SCENESETTER FOR THE TRAVEL OF AMBASSADOR DAILEY TO

S E C R E T SANAA 002067

SIPDIS

SIPDIS

FOR S/CT:AMBASSADOR DAILY, AND NEA/ARP

E.O. 12958: DECL: 11/04/2017
TAGS: PGOV PTER PREL OTRA YM
SUBJECT: SCENESETTER FOR THE TRAVEL OF AMBASSADOR DAILEY TO
YEMEN

REF: SANAA 1989

Classified By: Ambassador Stephen Seche for reasons 1.4 (b) and (d)

INTRODUCTION AND SUMMARY
--------------

1.(S) Ambassador Dailey, Embassy Sana'a looks forward to
your visit. As you know, the recent release of convicted USS
Cole bombing conspirator Jamal al-Badawi has put a
considerable strain on the bilateral relationship. While we
now believe that President Saleh recognizes the magnitude of
his error in releasing al-Badawi, he has refused our request
for extradition, citing a Constitutional prohibition. The
indefinite delay of the signing of Yemen's Millennium
Challenge Corporation (MCC) Threshold Country Plan (TSP) has
proven to be an effective lever. We hope that your meetings
will give you the opportunity to personally press this key
issue, noting that extradition remains our preferred outcome
but that, at the very least, we must be reassured that Badawi
will be returned to jail to serve out the duration of his
sentence.

2.(U) In order to help you prepare for your visit, Embassy
Sana'a is providing this document. It begins, per your
request, with an examination of the issue of Yemeni fighters
traveling to Iraq. It continues with a brief overview of the
political and economic situation in country and the bilateral
relationship, and concludes with a review of issues that are
key to the internal workings of Yemen and to our bilateral
relationship. End introduction and summary.

FOREIGN FIGHTERS
--------------

3.(S) The ROYG is particularly sensitive on the issue of
Foreign Fighters. ROYG sources are tight-lipped to the point
of being secretive on the issue. Much of the information
that has been obtained cannot be transmitted in these
channels. We have asked that this information be passed to
you via appropriate means. It is known that Yemen is a
source of foreign fighters and a way point on some foreign
fighters, road to Iraq.

4.(U) Yemen is the poorest Arab country. Further, since
September 2006, prices of basic consumer goods have risen in
real terms by at least 100 percent. Inflation has worsened
the already abysmal poverty rate and has led to the
bankruptcy of at least 2,400 businesses. Additionally, the
central government lacks control over many tribal areas and,
particularly in the south, is seen to be corrupt. All of
these issues make Yemen's poor and disaffected prime
candidates for recruitment by extremists, particularly in
those areas historically underserved by the ROYG. Post's
international assistance efforts through USAID, the
Department of Agriculture's Food for Progress Program, the
Department of Defense's Civil Affairs Program and the Middle
East Partnership Initiative have concentrated on alleviating
these negative indicators. Yemen's poverty, endemic
corruption, and dire financial outlook, however, have
complicated these efforts.

5.(C) The USG has long identified the lack of a strong CT
law with anti-conspiracy provisions as a major flaw in Yemeni
jurisprudence that makes it difficult for the ROYG to arrest,
charge, and convict those who commit terrorist acts in
foreign countries. All too often, returned fighters from
Iraq are charged only with document fraud or forgery, and are
given relatively light sentences. During the recent visit of
Presidential Advisor for Homeland Security and
Counterterrorism Frances Townsend, President Saleh
off-handedly accepted her offer of USG assistance in drafting
such a law; we are following up to see if his response
reflects real receptivity to the offer. Post already has
provided the ROYG with copies of effective CT laws from other
Arab countries to use as examples. The Yemenis claim to be
progressing on the draft law but post has yet to see any
concrete progress.

GENERAL INFORMATION
--------------

6.(U) Yemen is a republic with a bicameral legislature.
Under the constitution, an elected president, an elected
301-seat House of Representatives, and an appointed
111-member consultative Shura Council share power. The
president is head of state, and the prime minister is head of
government. The constitution provides that the president be
elected by popular vote from at least two candidates endorsed
by Parliament; the prime minister is appointed by the
president. The presidential term of office is 7 years, and

the parliamentary term of elected office is 6 years.
Suffrage is universal over 18. (Note: In late September,
President Saleh proposed a series of amendments that would,
among other things, reduce the terms of office for the
president and legislators and would allow for the election of
Shura Council members. End Note.)

7.(U) Yemen's economy is highly dependent on oil. The oil
industry represents 70-80 percent of the national budget and
23 percent of the GDP. Yemen has proven reserves of four
billion barrels. Yemen's oil resources are dwindling. The
country produced 471,000 barrels per day (bpd) in 2001 but by
2007, production dropped to 330,000 bpd. The ROYG places
great hope in liquefied natural gas as a replacement for oil
as an engine for economic growth, despite the fact that best
estimates indicate that Yemen's gas production will produce
only half the income that oil production produces today.

