Millions in aid linked to Yemeni reform

Washington has just given its ally another chance to receive development aid.

from the February 27, 2007 edition

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In December 2006, Yemen's parliament ratified a law forming the National Supreme Anticorruption Authority. The MCC board will be watching to see if this new body operates effectively before Yemen can progress to the compact stage.

Yemen must also show that revised procurement laws for government contracts are being used and that steps are being taken toward press freedom and respect for the rule of law.

The payoff could be substantial. Ghana is one of 31 countries admitted to the twin stages of the Millennium Challenge and the most recent applicant to qualify for a compact; it was awarded $540 million over four years.

The MCC's nod comes at a time of growing confidence in Yemen among donors. In November 2006, Britain and Yemen's Gulf neighbors pledged $4.7 billion in aid over the next four years. The agreement to increase aid followed the recognition that Yemen was underfunded. It receives just $12 per person in annual development assistance. Its African and Asian peers, on average, receive three times that amount.

British Ambassador Michael Gifford says Yemen is standing at "a crucial point. There are a number of reform-minded ministers responsible for key portfolios and recent pledges of increased aid, including from the UK, demonstrate that President Saleh's government has the good will and support of the international community."

To be sure, there are concerns about Yemen's capacity to spend this extra money wisely. Donors admit that such an extensive reform process will be difficult. In the long term, they emphasize Yemen's need to follow through on its promises.

"Economic reform and stamping out corruption are vital to solving the country's future challenges," says Kevin Rosser, an oil and gas analyst at risk consulting firm Control Risks. "Without them, there can be no progress toward reducing poverty, combating extremism, or strengthening democratic institutions."

Western diplomats and progressive Yemenis hope that this opportunity won't be squandered. Saleh has endorsed the project personally. Observers are hoping that he demonstrates the will to implement the changes in a sustained reform drive that lasts the course of his term in office.

"If Yemen backslides, it will affect the whole region," says presidential adviser Faris Sanabani. "Yemen has huge potential, and the economy is our next battle. Our commitment to reform is going to turn the country around and put us on the right track for the future."

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