GCC WANTS TO FOCUS ON TECHNICAL IMPEDIMENTS TO

S E C R E T RIYADH 000225

SIPDIS

E.O. 12958: DECL: 02/28/2030
TAGS: EAID EFIN PREL SA
SUBJECT: GCC WANTS TO FOCUS ON TECHNICAL IMPEDIMENTS TO
YEMEN ASSISTANCE AT UPCOMING CONFERENCE

REF: (A) SANAA 380 (B) KUWAIT 160

Classified By: Ambassador James B. Smith, reasons 1.4 (b and d).


1. (C) Summary: The Gulf Cooperation Council (GCC) is looking
forward to the February 27-28 meeting on technical aspects of
assistance to Yemen, which it hopes will identify the main
impediments to more effective aid programs on the ground.
This is the latest in a series of meetings the GCC has held
with Yemen, and supports the GCC's engagement with Yemen's
national development plan. The GCC is concerned that Yemen
is trying to turn a technical meeting into a more political
meeting. The President of Yemen raised this meeting with King
Abdullah during his February 23 audience, and subsequently
announced it was sending a Deputy Prime Minister, which
prompted a flurry of calls among GCC members to try to up the
level of attendees. The GCC would prefer that this meeting
set up a subsequent ministerial level meeting, perhaps on the
margins of the late March GCC-Yemen ministerial, on specific
steps to improve disbursements. The GCC welcomes greater
donor involvement and coordination, which it hopes can
address the need for greater Yemeni capacity in the Ministry
of Planning to coordinate between line ministries and donors.
The GCC also hopes that the February meeting can begin to
sketch out ways to harmonize the existing donor programs with
the Friends of Yemen process, about which some GCC member
states still have some concerns. End Summary.

Yemen Shines Spotlight on February Technical Meeting:
- - - - - - - - - - - - - - - - - - - - - - - - - - -


2. (C) Dr. Abdel Aziz Aluwaisheg, Gulf Cooperation Council
(GCC) Director General of Economic Relations, told EconCouns
February 24 that the February 27-28 technical assistance
meeting in Riyadh has suddenly received a lot of high level
attention, thanks in part to Yemeni President Saleh's
February 23 visit to Saudi Arabia (septel). Saleh told King
Abdullah about the meeting, and expressed Yemen's hopes that
it would result in some specific decisions to accelerate
funding for Yemen. Yemen subsequently informed the GCC that
it is expanding its delegation to 13, and has raised its
level, with the Deputy Prime Minister now leading a group
that will include the Minister of Finance, and
Undersecretaries and Directors General from the Ministries of
Planning and Economic Forecasting. Yemen also plans on
bringing the Executive Director of the Saada Reconstruction
Organization, even though the GCC has already informed Yemen
that they are unlikely to be able to accommodate a specific
item on the already crowded agenda. As a result of the
Yemeni decision and the meeting with the King, Saudi FM Saud
Al-Faisal called the GCC and asked that they request all GCC
states upgrade their attendance; apparently, no ministers
were available on such short notice, but a couple of Deputy
Ministers may attend.

GCC Goals for the Meeting:
- - - - - - - - - - - - - -


3. (C) Aluwaisheg explained that the GCC had hoped to keep
this meeting very much at the technical level, with a focus
on identifying the technical problems that are slowing
disbursements. The meeting was never intended to make
significant policy decisions. Rather, it was intended to
identify a clear problem set, and perhaps some potential
remedies, and tee up a discussion of ministers, tentatively
envisioned to take place in March, which could usefully
sketch out the way forward. It will certainly feed into
preparations for the next GCC-Yemen ministerial meeting on
assistance, which will take place at the end of March.
Depending on the advice of the delegates to the February
27-28 meeting, that GCC-Yemen meeting may also include other
donors.


4. (C) Aluwaisheg also stressed that this is not the first
technical meeting between GCC donors and Yemen. They have
been meeting for several years to discuss how best to design
and implement the GCC member assistance programs. Aluwaisheg
said the GCC had hoped that this session would be primarily a
brainstorming session to forge consensus on what the main
impediments are to higher disbursements and more effective
programs. The meeting is also interested in developing more
effective tools to measure progress in Yemen, following up on
discussions in London in January.

Deconflicting with Friends of Yemen:
- - - - - - - - - - - - - - - - - - -


5. (C) This GCC meeting will also provide a useful forum to
discuss how best to merge the pre-existing bilateral aid

programs, like those of the GCC, with the Friends of Yemen
(FOY) process, which Aluwaisheg said most GCC countries
regard as primarily political. Aluwaisheg personally hoped
that the FOY process could help provide greater political
will to address the problems that have slowed disbursements,
both on the Yemeni and on the GCC members' sides.


6. (S) There are some sensitivities within GCC member states
about the FOY process. Oman objected to GCC officials
earlier in February to the characterization of Yemen as a
failed state. Oman also reportedly cited concerns that the
west, particularly the U.S., may seek to use the FOY process
to highlight concerns about Iranian involvement in Yemen,
which may raise regional tensions further. Separately, the
Kuwaiti, Abu Dhabi and Saudi Development Funds have all
disagreed with GCC suggestions to accelerate disbursements,
citing concerns about lack of Yemeni priorities, ability to
execute programs and corruption.