FOREIGN AID
--------------

8.(U) Yemen is a valuable, if occasionally inconsistent,
partner in the war on terror and receives considerable
assistance from the United States. Yemen is currently
benefiting from 34 Middle East Partnership Initiative (MEPI)
projects, twice the number of projects in any other country.
Yemen is requesting just under 51 million dollars in US
assistance in FY 2009, with Peace and Security and Investing
in People as its primary targets. More than 9.5 million USD
of that aid comes from FMF and IMET funds. In addition to
these traditional sources of aid, the Embassy's Office of
Military Cooperation (OMC) provides in-kind military support
through the 1206 program. Assistance is also provided
through the DOD's Civil Affairs Program. This program is
currently implementing over 7 million USD in aid projects,
including schools and clinics.

JAMAL AL-BADAWI AND COUNTERTERRORISM
--------------

9.(S) The release to "house arrest" of Jamal al-Badawi was a
colossal blunder on the part of the ROYG and has the single
most pressing issue in the bilateral relationship at this
time. Al-Badawi was released as a part of a ROYG program
wherein fugitive terrorists surrender themselves, forswear
future terrorist activities, and agree to cooperate with the
ROYG to locate other fugitive terrorists and either negotiate
their surrender or facilitate their capture by security
forces. In a meeting with the Ambassador in Aden on October
29, President Saleh vigorously defended this "surrender"
program for extremists, arguing that even if a few
individuals have abused its terms, it has succeeded overall
in its goal of reducing the ranks of al-Qaeda and other
terrorist organizations in Yemen and saved American lives in
Afghanistan and Iraq.

10.(S) Our sources indicate that, due to the very negative,
public reaction in the US - and the USG decision to
indefinitely delay signing the MCC Threshold Program
agreement - Saleh realizes the magnitude of his error and is
willing to work toward repairing the trust that has been
damaged by this episode. We do not know, however, if this
disposition extends to extraditing Badawi. Thus far, the
President has been adamant that the Yemeni Constitution
precludes extradition, a point reiterated by the Foreign
Minister to the Ambassador on November 5. It is our judgment
that nothing short of a POTUS phone call directly to Saleh
would have any chance of persuading him to seriously consider
the extradition option and even that offers no guarantees,
given the stiff political price Saleh would have to pay
domestically. We believe that, in order to extradite Badawi,
Saleh would have to renege on commitments made to Badawi and
his supporters (Note: senior Presidential advisor AbdulKarim
al-Eryani suggested to the Ambassador on November 3 that
these supporters are influential and could make life
uncomfortable for Saleh, but declined to identify them. End
Note.) We believe the deal would probably have entailed an
agreement that, if al-Badawi surrendered and agreed to help
apprehend others, he could avoid going back to prison.
Facing a broad array of other difficulties (see paras 14-23),
Saleh is short on political capital and in a difficult
position to be seen as reneging on agreements with
influential Yemenis to appease the US.

11.(S) On the broader counterterrorism front, rhetoric in
the media and official statements asserts the ROYG's
commitment to fighting terrorism. (Note: Not all the groups
identified by the ROYG as terrorist groups are recognized by
the USG as such. The al-Houthi, a group of insurgents in
Saada Province who battled with ROYG forces in the first half
of 2007 - and who seem to be resurgent at this time - (see


para 16),are a prime example. End Note). The ROYG
successfully deployed the USG-supported Central Security
Forces Counterterrorism Unit (CSF-CTU) in at least three
operations in the past year, killing 10 suspects with ties to
al-Qa'ida. On August 23, the ROYG announced a ban on the
carrying of guns in major cities, and it reportedly has met
with success, a plus for Yemeni counterterrorism efforts.


12.(C) The security situation in Yemen remains an issue of
concern. The last year has witnessed a number of terrorist
attacks, including the May 20 terrorist bombings in Sana'a
which killed one child and the July 2 al-Qa'ida Suicide
Vehicle Borne Improvised Explosive Device (SVBIED) attack on
a group of Spanish tourists in Marib, which killed ten.
Seven of twenty-three February 2006 prison escapees with
al-Qa'ida ties remain at large. The lack of strong
counterterrorism laws in Yemen means that, even when
terrorists are caught, the ROYG often lacks the legal basis
to hold them. Advisor to the President for Homeland Security
and Counterterrorism (APHSCT) Frances Townsend discussed the
lack of an effective counterterrorism law during her October
22 meeting with President Saleh in Aden (reftel) Yemenis
make up the largest percentage of detainees at Guantanamo
Bay: 97 of the 335 Guantanamo Bay detainees are Yemeni and
another four who are listed as Saudis may be as well. We are
currently working with the ROYG to send a delegation to GTMO
before year's end to resolve the citizenship issue so that
efforts to repatriate the Yemeni detainees can proceed. DOD
has agreed to facilitate and finance this travel.

