Yemeni critics: Management needed more than donors

Experts say improving management Yemen's natural resources can unlock enough funding to make up fiscal shortfalls.

September 14, 2012 09:17
4 minute read.
Members of Arab donor countries in Yemen

Members of Arab donor countries in Yemen 370. (photo credit: REUTERS/Mohamed Al-Sayaghi)


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SANA’A - While Yemeni officials struggle to solicit contributions from donor nations, arguing that money is the solution to the country’s economic and humanitarian crises, anti-corruption activists counter that improving the management of Yemen’s natural resources will unlock funding sufficient to make-up fiscal shortfalls.

In the Saudi Arabian capital of Riyadh last week, donor nations pledged $6.4 billion in assistance to Yemen. That still leaves a shortfall of $5.5 billion based upon the $11.9 billion that the Yemeni government claimed as its cash gap just prior to the donor conference. According to officials, the amount needed represents the cost of the nation’s urgent needs as well as the costs of dealing with the humanitarian crisis caused by the suspension of public services in 2011 while the struggle to oust former President Ali Abdullah Saleh played out, and providing for the flow of African refugees that have poured into Yemen.

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Following the Riyadh conference, Yemeni Deputy Minister of Planning and International Cooperation for Studies and Economic Expectations Dr. Mohamed Al-Hawri, painted an optimistic picture despite the apparent failure to reach the conference goal. He told The Media Line that while “the $6.4 billion pledged does not cover the financial gap, there are other financial grants to be announced in New York [where a second donor conference will be held later this month]. We think it will cover the cash gap estimated at $11.9 billion.”

But experts contend that Yemen needs both external help and the ability to reap more revenue from its resources. Ali Al-Wafi, a Yemeni economist and former chairman of the parliament’s Financial Committee, told The Media Line that “Yemen needs both the good and sufficient management and the external aid. Yemen needs the foreign assistance to support its own revenues as the country’s resources are limited.”

Al-Wafi also said he doubted the Yemeni government’s capacity to utilize the pledged funds and the country’s resources to meet the development and humanitarian demands. Referring to international pledges, he said, “I doubt that Yemen will absorb half of the amount due to the huge complications of the political and security situations and because we reached a point where we do not know who rules us and no one is held accountable for any violations.”

Anti-corruption activist Mohamed Al-Absi, believes that Yemen has enough revenue potential in its natural resources to drastically reduce or even remove the need for donations from abroad. Al-Absi quit his government job as office manager of the Technical Education and Vocational Training Ministry this year in order to continue to run his volunteer media campaigns alleging waste of the country’s resources. He told The Media Line that, “at the ministry, they were telling me, ‘You’re a member of the government, you must be silent.’ But I really could not keep my mouth shut.” 

Al-Absi, along with a number of Yemeni journalists, anti-corruption activists and parliamentarians, in June 2010 launched the Anti-Gas Sale Contract National Alliance (YLNG) – an organization dedicated to canceling Yemen’s contract to provide its liquid natural gas to the Korean Gas Corporation (KOGAS). They contend that the agreement symbolizes governmental waste and the nation’s ability to benefit appropriately from its natural resources.


“Our problem in Yemen is not the lack of cash, but rather the lack of sufficient management to run the country with responsibility and accountability,” Al-Absi said. YLNG argues that the KOGAS contract has deprived Yemen of at least $180 billion in revenue over a period of twenty-years during which its natural gas was being purchased by the Korean company at a fixed price of $3.2 per one million BTUs. By comparison, during the same period of time, neighboring Oman was selling its natural gas to other companies at $11 per one million BTUs and Qatar at $12.

Al-Absi compared Yemen’s loss to Egyptian complaints about the gas deal former President Mubarak cut with Israel. “These are direct losses in marketing,” he said. In his weekly columns criticizing government waste, Al-Absi claims that the KOGAS deal is only one example of where Yemen’s much-needed revenue is lost. He even accuses the government of failing to capitalize on the potentially more lucrative tax on the sale of qat, the narcotic plant leaves Yemenis chew constantly, which fetches about $1,000 per day whereas it should bring in closer to $1 million, according to Al-Absi.

Critics of the government’s alleged waste of resources also point to the failure to obligate foreign companies mining Yemeni resources from working in a way that protects and preserves the resources. One example given is the burn-off of 11 trillion cubic meters of oil by an American company working Yemen’s largest oil field “because there were no terms in the contract that required the company to re-inject the gas.”

Those who criticize government waste and poor management practices admonish that “donors must not be expected to act as automated teller machines (ATMs) for the Yemeni government.” The donors are needed to stem the humanitarian crisis that is threatening one million children who are malnourished, but that the long-term solution lies with improving the government’s management techniques and insuring proper value is received for Yemen’s natural resources.

To illustrate the government’s lack of business acumen, Al-Absi compared his president to the Qatari prince. “The Prince of Qatar went to Egypt and subsequently deposited $2 billion at the Central Bank of Egypt upon concluding his business; whereas Yemeni President Abd Rabo Mansour Hadi went to Qatar and returned with a promise to re-start a joint real-estate ventured between a Qatari and Yemeni businessman.”

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