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An Unbalanced Scorecard

By Clare Dunkley • Dec 30th, 2008

Yemen is working urgently to ween itself off of the country’s dwindling oil output. But security, political and bureaucratic hurdles are getting in the way.



It never rains but it pours,” might, sadly, be the best way to describe Yemen’s pent-up tourism potential. The devastating floods that struck the Hadramout province in late October not only killed dozens of residents and destroyed homes, but damaged the world-famous medieval mud-brick “high-rises” of Shibam – a UNESCO World Heritage site known as the “Manhattan of the desert” and a major draw for travelers who are intrepid enough to venture there.
The previous month, an attack by the shadowy al-Qaeda in Yemen (AQY) group on the US embassy in Sana’a killed 16 people and hit international headlines – discouraging tourism and wider foreign involvement in the country’s struggling economy. The government had only just pacified the latest outbreak of the sporadic Houthi rebellion in the northern Saada region.
President Ali Abdullah Saleh, who was re-elected in 2006 (having served as head of state since the union of north and south of the country in 1990), could be forgiven for thinking that attempts to promote swifter development were being deliberately thwarted by events beyond his control.
Transparency International’s annual Corruption Perception Index, published this year in late September, puts Yemen 141st out of 180 countries, with Saudi Arabia in 80th spot and its five GCC fellows considerably higher up the rankings. Close to 40 percent of the population lives below the poverty line, despite its oil revenues. Yet this blessing is also a curse. Being almost completely dependant on oil exports means Yemen will see falling revenues as output declines precipitously. Between 2006 and 2007, for instance, it dropped by 11.6 percent to 336,000 barrels/day (b/d).
An international donors conference convened in London in mid-November 2006, but it proved the GCC was more supportive financially than in terms of genuine political and economic integration. Out of a total of $4.7 billion pledged in support of Sana’a’s 2006-2010 Third Five-year Development Plan for Poverty Reduction and concurrent Public Investment Program (PIP), more than half the funds were promised by the Gulf states (they also played a central role in planning the gathering). The money should go most of the way towards plugging an estimated $5.5 billion gap between the government’s means and the $12.6 billion costing of the PIP, which aims to roughly double annual GDP growth by 2010 to 7 percent from about 3.6 percent in 2007.


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