Despite its history, cultural significance and geo-strategic importance, it would appear that Yemen has only been in the news for bad reasons this year.
A series of kidnappings, attacks on pipelines and a strengthening of al Qaida are all stoking concerns about the validity of the country as a stable investment location.
Oil&gas provides about 90% of the nation’s revenue, but resources are expected to run out within a decade. The water table is falling, public insecurity is growing and many firms are likely being put off by the perceived risks of instability and violence.
Al Qaida in the Arabian Peninsula appears to have strengthened both its resolve and its support base in the country over the past six months.
The government in San’a’ has pursued more intensive counter-insurgency operations against the group, but this has led to collateral damage and civilian casualties. Al Qaida has capitalised on the resultant public anger, criticising the government for its actions and generating sympathy for its own cause.
Islamists have traditionally targeted the oil&gas sector, viewing it as a vanguard of western imperialism. Related infrastructure has subsequently been attacked on numerous occasions over the past decade in Yemen and recent threats against western interests will likely lead to further attacks over the coming year.
Armed tribesmen not aligned to al Qaida have also attacked oil&gas infrastructure in the past. The attackers generally do not wish to cause casualties or excessive harm but, instead, are intent on pressuring the government to provide funding, jobs or infrastructure development.
Oil workers have been abducted for the same reason. Two Chinese nationals and two of their Yemeni guards were abducted in Shabwah province on May 16 and at least eight more people, including four foreigners, have been abducted in the country since April.
None of the abductees from this period were held for more than two days, and captives in Yemen are usually cared for. However, three foreigners were found dead and four remain unaccounted for after a kidnapping in the troubled northern province of Sa’adah in June 2009.
Kidnappers may not normally have the intent to harm their captives, but personnel are nonetheless at risk.
As in many challenging parts of the world, close protection and visible security measures should be considered, particularly for the politically sensitive energy industry. However, there are numerous measures of soft security which can also be adopted by firms seeking to lower their exposure to risk.
Companies can help protect their staff by providing them with safety training and cultural awareness. Informed managers can make the decision to avoid working in a certain area because of a risk of unrest or logistical difficulties in the district.
A well briefed team will likely be more understanding of logistical and planning requirements when organising travel around the country. Cultural oversights and subsequent disputes with local residents can also be avoided if employees are informed on local cultural practices and social sensitivities.
As in other parts of the Arab world, investment is regarded here as a long-term relationship rather than a short-term capitalisation. By investing in a local community, a company will avoid giving the impression that it is in the area for short-term gain. By providing local residents with infrastructure, education, job security or otherwise, it will reduce the perception that foreign companies are only in Yemen to benefit from its dwindling resources before they pack up and abandon the country in a few years.
With proper procedures and risk-mitigation practices, the country can represent a good return on investment. There is much work to be done and a real need for construction, logistics and continued investment in the hydrocarbon sector.
Economic activity will also likely have a stabilising effect on current conditions by providing greater job security and revenue. Foreign investors, therefore, constitute part of the solution to Yemen’s current difficulties and should be encouraged rather than deterred.
Safety considerations, training and awareness, however, will be paramount to their operational success and ultimate profitability in Yemen.
John Drake is senior risk consultant at AKE Limited
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