Yeman - world class commerical player?

At the 2010 annual Mumbai Port and Shipping Expo, the Yemen Maritime Security Company will be displaying its wares.  This exhibition attracts huge numbers of shipping companies and this is the first time that Yemen will be exhibiting.  The YMS and its British subsidiary, Integrated Maritime Security Solutions will be advertising their services on offer within the Gulf of Aden through which passes 20% of international shipping.  

This is a major move in Yemen stepping up to counter piracy, which is rampant in these waters, and showing the world it means business. “Yemen has much to offer the world and being a part of an anti-piracy solution is one way of demonstrating Yemen’s commitment to the international community,” said Joseph Escott, the Company’s British Marketing Director.  This is also an opportunity for Yemen to show that although YMS/IMSS is government licensed it is a privately funded commercial enterprise. Mohammed Saleh Haidra, CEO of the Company has highlighted a problem of perceived state interference when he states: “There has been a lot of publicity in the international press lately about the ethics of using state assets to protect commercial shipping transiting through the Gulf of Aden. So, it’s important to remember that, as a commercial enterprise, YMS/IMSS does not align itself with this practice. Our goal is to offer a cost effective security solution that is not tainted by unethical practices. We want to demonstrate that Yemen commercial enterprise, in keeping with international practices, is able to offer a clean quality product that cannot be questioned.”

The reason Haidra is so emphatic about the ethical base of YMS is due to the dubious activities of the official Yemeni Coastguard Service.  This supposedly state security service has been operating for private profit, although the US has been funding it since 2003.  Lotus Projects, a Yemeni firm with a UK based franchise called the Gulf of Aden Group Transit (GoAGT), reports that it has a “unique agreement with Lotus Projects and the Yemen Navy which means (… a client is…) guaranteed the protection of highly trained military personnel and the Yemen Government in the event of an attack.” 

According to Marinelog.com, “For $35,000 for a three day transit, GoAGT will supply an armed team of six serving Yemen military or coastguard personnel to embark on and protect a vessel between the GoAGT transit coordinates.”  The men deployed will be on Yemeni government salaries although doing private work.  Last year the US Coast Guard (USCG) spent $28.2 million for two patrol boats for the Yemen Coastguard.  This was to “assist the Yemen Coast Guard in addressing an anti-piracy mission in the Gulf of Aden that is strategically important to U.S. interests” was how the USCG announced these plans.  Since the reports that the Yemen Coast Guard conducts private business for private profit with government equipment and manpower, it is easy to see why YMS is keen to distance themselves from such opaqueness and present a transparent straightforward approach to ethical commerce.

YMS is not alone in wishing to embark upon the outside commercial scene.  Yemen’s port Aden has huge potential, particularly if the piracy issue is addressed.   Currently it is dilapidated and still has the appearance from when the British left in 1967. 

However, it is tax-free haven and there are signs of recovery and investment.  In 2008 Dubai port operator DP World has plans underway to expand the container capabilities of Aden.   DP World has been employing local Yemenis since its venture in and is actively recruiting more. 

Yemeni-Saudi Arab Iron and Steel Corp is also expanding.  Having set up a plant in Aden back in 2005, the company is now launching a $1.6 billion expansion to boost capacity to 1.5 million metric tons a year within a decade.   Ravinder Singh a leading company executive said: "I'm amazed at the quality of Yemeni manpower. I've worked in India for more than 30 years in several places, but I've never seen manpower with the commitment of Yemenis.”

The port zone of Aden is run by Abdul-Galil al-Shaibi who envisages fast expansion for the port to double its size within 5 years. "We have been moving fast but in my view not fast enough. We have cheap labor...The process is to interest Yemenis in their country, to develop it so others will come."  The UN, US led in this instance by Hilary Clinton at the “Friends of Yemen” conference in London in January this year and most of the financial world are scpetical of Yemen’s ability to pull through economically.  The statistics do not help:  45% of the local population lives on under $2 per day; unemployment is rife along with corruption.

