** Mailing-List Indonesia Nasional Milis PPI-India www.ppi-india.da.ru ** http://www.yobserver.com/news_4228.php ANALYSIS: Poverty not Al-Qaeda is Yemen's adversary By Observer Staff Mar 19, 2005 - Vol.VIII Issue 11 SANA'A (Reuters) - Yemen has won US praise for fighting Al-Qaeda, but faces an even tougher struggle against the grinding poverty that Islamist militants use to help recruit followers. "Yemen has the potential to become like Jordan but it also has the potential to become like Somalia," said one Western official, arguing that the Arab country was at a crossroads. President Ali Abdullah Saleh quickly swung behind the United States after the Sept. 11, 2001 attacks and his government has scored big successes in dismantling Al-Qaeda in Yemen, a staging ground for its militants, US and European officials say. They worry that poverty, illiteracy and explosive population growth may now overwhelm Yemen, whose oil resources are fast declining, unless it acts decisively to reform education, health and infrastructure and to improve the climate for investors. "There is no question the Al-Qaeda network as it was established in 2001 is no longer there," said one senior Western diplomat. "But besides the security battle, it is equally if not more important to invest in development, education, health and infrastructure, not just training special forces." Yemen's economic indicators make grim reading. According to World Bank figures, over 42 percent of its 19 million people live below the poverty line, illiteracy is estimated at 50 percent and unemployment is over 20 percent. "At the moment the population growth rate is 3.5 percent and expected to double in 20 years. This is a huge problem," said Mustapha Rouis, the World Bank's representative in Yemen. He said slowing oil output would hit state revenue and foreign exchange earnings as well as economic growth. "In 2004 the oil sector, which contributed 35 percent to GDP, started to decline. Unless they find more discoveries it is something that will have a major impact," Rouis said. Yemen's once lucrative tourism industry has also taken a battering following Al-Qaeda attacks against Western tourists, the USS Cole bombing that killed 17 US sailors in 2000 and the attack on the French supertanker Limburg in 2002. Donor alarm "All that makes up a picture of a country that has an uncertain future," said one envoy. "It is a long battle in a country as poor as Yemen. There is a lot to be done before the war against extremism and fanaticism and terror is won." Donors say the alarming situation requires bold government reforms to restructure the bloated public sector, find alternative revenues by encouraging private investment, end corruption and promote legal certainty to woo investors. "The government is recognising there is an issue but what is lacking is the implementation of reforms. It's time for the government to get out of the way and improve the investment climate of the private sector," Rouis told Reuters. Prime Minister Abdul Qader Bagammal said his government, meeting donors' demands, has agreed a reform package to reduce diesel subsidies costing the state $500 million a year, raise public wages, cut custom tariffs and adjust commercial laws. A US official said his government was ready to offer more aid to Yemen if it acts on economic reforms. "Unless they have a transparent and non-corrupt system, no foreign firms will invest here. How do you build the economy and employ millions of Yemenis if you don't introduce reforms? "We want the government to introduce reforms to remove all the factors that may cause Al-Qaeda to prosper. We don't want to fight Al-Qaeda (here) for 20 years. We want the government to be stable and support its people," the official added. Despite the poor economic performance, the United States and Britain and even some local reformists credit Yemen with making political progress by granting liberties, allowing women to take part in local councils and accommodating the opposition. But not all reformists agree that the government has turned the tide against Al-Qaeda. Some advocate a policy overhaul to counter Islamist zealots who they said preach hatred and violence against the West to young Yemenis attending religious schools. "The battle against the religious ideology is not being confronted seriously. The authorities are dealing with the issue of terrorism as if it is an American issue and not a Yemeni one," said reformist Saeed Thabet. "They should have serious policies to uproot terrorism as an ideology, not only through security crackdowns. They have to reform religious education," he added. 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