Is Yemen serious about fighting corruption? [Archives:2006/995/Reportage]

October 2 2006
43 percent of Yemenis live below the poverty line, which is $2 per day. YT PHOTO
43 percent of Yemenis live below the poverty line, which is $2 per day. YT PHOTO
By: Mohammed Al-Jabri
Yemen loses $600-700 million annually due to corruption, expert says

As one of the world's poorest nations, corruption is a chief obstacle to Yemen's economy and its citizens' development.

Transparency International's annual Corruption Perception Index for 2005 placed Yemen at 106 out of 159 countries. It scored 2.7 out of a squeaky-clean 10 compared to 2.4 in 2004.

Corruption was the foremost issue for Yemeni presidential candidates in their Aug. 22 to Sept. 19 election campaigns, with each confessing its existence and promising to fight it.

Yemen annually loses $500 million, with that figure rising to $600-700 million in other years, says Abdul-Hai Qasim, a political and economic analyst at the Yemeni Center for Strategic Studies (YCSS). “Increasing corruption causes Yemen to be a non-stimulating environment for both foreign and local investment capital,” Qasim says.

Approximately 50 percent of development projects have been deterred or not implemented due to corruption. “Coercive partnership with investors on the part of influential state figures, as well as land-related problems, figure prominently in deterring such projects,” Qasim adds, “Inability to attract local and foreign investment deprives Yemen of gross financial revenues, as 40 to 50 percent could be attained if there was no corruption.”

Yemen's weak investment environment also affects gross domestic production, which decreased from 22 percent in 1995 to 19.2 percent by the end of 2001, with the percentage continuing the same direction, i.e., toward deterioration.

Weak gross domestic product (GDP) growth and lack of firm resolve for far-sighted fiscal management are the Yemeni economy's main weaknesses. progress in the initial two years (2003-2004) of Yemen's first Poverty Reduction Strategy (PRS )has been slow and “short of PRS targets in many respects,” according to the candid review prepared by the government.

GDP growth barely has kept pace with population growth, whereas the proposed per-capita growth target was 2.5 percent. Poverty most likely didn't decrease, thus failing the targeted 13 percent reduction.

According to Qasim, corruption in Yemen affects citizens both in the long and short run. Spreading administrative and financial corruption in state institutions has negative consequences for economic growth. This, in turn, affects citizens' living standards, as evident in increasing poverty, illiteracy and unemployment.

With a population of approximately 20 million, 43 percent of Yemenis live below the poverty line, which is $2 per day. As a result, steady economic development in Yemen has been deterred.

In its 2005 annual report, the YCSS criticized the government for such rampant corruption, stating that abuse of executive power by the nation's ruling system was a key reason for corruption. The report pointed out that government measures undertaken within its reform program during the past 10 years had failed to eradicate financial corruption in public institutions. Additionally, judiciary isn't independent and political interference is widespread in the courts. All of this helps extend Yemen's culture of corruption, the YCSS report added.

Fighting corruption requires serious political will on the government's part, Qasim notes. Constitutional, observational, judicial and auditing institutions also must be activated. Additionally, the government must issue clear laws to punish corrupt individuals and treat corruption's causes, enact the Financial Disclosure Law and appoint honest figures to high-ranking posts, he asserts

In its report, the YCSS cited several examples of development projects that suffered due to corruption, with Watani Bank for Trade and Investment a case in point. Failing to meet its financial obligations to its customers, as stipulated by Articles 43, 44 and 46 in Law No. 38, Watani declared bankruptcy in December 2005.

A bank source affirmed that the bankruptcy came about when hundreds of contractors didn't pay their debts to the bank because the government delayed paying them their dues from implementing some projects.

Also, on Dec. 11, 2005, the World Bank announced that it would decrease its subsidies to Yemen by 34 percent – from $420 million to $280 million – over the next three years. Christiaan Poortman, World Bank Vice President for the Middle East and North Africa region, explained that the World Bank had to decrease subsidies because Yemen's performance indicators fell remarkably and didn't show progress and urged the Yemeni government to fight corruption.

To avoid criticism from donor nations and international organizations, the Yemeni government decided to establish a committee to combat corruption in 2005, by the end of which it had endorsed the idea and established the National Supreme Committee to Combat Corruption.

Being the public's demand, the issue of fighting corruption recently has gained steam in Yemeni society and become a daily topic for journalists.

As mentioned in his campaign platform, President Ali Abdullah Saleh promised to fight corruption and issue the Financial Disclosure Law, which he vowed will “be applied to everyone without exception.

“We'll continue fighting corruption and corrupt individuals and absolutely won't hesitate to send whoever is convicted of corruption to justice,” he stated Sept. 26, addressing Yemenis on the revolution's 44th anniversary.