CABINET SHAKE-UP: IS REAL REFORM ON ITS WAY?

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 000342

SIPDIS

E.O. 12958: DECL: 02/12/2016
TAGS: PREL PGOV YM DOMESTIC POLITICS
SUBJECT: CABINET SHAKE-UP: IS REAL REFORM ON ITS WAY?

REF: A. SANAA 272


B. SANAA 330

C. 2001 SANAA 1919

Classified By: AMBASSADOR THOMAS C. KRAJESKI, FOR REASONS 1.4 (B) AND (
D).


1. (C) Summary and Comment. On February 11, President
Saleh announced a dramatic reshuffling of his 34-member
cabinet, including replacing the Ministers of Defense,
Finance, Oil, and Planning. Saleh's new cabinet, still led
by Prime Minister Bajammal, includes 15 new ministers and two
women. ROYG officials said the move was in response to
international and domestic pressure to fight corruption and
implement real economic and political reform. The shake-up
also comes after the ROYG's international embarrassment over
the escape of 23 imprisoned Al Qa'ida operatives from a
Political Security Organization jail (ref A).


2. (C) Summary and Comment continued: In a promising move
for economic reform, Saleh replaced the notoriously corrupt
Finance Minister and the Minister for International Planning
and Cooperation with experienced and well-respected
technocrats. On the security front, Saleh expanded Interior
Minister Rashad Alimi's duties to include the post of Deputy
Prime Minister, but replaced Minister of Defense Abdullah Ali
Alewa with a relatively unknown officer. While it is too
early to gauge the new cabinet's real impact on reform
efforts, Saleh is clearly trying to allay donor fears and
opposition criticism that the ROYG is not doing enough to
combat corruption and implement economic reform. End Summary
and Comment.

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Mounting Pressure from All Sides: Donors and the HAMAS
Effect
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3. (C) Saleh's announcement came just days after a meeting
with ambassadors of donor countries, including the American
Ambassador, who urged the President to take concrete and
immediate steps to combat corruption and improve good
governance (septel). Without such efforts to demonstrate the
ROYG's commitment to reform, the ambassadors warned, Saleh
could not count on continued support from donors.


4. (C) On the domestic front, opposition parties have
become increasingly vocal during the run-up to the September
presidential and local council elections. Opposition
accusations that the ROYG has done little to combat rampant
corruption have escalated, including the publishing of
several newspaper reports implicating corrupt officials,
including the Minister of Oil who lost his job in the
reshuffle. Opposition parliamentarians are also beginning to
show a still relatively small but growing willingness to
challenge presidential power (ref B). While few believe
Saleh will lose his re-election bid, the opposition hopes to
make gains in local council elections. Given HAMAS's success
at capitalizing on popular discontent with the Palestinian
Authority, the opposition is eager to make corruption a key
election issue.

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Corruption out, Technocrats in
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5. (C) The biggest loser in the cabinet re-shuffle is
Minister of Finance Salami, who has been a powerful political
player for more than 20 years. Salami carved out a veritable
mini-empire by maintaining tight control on allocations to
government agencies and local government. In addition to
being well-known for corruption, he also played a key role in
blocking donor efforts to decentralize public finance and
create a transparent budget system. Salami's replacement is
Dr. Seif Mahyoub Al-Asali, an economics professor at Sanaa
University and former Deputy Minister for Revenues.


6. (C) Another minister who is apparently on the outs is
former Minister of Planning and International Cooperation
(MOPIC) Ahmed Sofan. MOPIC, as the main interlocutor for
donors and international organizations and the main
implementing agency for development projects, has come under
heavy criticism recently for failing to maintain donor
confidence. A smart and congenial official, Sofan presided
over a period during which the World Bank cut its assistance
to Yemen by more than 30 percent, and Yemen failed to qualify
for the Millennium Challenge Account Threshold Country
Program -- both major blows to Yemen's development
assistance.


7. (C) Sofan has been replaced by Abdulkarim Al-Arhabi, the
outgoing Minister of Social Affairs and Labor, a position he
held concurrently with the Executive Directorate of the
Social Fund for Development (SFD). As MOPIC's star has
fallen over the past several years, SFD's has risen --
largely due to confidence among donors in Arhabi's relatively
clean, accountable, no-nonsense management style. Arhabi was
a frequent critic of MOPIC's performance as a
"super-ministry," particularly that ministry's practice of
assigning development projects in a top-down manner and then
withholding full funding from implementing agencies.



8. (C) Perhaps the biggest winner in the re-shuffle was
Interior Minister Alimi who was promoted to Deputy Prime
Minister. Alimi will also continue in his current position,
where he has proven himself to be a capable and professional
leader by overseeing the establishment and development of
Yemen's most capable security forces - the Coast Guard and
the Central Security Force's Counter Terrorism Unit - with
USG assistance. Defense Minister Alewa, however, lost his
job to a relatively unknown military officer, Staff Brigadier
Mohammad Naser Ahmed Ali, who is expected to challenge Chief
of Staff MG Mohammed Ali Qassimi even less than did his
predecessor.


9. (C) Foreign Minister Abubakr Qirbi kept his job and
assumed the portfolio of expatriates, formerly held by Abdo
Ali Qubati. Qirbi has a reputation for being a reliable and
reasoned, if not always effective, interlocutor.

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Comment
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10. (C) Saleh's sudden cabinet re-shuffle is, at this point,
a symbolic victory for economic reform in Yemen. The change
in the cabinet is not merely cosmetic -- the ROYG has shed
itself of several of its heavyweights. By elevating the most
capable leaders, and by replacing the most corrupt and
well-connected individuals with newcomers and technocrats,
Saleh is making a statement against mounting criticism that
the ROYG has not demonstrated the political will necessary to
combat corruption and implement real reform. The ROYG likely
took the donor ambassadors' message -- and HAMAS's victory --
to heart and is taking real steps to improve his government's
public image before the September elections.


11. (C) Despite a clear step in the right direction,
however, it is too early to judge what real impact the new
cabinet will have on economic and political reform,
especially with the powerful and corrupt Prime Minister Abdul
Kader Bajammal retaining his post. Post greeted the last
major re-shuffle in April 2001 with optimism that Salami and
Sofan would usher in a new era of economic reform -- hopes
that were never realized (ref C). The hope is that this new
crop of experienced technocrats at key posts responsible for
economic development and financial management will be more
successful in reducing corruption and improving the lives of
the Yemeni people. They face a tough challenge, however, in
the form of entrenched interests within the bureaucracy and
private sector that are beneficiaries of the status quo.
Sustained political will from President Saleh and support
from the donors will be key to overcoming these obstacles in
the critical period ahead.


12. (U) Post will provide a complete list of the new cabinet
and biographies septel.
Krajeski