FORUM FOR THE FUTURE
--------------

13.(U) This year the ROYG will co-host (with Germany) the
Forum for the Future. The event is scheduled to take place
in Sana'a on December 4 and 5. The ROYG has promised a high
level of civil society participation in the forum itself and
there will be a parallel civil society event taking place
November 30-December 2. The ROYG is putting great emphasis on
the success of the Forum. By the time you arrive, DRL DAS
Erica Barks-Ruggles and NEA MEPI DAS Kent Patton will have
completed a visit to Sana'a to participate in Forum for the
Future planning meetings. Secretary Rice has confirmed her
intention to participate in the ministerial-level meeting.

CORRUPTION
--------------

14.(C) On June 25, Yemen's Parliament elected eleven members
to the first Supreme National Authority to Combat Corruption
(SNACC). The Commission will be responsible for implementing
the new Anti-Corruption Law and developing a national
strategy involving the government, media and civil society.
Observers remain divided about the impact SNACC will have,
but most remain cautiously optimistic. Most board members
have a technical or legal background and an reputation for
honesty. Implementation will be the real test of the
Anti-Corruption Law. Much will depend on SNACC's relations
with other ROYG bodies. Observers are waiting to see if the
ROYG has the political will to enforce this law and if SNACC
will be an effective mechanism for doing so.

WTO ACCESSION
--------------

15.(C) The ROYG applied for accession to the WTO in April

2000. At its meeting on 17 July 2000, the General Council
established a Working Party to examine the application of the
ROYG. WTO Members welcomed Yemen's application and pledged
to work to constructively advance and conclude its accession
on appropriate terms. While appreciating the reforms already
undertaken, members noted that further work is needed to
achieve compliance with WTO rules and disciplines. The ROYG
is currently revising or creating for the first time a great
volume of trade and investment related laws. Yemen still must
make concrete commitments, and the ROYG needs a plan to
implement these commitments within the flexibilities afforded
to the least-developed countries.

FREEDOM OF EXPRESSION
--------------

16.(C) In recent months, the ROYG has taken aggressive
action to intimidate journalists and inhibit their ability to
report on sensitive and security-related subjects, raising
doubt about the government's commitment to freedom of speech
and dissent in Yemen. The repeated abduction and physical
abuse of Abdul-Karim al-Khaiwani, an opposition journalist
and editor of "Al-Shura.net," and the harassment of Nayif
Hassan and Nabeel Shabib, owners, editors, and writers of the



independent weekly "al-Shar'e," are specific issues of
concern. (Comment: The Yemeni government officially denies
any involvement in the actions taken against the journalists,
although Khaiwani and others insist it was government forces
that acted against them. End Comment).

17.(C) The ROYG's reportedly violent reaction to largely
peaceful protests - especially in the south - reflects its
willingness to curtail the rights of Yemeni citizens to
maintain control over an increasingly restive population.
Demonstrations over unemployment and rising prices have
resulted in death, injury, and detention at the hands of
government forces. Recently, four people were killed and
another 15 were injured on October 13 when police opened fire
on a large group of Yemenis preparing a demonstration to mark
the 44th anniversary of the 1963 uprising in Southern Yemen
against British occupation.

18.(C) In terms of legislative developments, in August, a
draft 'National Unity, Interior Front, and Social Peace' law
was submitted to Parliament. This law, which, among other
things, would criminalize criticism of the president, caused
a great deal of controversy when it was proposed in August.
Opposition journalists fear that it could further roll back
the already limited press freedoms enjoyed by publications in
Yemen. Our contacts have recently told us that they believe
that the draft law will either be withdrawn or left to
languish in the Parliament but will not be enacted.

UNREST IN THE SOUTH
--------------

19.(C) Southern Yemenis dissatisfied with the Saleh
government (which they argue favors north Yemen) have been
staging demonstrations since July, resulting in at least six
deaths at the hands of Yemeni riot police and armed forces.
The demonstrations, often numbering in the thousands and
organized by Yemeni political opposition parties, are
inspired by a small group of forced retired southern military
officers seeking reinstatement and higher pensions, and are
primarily composed of these individuals, their supporters and
Yemenis angered by the rising cost of essential foodstuffs.
Their ire, however, is not a recent development. Since North
and South Yemen united in 1990, southern Yemenis have argued
that only the north has benefited from unity, while
southerners have lost jobs, land, economic opportunities, and
basic rights. Although the demonstrators show no sign of
relenting and the government has given no indication it
intends to use any means other than physical force to
suppress them, it is generally thought unlikely that southern
antagonism will boil over into widespread civil unrest
reminiscent of the 1994 civil war fought between North and
South Yemen.

