
Specific accusations aside, Post assesses this to be an
accurate accounting of the corrupt tendering process and
notes that it is common for Ministers to ensure their own
companies win lucrative tenders. End Comment)

5. (C) Thabet appealed for the embassy to lobby for a clean,
transparent process and said that he along with his brother,
a prominent MP, plan to seek an audience with the President
urging him to consider the Hutchison Whampoa group. (Note:
The Thabets who are heavily involved in marine businesses
would probably benefit from Hutchison. End Note.)

-------------- -
On Economic Reform -- Where's the Money Going?
-------------- -

5. (C) In Thabet's analysis, no one at the top really
understands the changes needed for necessary economic
reforms. On a positive note, Thabet noted that Saleh
recently announced the creation of a committee to investigate
diesel smuggling (septel), but remarked that the last time
someone was fired for corruption, he was promoted to a higher
position a week later. Thabet said he and other members of
the Chamber of Commerce would stop opposing economic reforms
if the government could clearly account for where the money
that would be saved by ending subsidies would be spent -- how
would it benefit the Yemeni people.

President Saleh -- The Old Man Doesn't Get It

6. (C) In response to the question, "who understands the
economic situation?" Thabet relied, "The old man doesn't get
it, and the people around him feed him bad information."
Complaining that the President is more and more inconsistent
in his speeches, Thabet said recent attempts by the Saleh to
combat corruption are laughed off by most observers. Thabet
said only the US, UK and EU donor nations were capable of
convincing Saleh of the need for economic reforms. "Maybe
the old man will listen," said Thabet, "athough he only
understands tribal and security issues." Thabet confided that
he could think of only two potentially honest brokers,
Minister of Labor Affairs and Social Fund Director Arahabi,
and former Minister of Oil and Minister of Finance al-Wajih.

7. (C) Comment. Thabet is a long-time Embassy interlocutor
whose frustration is clearly mounting along with negative
economic indicators and growing corruption. Thabet is not
the first to point to the inability of the senior ROYG
leadership to get through to Saleh on dire economic trends.
Securing a viable international operator for the Port of Aden
is one of the few hopes for Yemen's economy. If Thabet's
allegations surrounding the Port of Aden contract are true,
the ROYG will be missing a rare opportunity to bring in much
needed direct foreign investment into Yemen.

8. Comment Continued. At a dinner meeting with MOPIC
Minister Sofan and visiting MCC threshold team, Ambassador
told Sofan that donor countries and the international
business community would closely watch the Aden Port tender.
It was very important for Yemen's reputation, Ambassador told
the Minister, that the process be transparent, fair, and
result in award of the contract to a reputable company.
Sofan agreed completely but confirmed that the tender
committee would consider all bidders, there is no shortlist.
End Comment.