GCC Suggestions for Ways Forward:
- - - - - - - - - - - - - - - - -


7. (C) Aluwaisheg said that the GCC feels a little bit caught
in the middle, as it believes it is important to use the
upcoming meeting to focus on key impediments to improve
specific conditions on the ground in Yemen. The GCC is
frustrated with lack of Yemeni progress on a number of
fronts, but also believes that Yemen has made some progress,
and is convinced that waiting until the government has proven
its ability to solve major issues will allow problems to
mushroom.


8. (C) Aluwaisheg identified the lack of capacity of the
Yemeni Ministry of Planning to coordinate donor programs with
ministry efforts as the single biggest problem. He
characterized the Ministry of Planning as the "gateway" to
all aid in Yemen. He noted that the EU has funded between 10
and 15 coordination staff for its $750 million program in
Yemen; as a result, EU donors have better contact with line
ministries and have made greater progress in disbursing
assistance. By contrast, Yemen has assigned only one
official to coordinate the $3.7 billion in combined GCC
programs. As a result, GCC donors cannot even get reports on
time, let alone undertake the coordination they need with
line ministries. Aluwaisheg believes that outside funding of
a few more technical experts in the ministry of planning
would significantly improve the effectiveness of programs in
Yemen. He suggested it would make a lot more sense to
organize experts thematically, rather than segregate them by
donor. He invited the U.S. to consider funding this kind of
program as a key gap between existing donor programs. In a
similar vein, Aluwaisheg said that it would be useful to have
greater leadership among the donors, particularly on the
ground, which would help make sure that implementation of
programs took place, and could offer a way to integrate the
FOY process with donor programs. He said that UN and World
Bank efforts to promote greater integration have not been as
successful as the GCC had hoped.

Labor a Non-Starter:
- - - - - - - - - -


9. (C) Aluwaisheg said that Yemen was likely to suggest at
the February 27-28 meeting that the GCC states allow more
Yemeni expat laborers to enter their markets. Aluwaisheg
said that the GCC has been working with Yemen on this issue
for at least two years. The problem is that GCC labor
markets are already open to Yemeni laborers. Aluwaisheg said
that the Yemeni request effectively translates into an appeal
to direct GCC employers to hire Yemenis at the expense of
other nationalities. Given that most GCC states have not
succeeded with similar programs over the last decades to
convince local employers to hire GCC nationals, he doubted
that any such directive would be effective in the case of
Yemen. He also said it was totally impractical to ask GCC
states to consider letting in Yemenis without visas, given
abundant recent security concerns. Aluwaisheg noted that
Yemen had pushed this issue hard in 2007-8, and had raised it
at the June 2009 ministerial meeting, after which it was
referred to the GCC Labor Council (of which Yemen is a
member). Yemen has apparently not pursued the issue in that
forum.


10. (C) The GCC has tried proactively to increase the skills
of Yemenis to make them more competitive both at home and
abroad by promoting technical schools and education. GCC
member states have built several dozen schools already, and
have coordinated with the UK and the Netherlands to solicit
support for operating costs. The GCC is also trying to help

Yemen address a serious identity problem, which would improve
the ability to legitimate Yemeni workers to get jobs abroad,
by setting up a central Yemeni database (the UAE has already
contributed $63 million to set up this center). Aluwaisheg
said that this might be an area where a relatively new donor,
such as the U.S., might help coordinate existing programs
and/or fill in gaps. Aluwaisheg concluded by recognizing
that finding jobs for Yemenis is a serious issue, but
expressing considerable frustration that the Yemeni
Government is not doing more to work with donors to address
the underlying problems. He expects Yemen will raise this
issue again at the upcoming meeting, which will only
frustrate GCC member state delegations. Aluwaisheg said it
would be very unhelpful for foreign delegations to suggest
greater GCC flexibility for Yemeni expats, particularly given
recent increased restrictions on travelers from the Arabian
Peninsula to Europe and the U.S. (apparently, the EU
suggested they considered raising this on behalf of Yemen,
but decided against it after learning more of the background).

Comment:
- - - - -


11. (C) The GCC is very pleased that U.S. experts on Yemen
assistance will attend the meeting. They welcome the
tangible sign of interest in coordinating to support
assistance in Yemen. They also believe that the U.S. has a
unique ability to plug some existing holes in donor programs,
such as offering to improve the capacity of the Ministry of
Planning. Perhaps more importantly, GCC officials also
believe that U.S. participation in this meeting will help
persuade other donors to improve coordination. In that
regard, the apparent attempt by Saleh to increase the profile
of this upcoming technical meeting may backfire to the extent
that it may convince some important decision makers in GCC
member states that Yemen is trying to embarrass them into
cutting bigger checks without resolving underlying capacity
issues.

SMITH