Identifier
Created
Classification
Origin
90STATE32618
1990-02-01 23:30:00
SECRET
Secretary of State
Cable title:  

THE SECRETARY'S MEETING WITH YAR PRESIDENT

Tags:  PREL ECON EAID YE 
pdf how-to read a cable
O 012330Z FEB 90
FM SECSTATE WASHDC
TO AMEMBASSY SANAA IMMEDIATE
INFO AMEMBASSY RIYADH IMMEDIATE
AMEMBASSY MUSCAT
SECDEF WASHDC 0000
USCINCCENT MACDILL AFB FL
S E C R E T STATE 032618 

MACDILL FOR POLAD

E.O. 12356: DECL:OADR
TAGS: PREL ECON EAID YE
SUBJECT: THE SECRETARY'S MEETING WITH YAR PRESIDENT
SALEH: AID AND ECONOMIC SUBJECTS

S E C R E T STATE 032618

MACDILL FOR POLAD

E.O. 12356: DECL:OADR
TAGS: PREL ECON EAID YE
SUBJECT: THE SECRETARY'S MEETING WITH YAR PRESIDENT
SALEH: AID AND ECONOMIC SUBJECTS


1. SECRET - ENTIRE TEXT


2. SUMMARY: ON JANUARY 24, SECRETARY BAKER HOSTED
PRESIDENT SALEH AND HIS DELEGATION AT THE DEPARTMENT OF
STATE FOR A ONE AND A HALF HOUR EXCHANGE INCLUDING A
WORKING LUNCHEON. THE TWO SIDES DISCUSSED THE MIX OF U.S.
ASSISTANCE FOR FY 90 TOTALLING 47.5 MILLION DOLLARS IN
ECONOMIC, FOOD, AND MILITARY ASSISTANCE. THERE WAS ALSO
DISCUSSION OF YEMENI UNITY, U.S.-PDRY RELATIONS, PDRY'S
SUPPORT FOR TERRORISM, AND THE PEACE PROCESS, SUBJECTS
WHICH ARE COVERED SEPTEL. A LIST OF PARTICIPANTS IS AT
PARA 11.

U.S. ASSISTANCE TO YAR


3. ON JANUARY 24, THE SECRETARY HOSTED PRESIDENT SALEH AND
SENIOR MEMBERS OF HIS DELEGATION. DURING THE 30-MINUTE
MEETING WHICH PRECEDED LUNCH, DISCUSSION FOCUSED ON THE FY

90 U.S. ASSISTANCE PROGRAM TO YEMEN. THE U.S. CONFIRMED
THAT TOTAL U.S. FY 90 ASSISTANCE WILL BE 47.5 MILLION
DOLLARS AS FOLLOWS:

-- 21 MILLION DOLLARS IN ECONOMIC ASSISTANCE,
-- 25 MILLION DOLLARS IN FOOD ASSISTANCE PL-480 TITLE I,
-- 500,000 DOLLARS IN FMS, AND
-- 1 MILLION DOLLARS IN IMET.


4. THE U.S. SIDE DESCRIBED THE BREAKDOWN OF THE 25 MILLION
DOLLARS IN PL-480 AS FOLLOWS: AN AGREEMENT FOR 5 MILLION
DOLLARS IN RICE UNDER TITLE I PL-480 HAS ALREADY BEEN
SIGNED. THIS IS THAT PORTION OF THE FY 89 PROGRAM WHICH
MOVED TO FY 90. THE U.S. AND YEMEN ARE PREPARED TO SIGN
SCHEDULED FOR JANUARY 25 A SECOND AGREEMENT ON 10
MILLION DOLLARS IN ADDITIONAL RICE. THE U.S. GOVERNMENT
ALSO AGREED TO PROVIDE 5 MILLION DOLLARS FOR A NEW FEED
GRAIN PROGRAM. AID ACTING ADMINISTRATOR EDELMAN ADDED
THAT HE COULD NOW ALSO ANNOUNCE U.S. WILLINGNESS TO ADD AN
ADDITIONAL 5 MILLION DOLLARS IN FEED GRAINS TO THE 5
MILLION DOLLARS PREVIOUSLY APPROVED. HE ATTRIBUTED THIS
NEW DEVELOPMENT TO THE EFFECTIVE EFFORTS OF AMBASSADOR
DUNBAR DURING THE DAYS PRECEDING THE VISIT. THE YEMENI
SIDE WAS TOLD THAT 20 MILLION DOLLARS OF THIS FOOD
ASSISTANCE NOT INCLUDED IS THE 5 MILLION DOLLARS IN RICE
CARRIED OVER FROM FY 89 WOULD BE PROVIDED UNDER EXTRA
CONCESSIONAL TERMS, WHICH INCLUDES A TEN-YEAR GRACE PERIOD
AND A 40-YEAR REPAYMENT SCHEDULE.


