SAUDI ARABIAN-YEMENI RELATIONS: IMPLICATIONS FOR U.S. POLICY.

Anthony, John Duke

For years, relations between Saudi Arabia and Yemen, two friends of the United States, have been marked by opportunity and promise interrupted by intermittent conflicts and tension. The most significant dispute has involved border demarcation. