Oil and politicsFuture of oil in Yemen [Archives:2005/861/Opinion]

July 21 2005

By Prof. Dr. Abdulaziz al-Tarb
When questioning the future of oil in Yemen, the key question is the accuracy of the figures announced by the Yemeni government in terms of revenues and exports. In response to such doubts the Oil Investment Authority suggests that the World Bank and International Monetary Fund manipulate these figures for their own purposes. If their diplomatic relations with Yemen are good, they say Yemen's reserves are in good order, and if not, they say oil is going to deplete. Being an economist, I put it that Yemen's economy is promising and will further thrive if Yemen is able to market itself well, find at least a partial resolution to the blight of corruption, and overhaul the national economy. Yemen is virgin. Gulf States are saturated. Many foreign and Arab businessmen are expected to rush to our country if we have self-respect and reduce bureaucracy. We should urge businessmen to compete for the welfare of the community. If an organization cannot compete locally, it cannot find any ground outside. With the membership of the World Trade Organization and the Arab Wider Trade Area Agreement, products and services will come to our markets. Citizens will look for the price, quality and brand. A large portion of our industry does not consider those three points. We shouldn't search for ISO with its different grades. There is no point in paying for the right to manufacture certain products without being able to export them. I once reproached Malaysian companies for the low quality products they export to our country. They replied that local importers want them so. We should differentiate between industry and trade.

Coming to oil, we should always remember that this is the master issue and it is highly politicized. For example, we heard in the 50's that Yemen had oil. A British company came but was not allowed to extract it. After independence, an Algerian company came and then an Italian one. It was rumoured there was Soviet pressure because the Italian company of Ajeeb was owned by the Italian Communist Party. Oil was not extracted. On the other hand, we fought with Saudi Arabia over a piece of land in Shabwa province. Technical reports had told the Saudis that the Saudi reserves travel towards this area of Yemen. Thus, with the fact that Saudi Arabia recovers large quantities of oil, how can we expect that oil in Yemen shall deplete? If we cannot raise the living standard of people, oil should remain underground until the political resolution matures and we become able to make use of oil. The President's statement was based on the reports submitted by the concerned authorities. At the lecture, I argued objectively until I could snatch a confession from the Petroleum Exploration and Production Authority (PEPA) representatives who said that neither in 2009 nor in 2012 oil will have depleted and that Yemen is a growth region. I questioned the existing figures and procured other figures from sources in the European Association. The future is bright and satisfactory provided that the State promotes itself regionally and internationally and reforms its economic, political, administrative and financial policies. Another critical point is the non-oil sector, Yemen is able to displace Turkey in terms of provision of vegetables and fruits for the neighbouring countries provided that we do not try to pluck premature fruits. The Ministry of Agriculture as well as the Agricultural Cooperatives Union should shoulder this duty. The State failed to market them nor was it able to qualify private companies in this sector. In tourism, Yemen has got many advantages, which can yield many times oil revenues. Consider tourist revenues in Tunisia and Morocco. Tourism needs security and suitable accommodation not necessarily five star service. We should train tourist guides and establish companies that provide related services. We should run an intensive campaign underscoring the importance of “Made in Yemen,” in order to be able to market our products. Honey and coffee are high quality and luxury products the world over. Yemen's fisheries is a lucrative source of wealth but is in need of regulation. Jordan and Egypt have large demands for fish not to mention Europe. Existing economic councils have to be reconsidered. Those that are ineffective are dispensable. Yemen can make great profits from the fishery and tourism, which need only reorganization. The government should offer facilities to develop these sectors. Moreover, it is not possible to depend on the local resources to rebuild the Yemeni economy. This is why encouraging investment in Yemen is crucial for economic development. Yemen's investment act is one of the best. An investor in Yemen can be called an adventurer because he enters an unknown market. Pleased with the law, he hastens to do his enterprise but gets obstructed by bureaucracy and corruption under the guise of 'partnership.' Some complained to me that officers modify some submitted studies and present them under other names. This is wrong. Many businessmen showed their readiness to enter the Yemeni market but they want the law to be implemented. We need judicial reform and arbitration councils, the latter can be headed by economists and not judges. These are the concerns of investors. We should begin where others ended and not where they began. The largest number of investors should be involved in development. Consequently, the private sector, what I call business sector, is the maker of development. One of the problems is lack in economic identity. The business sector has to keep away from partisanship (e.g. three brothers join three parties). Their role gets distorted because the government doesn't provide them with the proper atmosphere. Many of the businessmen are not officially businessmen. Hence, how can we speak about 2015 while we do not know what to do in the coming two months? If we do not know what the government wants, how can it be helped? Partnership between the government and the private sector cannot be achieved through a meeting or a statement. If we do not understand partnership well, foreigners will impose it on us as we are rushing for the World Trade Organization. Some say we will get profits if we join the WTO, but I doubt this since we are not yet ready for entry. We will face a blow. Currently, businessmen and businesses move here and there. There appears a gap between the State and one of its parts similar to the “Woman are half of the society” issue. So far, this subject is not adequately studied.

To overcome the current ailments, we must do the following: Boards of public establishments should be summoned. They should be informed that the government adopts the principle of reward and punishment and that the Central Organization for Control and Audit is the authority responsible to monitor their conduct. Then comes the training of staff. What is happening in the successful private establishments should be introduced into the public sector. Most of public service officials feel that the establishments they head are their own property until they die. Therefore, they do whatever they like. Renewal is important. We shouldn't seek to reproduce identical patterns.