Introduction
In May 1990, the Republic of Yemen was formed by the unification of the former North and South Yemens. Yemeni leaders then declared a democratic society with a multiparty political system, free press, and a broadening of individual freedoms. Shortly thereafter, the Gulf crisis erupted, resulting in the severing of Saudi and Kuwaiti aid and severe reductions in aid from western donors, including the United States. Still, Yemen proceeded with its remarkable democratization process, conducting a free, fair, and representative election in April 1993. However, the economic effects caused by the Gulf crisis, combined with government mismanagement, sharply heightened Yemen's economic plight and decreased its capacity to provide services to its citizens. Internal dissatisfaction resulted in political infighting and finally a two-month civil war in mid-1994. At the war's end, Yemen was once again united as a democratic nation but its economy was shattered.
Despite these problems, Yemen continued its process of democratization, taking it far beyond that attempted by any other country in the region. Now, as it prepares for yet another round of parliamentary and presidential elections, Yemen continues to have the only popularly and freely elected democratic government on the Arabian Peninsula, with freedoms of speech and the press that are unmatched anywhere else in the region. Improving Yemen's economic and political development will ultimately have a positive influence in this important region of the world, thus serving the U.S. strategic interest of maintaining stability while supporting an indigenous democratic movement to achieve sustainability.
The Development Challenge
The Republic of Yemen is the most populous country on the Arabian Peninsula. Moreover, it is one of the world's 25 poorest and least developed countries. Furthermore, Yemen has among the highest illiteracy, infant and child mortality, and population growth rates in the world. Illiteracy is particularly high among women and girls, yet these women benefit from Yemen's universal suffrage, a law unique in this region. Average life expectancy is only 53 years.
While Yemen's stature as a young democracy grows, its economy continues to decline. The effects of Yemen's population expanding at over three percent per year have resulted in a major decline in the quality of health, social, and economic services. The weak institutional capacity of Yemen's various ministries and development agencies are becoming more evident as they grapple with ever worsening problems. Since the end of the civil war, the Yemeni Government has taken a more realistic look at its economic problems and institutional weaknesses and is clearly more receptive to donor assistance in addressing these needs.
Other Donors
U.S. assistance is minor. The World Bank is by far the largest donor, followed by the Netherlands, Japan, and Germany. The Bank's chosen areas of focus are: 1). public sector management, including civil service reform, budget reform and privatization; 2). attracting diversified private investment; 3). water management; and 4). poverty-oriented social sector improvements, particularly emphasizing basic education for girls. The latter two foci receive the overwhelming majority of donor support. All major donors recognize and reflect in their aid programs the importance of water management, health, and education (again, particularly girls' education). This leaves the World Bank almost alone in helping the government improve public sector management and create an attractive environment for private investment. In the end, however, it is public sector management that is the Bank's first priority.
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