5. PRESIDENT SALEH EXPRESSED APPRECIATION FOR U.S.
ASSISTANCE TO THE YAR. HE TOLD THE SECRETARY THAT HE
WANTED HIS VISIT TO HAVE A MAJOR IMPRINT ON U.S.-YEMENI

RELATIONS -- A LAUNCHING POINT FOR A STRONGER BILATERAL
RELATIONSHIP. THIS WAS ALL THE MORE IMPORTANT IN LIGHT OF
THE RECENT DRAMATIC DEVELOPMENTS IN THE WORLD. HE ASKED
FOR FURTHER U.S. ASSISTANCE AND SUPPORT FOR YEMEN'S
EFFORTS TO DEVELOP ITS ECONOMY. HE REQUESTED U.S. HELP IN
OBTAINING LOANS FROM THE WORLD BANK IN SUPPORT OF YEMEN'S
FIVE-YEAR PLAN.


6. THE SECRETARY CONFIRMED THAT WE DO SUPPORT YEMEN'S
BORROWING FROM THE IDA BUT THAT HE UNDERSTANDS YEMEN
CURRENTLY HAS 250 MILLION DOLLARS IN UNDISBURSED LOANS.
THE SECRETARY ASKED THE PRESIDENT IF THERE WAS SOMETHING
MORE SPECIFIC THAT WE COULD DO TO ASSIST YEMEN. MINISTER
ATTAR RAISED THE 220 KILOMETER HUTH-HARAD ROAD PROJECT.
HE SAID YEMEN HAS WORLD BANK SUPPORT FOR 10 MILLION
DOLLARS BUT NEEDS AN ADDITIONAL 15 MILLION DOLLARS.
FURTHER, THE YAR WISHES TO PAY 20 PERCENT OF THE LOCAL
COSTS OF THE PROJECT FROM THE LOCAL CURRENCY GENERATED BY
PL-480 SALES. FINALLY, THEY HOPE THE WORLD BANK WILL
AGREE TO "FORCED ACCOUNT," WHEREBY THE PROJECT IS EXECUTED
SOLELY BY YEMENI ENTERPRISES. THE SECRETARY REPLIED THAT
WE WOULD GET THE DETAILS AND SEE HOW WE CAN HELP.


7. THERE THEN FOLLOWED A RATHER DISJOINTED DISCUSSION OF
MONEY WHICH THE YEMENIS BELIEVED HAD BEEN GIVEN TO THEM BY
THE SAUDIS FOR THEIR MILITARY, BUT WHICH THEY HAVE NEVER
RECEIVED. PRESIDENT SALEH THOUGHT THERE REMAINED 17
MILLION DOLLARS FROM THE ORIGINAL SAUDI COMMITMENT OF 400
MILLION DOLLARS IN 1978 TO PAY FOR U.S. PLANES AND TANKS.
HE ARGUED THAT THE U.S. HAD THIS BALANCE IN ITS ACCOUNTS
AND SHOULD GIVE IT TO THE YEMENIS RATHER THAN RETURNING IT
TO THE SAUDIS. THE U.S. SIDE ATTEMPTED TO TO EXPLAIN
THAT, IF INDEED THE SAUDIS HAD DEPOSITED ALL OF THE 400
MILLION DOLLARS INTO THE FMS ACCOUNT, THAT MONEY REMAINED
LEGALLY THEIRS. THE U.S. SIDE WAS NOT CERTAIN, IN FACT,
THAT THERE WAS A BALANCE FROM THE ORIGINAL 1978 PROGRAM.
THE SECRETARY ASKED FOR CLARIFICATION AS TO WHETHER
PRESIDENT SALEH WAS ASKING US TO WEIGH IN WITH THE SAUDIS,
INDICATING THAT WE WOULD CONSIDER IT IF THAT WERE THEIR
REQUEST. PRESIDENT SALEH DID NOT SPECIFICALLY RESPOND TO
THE SECRETARY BUT PROCEEDED TO DESCRIBE THE AWKWARD
TRILATERAL RELATIONSHIP WHICH THE U.S., SAUDI ARABIA, AND
YEMEN HAVE IN SUPPORT OF THE MILITARY PROGRAM IN THE YAR.
HE SEEMED TO CONFUSE THE EARLIER ISSUE OF A 17 MILLION
DOLLAR BALANCE IN THE ACCOUNT WITH SAUDI REFUSAL TO
DELIVER A SIMILARLY VALUED AMOUNT OF AMMUNITION AND SPARE
PARTS. THE FOREIGN MINISTER INTERJECTED THAT A FEW YEARS
AGO THE U.S. HAD OFFERED YAR 14 MILLION DOLLARS IN FMS
CREDITS, BUT THAT THE CREDITS WERE OFFERED AT SUCH A HIGH
INTEREST RATE THAT THEY CAN NEVER BE USED. HE SUGGESTED
THAT MAYBE SOMETHING CAN BE DONE TO IMPROVE THE TERMS.
THE SECRETARY SAID WE WOULD LOOK INTO IT.

