ROYG MAKING TENTATIVE STEPS TO STEM CORRUPTION AND

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 003151

SIPDIS

E.O. 12958: DECL: 12/19/2014
TAGS: ECON PGOV KMPI KCOR YM KMCC ECON COM
SUBJECT: ROYG MAKING TENTATIVE STEPS TO STEM CORRUPTION AND
PROMOTE ECONOMIC REFORM

REF: SANAA 2521

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


1. (C) A recent series of local press articles may signal
that the ROYG is finally taking initial steps to address
corruption, particularly in the area of diesel smuggling, one
of the main reasons Parliament was able to successfully stall
implementation of an economic reform package. In a meeting
to determine Yemen's MCA threshold proposal, Anti-Corruption
Committee point man Ali al-Anisi affirmed that fighting
corruption is a top priority for the ROYG. In September,
(reftel) Parliament (with the blessing of the President)
voted down a series of cost cutting and revenue enhancing
measures, saying that until the executive did more to address
administrative abuses and corruption, the reforms would not
pass. Parliament is now debating the 2005 budget, which has
attached to it the pending economic reforms. The reform
package includes reducing diesel subsidies, and instituting a
general sales tax and civil service reform.

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Saleh Forms New Anti-Corruption Committees
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2. (SBU) Press reports have focused on a move by President
Saleh to form two investigative committees to look at the
issues of oil smuggling and over-staffing at the Ministry of
Education. The committee investigating the oil subsidies
will be composed of members from Parliament's Oil Committee
(responsible for this past year's corruption investigation on
block 53) and members of the Central Organization for Control
and Audit. An article in the government daily "al-Thawra"
specified companies to be investigated. Deputy Foreign
Minister Noman told Pol/Econ Chief that all contracts with
the companies in question have been canceled until the
investigation is completed. (Background: One of the
arguments in favor of reducing the subsidy is that diesel
fuel is smuggled to neighboring countries and sold for
profit. Most of smugglers are affiliated with the military
and benefit from the subsidies.)


3. (SBU) The second committee will address a controversial
and public problem, over staffing at Ministry of Education.
It is rumored that as many as 50 percent of people who
collect salaries from the Ministry of Education do not
actually report to work.

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Press Supports Reform
--------------


4. (SBU) On December 12 "al-Thawra" ran a front-page
commentary noting that diesel subsidies cost the ROYG 670
million USD a year. "Those who were against the reforms are
corrupt and benefit from the low diesel prices," the article
criticized, accusing politicians who oppose reducing oil
subsidies for "not assuming and responsibility for the
national interest." (Note: The 2005 ROYG Budget is about 4.5
billion USD, the amount in diesel subsidies is in excess of
what the government spends on healthcare and education
combined. End Note).


5. (SBU) Deputy Minister of Planning Mohammed al-Sabry told
Pol/Econ Deputy he was pleased at the "strong words" of this
article and believed it indicated increased attention to
promoting reforms. Sabry himself penned an article that
appeared in the paper "Jaridat al-Nas," affiliated with the
opposition party Islah, saying that the "doses", as the
economic reforms are commonly referred to, will not affect
the people. Sabray analyzed the effect on the poor, and
concluded that while inflation will grow, more money will be
used for development. Sabry said that his article was the
first in a series that will directly address the concerns of
the average citizen over the effects of the economic reform
package.

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Anisi Says Saleh Personally Involved With Issue
-------------- --


6. (C) To demonstrate the ROYG's commitment to
anti-corruption measures, Deputy Prime Minister Sofan
arranged for Ambassador and visiting MCA Threshold Program
representative to meet with Director of the Presidential
Office and Deputy Director of the Supreme Committee for
Combating Corruption Anisi 12/20. Prime Minister Ba Jammal
heads the Supreme Committee. Anisi affirmed Yemen's
committment to fighting corruption and produced a German
financed study outlining measures the ROYG has to enforce its
existing anti-corruption laws. Anisi said President Saleh is
personally involved with anti-corruption measures and that
the government understands the issue. To close, Anisi
claimed that Yemen wants to take a leadership role in
fighting terrorism, promoting democratic reform and fighting
corruption. (Note: Anisi's committee is openly derided among
most Yemenis as worthless, and he is known to be one of the
more corrupt members of Saleh's inner circle. End note.)


7. (C) Comment: Embassy contacts are pointing to these
initial steps with pleasure, but note healthy skepticism at
what might be achieved. Anisi's committee has done nothing
in the past two years to actually stem the rising tide of
corruption. It is significant to note that for the first
time a Deputy Minister is appearing on the front lines
advocating for economic reform. Until a Minister or the
President directly appeals for these changes, however, we too
remain skeptical about how much impact this new public
campaign will have on reforms. Nevertheless, high level
bureaucrats have taken up the call to promote reforms, and
the President's establishment of two committees to
investigate corruption are both important steps. Post will
continue to encourage follow-through on these initiatives and
push for additional concrete steps to address corruption,
which is crucial as Yemen aims for MCC status in 2006. End
Comment.
KRAJESKI