WHO HAS THE EAR OF THE PRESIDENT? PART 2:

C O N F I D E N T I A L SANAA 000046

SIPDIS

SIPDIS

FOR NEA/ARP

E.O. 12958: DECL: 01/01/2018
TAGS: PGOV PINR YM
SUBJECT: WHO HAS THE EAR OF THE PRESIDENT? PART 2:
ECONOMIC AND FINANCIAL REFORM

REF: 07 SANAA 2196

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


1. (C) President Ali Abdullah Saleh holds all decision-making
authority within his country. Nonetheless, he relies on an
established network of advisors who have obtained his trust
and respect. This is the second in a series of cables that
intends to develop a fuller understanding of who influences
Saleh's decision-making and governance. The first in this
series (reftel) gave a broad overview of President Saleh's
advisors. This cable examines who specifically affects his
decisions concerning economic reform. Future cables will
examine who influences the President's thinking on issues
ranging from foreign policy and counterterrorism to military
affairs.

SUMMARY
--------------


2. (C) Since 1995, Yemen's economic reform efforts have been
characterized by fits and starts, with several months of
frenzied reform efforts followed by longer periods of
inaction. President Saleh appears to play only a passive
role in reform and has ceded key reform decisions to his son
Ahmad Ali Abdullah Saleh. His son in turn relies on
technocrats like Minister of Planning and International
Cooperation and Deputy Prime Minister for Economic Reform
Abdul Karim Ismail al-Arhabi, Shura Council Chairman Abd
al-Aziz Ghani and Deputy Finance Minister for External
Financial Relations Jalal Yaqoub. Even these key players
tend to be easily distracted from reform and focus primarily
on other issues. This lack of focus within the ROYG often
leaves reform efforts on the back burner. End Summary.

INTRODUCTION
--------------


3. (C) Shortly after the 1994 Yemeni Civil War, President
Saleh decided, based on advice from his cabinet, to overhaul
Yemen's financial and economic structure. The consensus
within the cabinet was that Yemen risked economic collapse if
it did not reform with the international community's
assistance. Since that time, Yemen's reform has been
characterized by fits and starts, with moments of frenzied
reform efforts followed by long periods of inaction. While
the pace of these efforts has depended somewhat on
international pressure, an equally important factor is
Saleh's advisors and their desire and/or willingness to act.
The most influential of these advisors is his son Ahmad Ali
Abdullah Saleh, though President Saleh also listens to
several Cabinet members, Shura Council members, and other
close advisors.

MAJOR PLAYERS
--------------


4. (C) According to Saif al-Asily, Professor of Economics at
Sana'a University and former Minister of Finance (2006-2007),
the President has ceded much decision-making authority on
reform issues to his son Ahmad. Al-Asily believes the
President has grown increasingly passive regarding reform
since mid-2006 as his attention has been focused on the
Southern, terrorist, and Saada issues. As such, most
economic reform proposals go to Ahmad Saleh and then are
passed to the President for his rubber stamp. Additionally,
al-Asily indicated that Ahmad Saleh relies heavily on
technocrats like Minister of Planning and International
Cooperation Abdul Karim al-Arhabi and Deputy Minister of
Finance for External Financial Relations Jalal Yaqoub, due to
his lack of background in finance or economics. Al-Asily
believes al-Arhabi and Yaqoub are the two most influential
individuals in the reform arena, while Ahmad Saleh is
involved in name only, principally to further his political
ambitions, believing successful reform efforts will help him
gain international and local support.


5. (C) Al-Asily also highlighted Abd al-Aziz Ghani, the Shura
Council Chairman, as influential in economic and
political-reform issues. Ghani's importance was confirmed by
Tarek al-Sharafi, the Director General for External Financial
Relations in the Ministry of Finance. Al-Sharafi added that
Alawi as-Salami, a Shura Council member and former Deputy
Prime Minister and Minister of Finance, was a close confident
of Ghani and therefore also had influence on economic-reform
issues.