SAADA SITUATION
--------------

20.(C) While the ROYG is dealing with simmering unrest in
the south, it still faces concerns in the northern
governorate of Saada where, until a June 14 cease-fire,
insurgents loyal to Zaydi (Shia) cleric Abdul-Malik al-Houthi
battled ROYG forces. The weak Qatari-inspired mediation
agreement to end fighting in Saada remains just that and
since the end of the Eid al Fitr (mid-October) we have heard
a growing number of accounts of clashes between rebels and
ROYG forces. Neither the ROYG nor the al-Houthi forces have
shown a willingness to implement any of the cease-fire
agreement's key points, and positions staked out in the press
between President Saleh and rebellion leader Abdul-Malik
al-Houthi indicate neither is willing to back down.
Regardless of whether large scale violent clashes between
government and al-Houthi forces resume in the near term, the
conflict between the two sides has not been successfully
mediated and could flare up again into a renewed round of
war. (Note: There have been two previous phases of fighting
between the al-Houthis and the ROYG in 2004 and 2005. End
Note). Additionally, the humanitarian situation in Saada
remains a huge challenge, and renewed fighting will only
further inhibit the ability of relief organizations to work
in the area.

REFUGEES AND IDPS
--------------

21.(U) Refugees, mainly from Somalia and Ethiopia, arrived
in great numbers by sea from September 2006 to May 2007.
Nearly 29,000 refugees arrived in Yemen in 2006 and nearly
14,000 have arrived in 2007 thus far, according to the United
Nations High Commissioner for Refugees (UNHCR) and Yemeni
press reporting. Press reports also indicate that the influx
of refugees is likely to increase rapidly over the final two

months of 2007. In the first 26 days of September, over
4,700 refugees arrived on Yemen's shores, an increase of 70
percent over last year's 2,900 arrivals. So far in 2007,
nearly 400 refugees have died and 272 remain missing in their
attempts to reach Yemen, according to UNHCR reporting,
whereas the 2006 numbers of dead and missing totaled 328 and
310, respectively. Thousands of refugees who arrive in Yemen
try to continue north to find work in Saudi Arabia. Many die
on the long journey across the desolate Yemen-Saudi border.
There are currently an estimated 108,000 refugees in Yemen,
of which 101,000 are Somali and the remaining 7,000 mostly
Ethiopians and Iraqis. UNHCR has, as of October, issued
48,000 identification cards to refugees in Yemen in an effort
to track refugee numbers and movement.

22.(U) In early September, the International Committee of
the Red Cross (ICRC) reported that they have assisted 43,000
IDPs in Yemen's northwest Saada Governorate, and estimate the
total to be 56,000 - 60,000. Security concerns have
restricted the ability of aid organizations to provide
assistance. The ICRC and Red Crescent Society currently
operate two camps in Saada that provide non-food aid
(blankets, water cans, and soap) and primary health care
through five mobile clinics. UNHCR has recently opened a
satellite office in Saada to help with the IDPs there.

A LAND OF CONTRADICTIONS
--------------

23.(S) As you can see, Yemen is a complex country facing
enormous challenges. This is perhaps appropriate for a
country that enjoys both the benefits and drawbacks of its
location at the crossroads of the Middle East and Africa.
Yemen shares many qualities of neighboring African states
(certainly, its poverty and lack of development come to
mind),but remains resolutely Arab at the same time. Its
oil-rich neighbors in the GCC often seem lukewarm or worse in
their relations with Yemen, and have resisted its repeated
overtures for GCC membership. Domestically, the ROYG has
taken significant steps toward reform but concerns remain
about its long-term commitment. Until the ROYG reins in
corruption and evidences - in deed, as well as word - its
support for freedom of expression, both reform and
development will face an uphill battle. A similar
contradiction exists on terrorism issues. The ROYG has often
been cooperative with our counterterrorism efforts but seems
to lack the will to craft strong CT laws and, from time to
time, makes decisions, as it did in the Badawi case, that
undermine its claim to be a reliable CT partner. At the same
time, with economic conditions suffering from rising prices,
significant pockets of unrest in both the North and South,
and recent terrorist attacks, the Saleh government has its
hands full trying to maintain internal stability and
security. Our own interests are very much at stake here:
should the ROYG fail to solve the problems that confront it,
the future of Yemen itself could be in doubt, resulting in
serious instability on the Arabian Peninsula. The
implications are enormous, both from a counter-terrorism as
well as a humanitarian perspective. We must continue to
reassure President Saleh that we are committed to Yemen's
unity, stability and prosperity, but that we reserve the
right as a friend and partner (and significant donor) to draw
his attention to those shortcomings that we believe hinder
efforts to achieve these goals.
SECHE