Both sides will benefit from GCC integration, World Bank VP says [Archives:2006/1003/Reportage]

Interview by: Dr. Hamdan Dammag
Many considered the London Donors Conference earlier this month a successful mission. Daniela Gressani, World Bank Vice President for the Middle East and North Africa Region, was very noticeable during the conference. Dr. Hamdan Dammag met Gressani during her first visit to Yemen prior to the conference and conducted the following interview.

Is this your first visit to Yemen?

Yes, but I hope it will be the first of many.

What's the significance of your visit to Yemen and what do you aim to achieve?

There are two things, the first of which is to learn about Yemen. I've been in this new position as World Bank vice president for the Middle East and North Africa region for a few months, so I need to learn many things about Yemen. I previously worked in this region as an economic policy manager, but I didn't have a chance to visit Yemen at that time. So regarding Yemen, there's plenty of learning and catching up to do.

My second objective is to ensure that we're fully prepared for the important London meeting Nov. 15 and 16, wherein the donor community, including both Western and GCC (Gulf Cooperation Council) donors, will come together to discuss Yemen's needs as well as its achievements.

How will the World Bank help Yemen at the London conference?

We've been working closely with the Yemeni government in terms of documenting Yemen's achievements during the past two months, as well as the commitments and forms needed for Yemen to progress further.

The second thing is that several important measures must be taken in order to prepare Yemen to engage with donors. I think one of the most important has been preparing for the public investment plan, on which the World Bank has been providing input to the government. The other thing is to look at new mechanisms, options to implement projects and activities to be funded by donors, which the government has done with technical input from us.

What are your expectations of Yemen in this conference?

I hope Yemen will be successful in raising its profile in the international community. This conference has two objectives:

Yemen isn't well known nor are its accomplishments well known. Its challenges also aren't well known, nor its government's commitment to taking action to overcome these challenges, so the international community needs to better understand these.

But of course, the conference isn't only about raising money. It's also to raise the financial resources for Yemen to progress toward implementing social programs in education, health and social protection and implement improvements in its basic infrastructure. Money is going to be an indicator, but not the only one.

Last year, Christiaan Poortman, the previous WB Vice President for the Middle East and North Africa Region, said the WB will decrease its aid to Yemen by 34 percent; however, it was announced this year that the new Country Assistance Strategy (CAS) for Yemen will be $400 million. Does this indicate that the Yemeni government's performance has improved since last year?

Actually, $400 million isn't an accurate figure because that's for a four-year period, so what we have is approximately $100 million per year. As you said, the WB decreased its assistance by 34 percent in response to Yemen's poor performance regarding economic governance, which we consider very important because it's a big obstacle to development.

However, funds available to Yemen under the new assistance strategy increased, not by 34 percent, as previously decreased, but by one-third of that, I think. This was done in response to the fact that Yemen has taken important steps. I think a number of measures the Yemeni government has taken have been impressive in the area of good governance and fighting corruption.

So far, these are legislative measures, which are necessary, but of course, we want to ensure that they're translating into fact on the ground and that they're implemented. We certainly are open to increasing Yemen's assistance again, but as I said, we hope we'll see results on the ground by implementing these legislative measures.

Can you tell us more about the new Country Assistance Strategy (CAS) for Yemen, which includes 19 projects for 2006-2009?

My colleague Mustafa [Rouis, manager of the WB office in Yemen] is more familiar with the details; however, I can tell you generally regarding Yemen that what we're trying to achieve is to provide support in two main areas, one of which is the social sector. Yemen has made progress in education, but still has a large gap to close with its neighboring countries in order to fully realize its population's potential.

The second area involves infrastructure. Again, investment is needed to complement and enable a stronger power sector. Investment also is essential for creating jobs. So these are the two main directions.

How do you think Yemen will benefit economically by joining the GCC? Does the WB have a vision concerning this?

Yes, we do. In fact, the [Yemeni] government has asked us to work with it on an action plan to maximize the benefits of integrating over time. But such integration isn't an event that will occur at a certain date; rather, it's a process that must be built up. Of course, we plan to engage the GCC in contributing to this process.

There are fairly obvious benefits for Yemen, as well as the GCC nations. I think these mostly arise from two things, one of which is improving trade. I think there's room to improve trade relations between Yemen and the GCC.

The second area of mutual benefit is better integration of the labor market. At this point, Yemen exports labor, while the GCC imports a significant number of laborers.

Lastly, closer collaboration in the private sector can be the axis of establishing businesses and moving capital across borders. All of these will benefit both Yemen and the GCC nations.

So you really think the GCC also will benefit by integrating with Yemen?

Yes. Yemen is a large country from which the GCC will benefit through trade and labor market integration, as well as private sector integration. In my previous WB assignment, I was responsible for new European Union members. I witnessed first-hand the mutual benefits of the integration, which came from trade, the labor market and the financial sector.

I think maybe the biggest stance of these countries came from what's called the “right of establishment,” the fact that they must follow the same regulations to create a business in one country or another and they're not considered foreign investors. This has contributed to technology transfer, an employment generation and growth in both nations. There's no reason why we also shouldn't be able to achieve these benefits from Yemen's integration with the GCC.

My last two questions are about the World Bank in general. It's always in the public's perception, and this is real, that the World Bank serves corrupt regimes, especially Third World countries, more than the poor in these countries. What do you say about this?

I think the WB is an institution that was set up to work with governments. However, we're trying very hard to do two things: on one hand, we're trying to work with the current government to improve their governance and fight corruption with them. As I said, some important steps already have been taken in Yemen and I certainly hope implementation will follow so that the government's image also will change.

Working with the government is our mandate; however, we've been trying to reach out as much as possible to non-governmental institutions, whether civil society or academia, as well as Parliament. This is extremely helpful because it allows us to better understand the perspective of other groups in society and better communicate what we're about and the things we're trying to achieve. These are the two main directions to overcoming this image problem.

By the way, I also hope the press will play a role in explaining to the public what the World Bank is about. Someone said that at one time, the World Bank was the most heated but at the same time, the least known. So, we hope by talking to the press and the public to do a better job of explaining what we're all about.

So, can you explain to the public, in a simple way, the World Bank's role in helping the government fight corruption?

Essentially, this is done in two ways, one of which is making the government more sensitive about and aware of this issue. The WB conducts several comparative studies comparing Yemen to other countries regarding governance, corruption and the private sector. You can see from these studies that without a doubt, Yemen needs to improve its governance, fight corruption and improve the environment for the private sector. The first thing is to try to improve awareness and, at the same time, identify exactly what can be done to remedy the situation.
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