//GSM PROGRAM//


8. THE PRESIDENT AGAIN RAISED FOOD ASSISTANCE. HE SAID
YEMEN NEEDS FIVE HUNDRED THOUSAND TONS OF WHEAT ANNUALLY
AND HE NEEDS U.S. HELP IN OBTAINING THAT VOLUME OF WHEAT
ON THE SAME CONDITIONS CURRENTLY ENJOYED BY ALGERIA AND
EGYPT. MINISTER ATTAR NOTED THAT YEMEN NOW GETS ONLY
THREE YEARS FOR REPAYMENT AND WANTS EITHER FIVE OR SEVEN
YEARS TO REPAY. AMBASSADOR DUNBAR, NOTING THAT THE YEMENI
SIDE WAS TALKING ABOUT THE GSM PROGRAM, EXPLAINED THAT
YEMEN WAS IN ARREARS IN ITS PAYMENT ON PAST GSM PROGRAMS
AND THERE WAS LITTLE LIKELIHOOD OF SUCCESS IN TALKS FOR
BETTER TERMS WHILE THE ARREARAGES REMAIN. PRESIDENT SALEH
SAID THAT HE PERSONALLY WOULD SETTLE ALL ARREARAGES
IMMEDIATELY. ALL WOULD BE PAID.


9. THE SECRETARY REFERRED TO PRESIDENT SALEH'S EARLIER
REMARKS ABOUT THE IMPORTANCE OF HIS VISIT TO WASHINGTON
AND SAID THAT WE WILL LOOK AT THE GSM PROGRAM IN THAT
SPIRIT IF THE PRESIDENT CAN GET THE ARREARAGE ISSUE BEHIND
US. ONCE THE ARREARAGES ARE PAID, WE WILL ASK THE
AGRICULTURE DEPARTMENT TO SEE IF THEY CAN BE MORE
FORTHCOMING IN THE TERMS THEY OFFERED. PRESIDENT SALEH
SEEMED PLEASED AND SAID AGAIN THAT ALL ARREARS WILL BE
PAID. HE QUIPPED THAT THE SOVIETS HAD A SIMILAR BUT MUCH
BIGGER PROBLEM WITH YEMEN. "WE HAVE 2 BILLION DOLLARS IN
DEBTS TO THE SOVIETS WHICH WE RESCHEDULE EVERY YEAR. NOW
THAT THEY ARE CAPITALISTS, IT WILL BE MUCH TOUGHER TO
RESCHEDULE." "YOU WILL FIND MANY OF US," HE SAID,
"WISHING THEY HAD REMAINED SOCIALISTS:" THE SECRETARY
SUGGESTED SALEH TRY TO GET SOVIET AGREEMENT TO PAY OFF THE
ENTIRE DEBT IN RUBLES BECAUSE THEN THE YAR COULD WIPE OUT
ITS DEBT IN ONE DAY.

//INVESTMENT LAW//


10. THE SECRETARY ASKED ABOUT THE STATUS OF YEMEN'S NEW
INVESTMENT LAW. PRESIDENT SALEH SAID THE LAW WAS
PRESENTLY IN DRAFT. HE DESCRIBED IT AS ONE OF THE BEST
INVESTMENT LAWS IN THE WORLD. HE THANKED THE U.S. AND
SOME EUROPEAN COUNTRIES FOR THEIR GREAT ASSISTANCE. THE
LAW WILL SOON BE SENT TO PARLIAMENT FOR APPROVAL. IN HIS
WORDS, EVERYTHING IS ON TRACK.


11. PARTICIPANTS:

//U.S.//

THE SECRETARY
AMBASSADOR DUNBAR
DEPUTY NATIONAL SECURITY ADVISOR GATES
U/S BARTHOLOMEW
AID ACTING ADMINISTRATOR EDELMAN
A/S KELLY
S/P DIRECTOR ROSS
NEA/DAS GNEHM NOTETAKER

//YEMENI//

PRESIDENT SALEH
DEPUTY PM/FOREIGN MINISTER ABDULKARIM AL-ERYANI

DEPUTY PM/DEVELOPMENT MINISTER MOHAMED AL-ATTAR
YAHYA AL-MUTAWAKEL, MEMBER OF CONSULTATIVE COUNCIL
MOHAMED BASENDWAH, MEMBER OF CONSULTATIVE COUNCIL, MEMBER
OF CONSULTATIVE ASSEMBLY PARLIAMENT
OIL MINISTER AHMAD AL-MOHANY
MINSTATE FOR UNITY AFFAIRS YAHYA AL-ARASHI
ALI AL-ANESI, DIRECTOR OF PRESIDENTIAL OFFICE
HUSSEIN AL-AMRI, MEMBER OF CONSULTATIVE ASSEMBLY
AMBASSADOR MOHSIN ALAINI


BAKER