Russia Writes off USD 5.306 billion of Yemeni debt [Archives:2001/33/Business & Economy]
The Republic of Yemen and the Russian Federation are moving towards an improvement in their bilateral relations in the field of economy, commerce and investment. This reflects renewed confidence between the two political leaders and deep roots of friendship. Common interests of both nations enhanced these ties and pushed them forward despite the latest changes in international relations since the breakup of the Soviet Union. The Russian Federation exempted Yemen from 80% of its foreign debt in order to support its unity and economic reform programs. This decision was made without conditions that may alter Yemen’s national interest.
Despite an evolving international community proceeding toward ‘Globalization’, Yemeni-Russian bilateral relations moved closer as the two countries realized the potential danger of dominant Western companies on the emerging markets. These multinational companies are indeed strong competitors to Russian manufacturers of weapons and other products.
The Republic of Yemen found in the Russian Federation an honest friend and a very generous country that decided without any hesitation to sign an agreement writing off most of Yemen’s foreign debt to Russia. This decision is a crucial event in the history of Yemen as Yemeni debts to Russia represent more than 70% of the country’s total foreign debt.
According to this agreement, the Russian Federation exempted Yemen from USD 5.306 billion out of a total debt totalling USD 6.643 billion. The Russian Federation then accepted to reduce the remaining debt at the ratio of 67% based on the Napoli conditions. The rest is to be rescheduled in 33 years and use soft interests.
Russia’s decision greatly helped the Republic of Yemen reducing its total foreign debt at a level of 60%, instead of 200%, of total national production. The debts service on exports only reached 5% which is a good ratio for a less developed country. The Russian commitment to reduce Yemen’s debt also contributed in pushing ahead bilateral relations of both countries. It is worth mentioning that most of Yemeni debt to Russia came from the purchase of weapons and other military equipment by the Communist government in the South part of Yemen prior to the unification.
Russia returns into the region after crises
The Russian Federation’s concern to improve its bilateral relations with Yemen and other states in the region is coming after Moscow overcame its internal crises that followed the breakout of the Soviet Union. During this period, Russia went through a difficult transition period as they went from communism to liberalism.
The Western countries never missed an opportunity to dominate over the less developed nations. The Yemeni leadership remained cautious in its relations with the West and tried to keep good relations with Russia, China, and other non Western countries. This balanced policy in international relations enabled Yemen to protect its national interests and unity.
Yemeni-Russian bilateral ties were cemented and witnessed a noticeable development in commerce and investment. Officials of both countries paid a visit to the other and held discussions to improve their bilateral relations and cooperation, specifically in the fields of minerals, power, and oil where Russian corporations are given the opportunity to invest in Yemen.
Historically, the Yemeni-Russian bilateral relations are the oldest Arab-Russian relations, dating back to the 1920s. In the 1980s, Russian corporations conducted a number of geological surveys. Some ended up with the exploration of oil in the Southern part of Yemen and others proved the existence of gold in the Hadhramout region.
Yemen is a market for the Russian armament industry
Russia considers Yemen its main market in the region, as the national armed forces depend heavily on Russian light and heavy weapons. Russia has no intention to leave this market to Western competitors while its armament industry is looking for potential markets where it could sell its products. As a matter of fact, Yemen intends to buy not only Russian weapons but also other products such as house equipment, electrical goods, and refrigerators.
In conclusion, the Yemeni Russian bilateral relations are progressing and could go beyond expectations, as Moscow has adopted a more fair attitude than the Western governments concerning issues like Israeli aggressions and crimes committed against humanity in Palestine.