Abdul-Galil al-Shaibi’s enthusiasm is exactly what the country needs. There is talk of a sugar refinery being built. Yes, Yemen’s oil supplies are dwindling so it is unlikely the existing oil refinery will be updated, but the export of liquefied natural gas LNG is increasing. A new LNG plant was constructed last year in conjunction with a 320 km gas pipeline.  The French company Total has the majority shareholding of 39.62% of the largest investment to date in the country totaling US$ 4.5 billion.  Once full production capacity is achieved 6.7 million tonnes of LNG a year will be available for export.   To date, the US and South Korea have received shipments.   Yves-Louis Darricarrère, president of Total Exploration & Production, is quoted as saying: “The production start of Yemen LNG is the successful outcome of a cooperation between Total and its partners over the last decade.”

No assessment of any aspect of Yemen can exclude the threat and complications caused by the presence of Al-Qaeda in the form of AQAP (Al-Qaeda in the Arabian Peninsula).  AQAP may be synonymous with Yemen but Yemen is not synonymous with AQAP.  It is true that social and economic conditions in poverty-stricken Yemen are conducive to AQAP recruiting sympathisers.  However, if Yemen can provide real economic opportunities such as the expansion of the port of Aden and the investment into the production of LNG then AQAP’s appeal will slowly diminish as the population starts to enjoy an improved standard of living and sees the disadvantages of alienating Yemen’s trading partners.

This year Yemen is even trying to rebuild its tourist trade. The historic town of Tarim is getting a face-lift.  Fresh paint on the mosques, pot holes filled in – and all in preparation for its March debut as "capital of Islamic culture"! Tarim’s Director of the cultural project said: "Terrorism has hit tourism seriously. We hope there will be a rise in the numbers of tourists in the future."  Last year tourism took a hit as did the South Korean tourists visiting the UNESCO World Heritage site Shibam, also known as the "Manhattan of the Desert" for its 16th century mud-brick tower houses rising up to 16 storeys high.  Regrettably until internal security forces can prove effective, Western tourists are unlikely to be flooding in. As Mohammed Ramimi , mayor of Tarim put it: "Tourists used to come in the thousands. They could move freely. It was different."  At least, though, the Yemen is not throwing in the towel.  It is striving to offer decent options, despite Al-Qaeda’s threats.  Security personnel are provided for tourists within the town. Saleh al-Hamdi makes his living selling souvenirs to tourists.  According to him: "I've lived here for 18 years. There have never been any problems or hate against tourists. Tarim deserves to be Islamic cultural capital because its people are educated and knowledgeable."

Yemen is often described as either a failed state or a failing one.  Yemen’s place on the international commercial map is essential to prove that Yemen is a country worth supporting and that there is hope.   If financial investment such as that involved with LNG can continue and strengthen, Yemen will one day not be reliant on donor countries and the World Bank.  Of course Yemen needs the funds pledged at the 2006 London conference to implement economic and social reforms.  How much better it will be when Yemen can rely on its own industry and investment to provide the infrastructure necessary for its stability.

There is optimism in the air.  Last weekend’s Gulf Cooperation Council conference in Riyadh saw massive investment and support for Yemen from Saudi and other Gulf states, western nations, the World Bank, the United Nations and international aid organizations.  This time though, there was big shift in attitude. The director general of international economic relations for the GCC, Abdel Aziz Abu Hamad Aluwaisheg described this: “There is a recognition of the urgency of the situation in Yemen. This time everyone seems to be enthusiastic about moving the process forward. This is something new for Yemen.”  So far the support pledged to Yemen in 2006 has still not been handed over in its entirety since Yemen has not fulfilled the necessary reforms.  What is alarming is that of the monies actually given only 10 – 20% seems to have been spent correctly.  The rest has gone into a black hole(s).  The mood has changed now and there is a manifest purpose to see reform implemented and if necessary send experts to ensure that specific funding is reaching where it needs to go.  As Mr Aluwaisheg said:

“They (the donors) are willing to make an exception with Yemen,” he said. “Everyone realises that Yemen is a special case now.”

Given this will, both within and without Yemen, to reform, rebuild and restructure as well as innovate by, the country stands a real chance of merging from its semi-Medieval regression to take its place properly as a key supplier on world trade routes.  The question remains as to whether Yemen will be tough enough to withstand AQAP bullying tactics, be they terrorist, financial or doctrinal.  The Yemen has friends in the West, US and most importantly Saudi Arabia.  Follow them and Mumbai Expo is simply the door onto the stage.

March 4th 2010