Yemen Flag

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[Source: NUSACC's U.S.-Arab Trade Outlook 2013]

U.S. Secretary of State Hillary Rodham Clinton’s visit to Yemen in January 2011 – the first by a U.S. Secretary of State in two decades – underscored the Obama Administration’s desire to broaden the U.S.-Yemen dialogue beyond military-to-military relations. “We face a common threat that began with Al Qaeda, but our partnership goes beyond terrorism,” said Clinton. “Economic development and security are deeply connected.”

In 2010, the Obama Administration “rebalanced” its aid package to Yemen, providing $300 million in military and non-military aid. Economic assistance alone totals $130 million in 2011.

“The challenges Yemen faces extend far beyond terrorism,” said Secretary Clinton during her January visit to Sana’a. Only 4,500 of Yemen’s 42,000 miles of roads are paved, and there is no railway system. Unemployment is high and the youth population is growing. But there may be a light at the end of the tunnel. Yemen has been included in the World Bank’s Fast Track initiative for the development of education, and Yemen has launched a National ICT Master Plan that identifies primary e-services critical to the development of a knowledge-based society.

Oil revenues provide 70 percent of Yemen’s government revenues. That nation’s petroleum production averaged approximately 298,000 bpd in 2009, according to Oil and Gas Journal. With 90 percent of its potential oil reserves unexplored, Yemen plans to shorten the time it takes to grant foreign investors an energy concession from the current three years to six months.

Yemen ranks 32nd in world natural gas reserves with 478 billion cubic meters of proven reserves. Yemen has been shipping LNG to the United States, Asia, and South Korea from its 6.7 million-ton-per-year capacity pipeline at Ma’arib since November 2009. At $4.5 billion, the Yemen LNG project is the largest foreign direct investment ever made in that nation.

If Yemen can surmount political instability, it will join its neighbors in the Gulf Cooperation Council (GCC) by 2015. It took an important step forward in late 2010 when it hosted – without incident – the Gulf Cup of Nations, an annual soccer tournament that includes the six GCC nations, plus Yemen and Iraq.

Yemen has signed numerous bilateral trade and investment agreements with the EU, China, Canada, Japan, South Korea and the United States, including a December 2010 bilateral agreement with the United States to finalize the requirements for Yemen to join the World Trade Organization.

At a roundtable discussion co-hosted by NUSACC in January 2011, the U.S. Ambassador to Yemen, the Hon. Gerald Feierstein, highlighted recent efforts to work with the Government of Yemen to promote greater private sector engagement. “There’s no doubt in our mind, at the end of the day, that the engine for economic growth and prosperity for Yemen, like everywhere in the world, is going to be the private sector,” noted Feierstein. “We believe that the Yemeni private sector is well-positioned and eager to take on a bigger role in Yemen’s economy.”

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