6. (C) Jalal Yaqoub credited Ahmad Sofan, the former Minister
of Planning and International Cooperation, with convincing
President Saleh and Ahmad Saleh to reinvigorate reform
efforts in 2005. According to Yaqoub, however, Sofan's



influence waned considerably after he left his position
following the February 2006 Cabinet reshuffle. Since then,
new Minister of Planning and International Cooperation
al-Arhabi's influence has grown. According to Yaqoub,
however, al-Arhabi's influence derives from his friendship
with Presidential Secretary Faris Sanabani rather than from

his official position. Yaqoub indicated that al-Arhabi is in
the "second-tier" of Presidential advisors, but has
effectively used Sanabani's proximity to the President's son
to push his reform agenda. Yaqoub went on to note that
Sanabani, for his part, convinced President Saleh and Ahmad
Saleh to bless al-Arhabi's reform efforts by emphasizing
international donor demand for reform and the possibility
that international donations may decrease without it.

PRESIDENTIAL COMMITTEES FOR REFORM
--------------


7. (C) Separately, in February 2007 President Saleh created a
Presidential Advisory Committee for Reform which included
Director of the Presidential Office and Director of the
National Security Bureau Doctor Ali al-Anisi, Deputy Director
of the Presidential Office Abdu Ali Abd al-Rahman Bourji,
Presidential Secretary Faris Sanabani, Presidential nephew
Yahya Abdallah Saleh, al-Arhabi, and Yaqoub. According to
both Yaqoub and al-Asily, however, the committee is largely
ineffective. Additionally, the President created an
Investment Committee, led by his son Ahmad Saleh. This
committee includes Minister al-Arhabi, Minister of Industry
and Trade Yahya al-Mutawakel, Minister of Justice Ghazi Shaif
al-Aghbari, and General Investment Authority Chairman Salah
al-Attar. Al-Asily, however, believes this committee is
nothing more than an attempt by Ahmad Saleh to associate his
name with reform.

PARLIAMENT
--------------


8. (C) According to Yaqoub, the Yemeni Parliamentarians
Against Corruption (YEMPAC) plays a role in pushing reform in
Yemen. YEMPAC and other parliamentary leaders, except for
members of Saleh's "inner circle," however, are ineffective
in their extra-legislative efforts. As a result, most
parliamentary reform efforts are limited to law-making. For
example, YEMPAC leaders Sakr Wajih, Mohammed al-Aslami, and
Ali al-Shal are all powerful in the Parliament, but their
influence does not extend to the President and they rarely
influence executive decision-making. As noted separately by
Tareq al-Sharafi, however, legislative influence can
sometimes extend to presidential influence. For example, in
2005 Parliament passed a law requiring the President to
obtain parliamentary approval before lifting any price
subsidy as part of a reform package. While this influence is
minimal, it does demonstrate that Parliament can, at least
tangentially, affect presidential options and therefore
decision-making.

THE PUSH FOR REFORM
--------------


9. (C) Throughout POLOFF's meetings with Yemeni
interlocutors, all contacts agreed that the President is
passive in reform efforts and has delegated much
responsibility to his son Ahmad Saleh and Minister al-Arhabi.
These contacts believe the President is not as concerned
about reform efforts as he is with Southern unrest, Saada,
and terrorism. Another common theme throughout the
discussions was that there is currently no strong voice for
reform inside the ROYG, including Ahmad Saleh and al-Arhabi.
These individuals and those who support them make nominal
efforts at reform in order to placate the international donor
community. None, however, were viewed as dedicated to
economic reform and all were considered more focused on other
issues such as terrorism and tribal conflicts, pushing reform
efforts to the back burner.

COMMENT
--------------


10. (C) While it is true that issues such as southern unrest,
terrorism, and Saada tend to push economic reform to the
back-burner, we strongly disagree with the perception that
MOPIC Minister al-Arhabi is not dedicated to economic reform
efforts. Any failure by al-Arhabi to deliver on reform is
due to lack of support, not to the lack of commitment on his
part. Within the Yemeni government, al-Arhabi has the
greatest influence on economic reform issues. Transferring
his dedication and influence to true reform, however, has
been challenging given the general passivity of the ROYG
regarding economic reform.
SECHE