231. Telegram From the Embassy in the Yemen Arab Republic to the Embassy in Saudi Arabia1
4523. Subject: Economic Assistance to Yemen. Ref: (1) Jidda 6934; (2) Sana A–35.
Summary: Following summarizes information requested by Korean Embassy Jidda re aid to YAR from various donors. Also provides background on foreign investment in YAR.
1. A. Best way to characterize level of economic assistance from USSR to YAR is: slowly diminishing and no follow-through. Best estimate of total Soviet aid 1956–1976 is $104 million. In addition, Bulgari [Page 719] ans, Czechs, Hungarians and East Germans were moved to provide about $13 million in same period. Number of Soviet experts at present is 150–200. Only important new agreement signed in 1976 was promise to expand cement plant from [garble] ton capacity. Single large on-going project is Wadi Sardud Agricultural Program. Russian advisors also present at Hodeidah Port. Doctors and medical technicians at work in Sana, Hodeidah and Taiz hospitals—with unflattering results.
B. Trade figures with USSR for FY 1975 (July to June) are mixed: (Figures in millions)
| FY 74 | FY 75 | Percent of Market | |
| Exports to USSR | $.27 | $.22 | 2.5 |
| Imports from USSR | $4.7 | 11.3 | 5 (same as FY 74) |
C. Greatest jolt to Soviet aspirations in Yemen was probably June 1976 commitment from Saudis to supply $139 million in arms to YAR. Until then, USSR was principal armorer for Yemenis.
2. A. Chinese (PRC)—Yemeni economic relations are warm—reflecting those of political realm. Chinese believed to have about 400 workers in country, although many are semi-skilled. Post has no good estimate of total PRC aid; no agreements were announced during past year. Major current programs on which Chinese at work are:
(A) 230-kilometer Sana-Sa’ada highway; three quarters complete.
(B) 86-kilometer Amran-Hajja road.
(C) Construction of new textile factory at Hodeidah.
(D) Final steps in 400-bed Taiz hospital.
B. China’s trade with Yemen grew considerably in FY 1975: (figures in millions)
| FY 74 | FY 75 | Percent of Market | |
| Exports to PRC | $.7 | $4.9 | 43 |
| Imports from PRC | $6.8 | $25.0 | — |
(Chinese purchases mostly cotton and seeds.)
3. North Korea-Yemen relations are not strong in any sphere, despite Chinese encouragement. Small amount of economic assistance limited to health clinic at Dammar and vehicle repair facility at Hodiedah.
A $700,000 gift wheat shipment has arrived. PRK believed to have very few aid personnel in Yemen. They also sent some tractors, which don’t work well, and a musical instructor, who is terrible.
4. A. U.S. aid grant to Yemen for 1976 will reach $16 million. USAID and Peace Corps have about 80 experts and volunteers in country. (UN has 200.) The expansion of the Taiz water and sewage project is USAID’s major present effort.
[Page 720]B. U.S. trade with Yemen is one-sided:
(Figures in millions)
| FY 76 | FY 76 | |
| Exports to U.S. | $.2 | $.1 |
| Imports from U.S. | $4.0 | $10.0 |
5. West Germany has had the largest Western aid effort in the Yemen. Two of most visible and well-received projects are Sana International Airport—opened in 1973, and the Sana-Taiz highway built under a loan agreement for ultimate cost of dm 90 million. FRG is also funding an experimental farm at Sana, a telephone improvement effort, a small medical clinic in Sana and a geological survey team.
6. In 1974/75 economic assistance from Great Britain to YAR amounted to 500,000 pounds sterling, this sum supported twelve members of the British volunteer program, an economic survey team, and a small group of veterinarians.
7. France has a minimal assistance effort, consisting of a few scholarships, some French language teachers, and a small number of religious volunteers.
8. Yemen currently receives a total of bilateral and multilateral foreign assistance of $150 million/year. YARG is attempting to capitalize on the help in a number of ways, not all of which are successful—as of yet. Industry still accounts for only 2–3 per cent of the total GDP. Foreign investors have not rushed in despite passage of a liberal foreign investment law (details of law number 18 are found in Sanaa A–35 of October 30, 1976).
9. The figures for the Yemeni foreign debt are anomalous. External public debt for FY 76 is estimated to be $280 million, but Yemenis are refusing to pay any of Soviet and East Bloc debt. Balance of trade will be minus $360 million. But balance of payments (current accounts and transfers) will show a favorable balance of $80 million. The answer, of course, is $600 million in remittances from Yemenis working in the Gulf, Saudi Arabia, and the United States. This asset constitutes the country’s chief prop and one of the government’s greatest challenges—since little of this money reaches the public coffers.
10. Question of what aid ROK might provide should probably start from Oct. 75 ROK commitment to buy 50,000 tons of rock salt in each of next three years. At same time (Oct. 75) ROK offered to provide 100 sewing machines and help in setting up small clothing factory. They have also offered seven vocational training scholarships. We also understand that ROK and YAR have long since agreed to opening of embassies, and YAR expected this move in spring of this year (1976). Joint ventures, in which YAR also interested, have also been discussed [Page 721] by previous ROK missions to Sana, and no further exploration is needed in this field. To cover their investment instill idle rock salt facility in Salif, YARG is talking about salt processing plant there. They want also to develop Port of Salif. If Koreans want to move ahead here, they should come with projects and detailed proposals in hand. There have been too many exploratory missions.
11. Laws written recently in YAR are designed to attract and protect foreign investment and reflect highly favorable view of market system. In addition to tax and customs exemptions for initial years of a factory, there are no rpt no exchange controls, no agent requirements, no strikes permitted and no real problems with residence or entry visas for foreign management.
Summary: The Embassy provided a comprehensive evaluation of outside economic and military influence on the Yemen Arab Republic, in response to an ROK request.
Source: National Archives, RG 59, Central Foreign Policy File, D760473–1178. Confidential. Repeated to the Department and Seoul. Telegrams 6934 from Jidda, December 8, and A–35 from Sana’a, October 30, are ibid., D760454–0406 and P760173–2071, respectively.
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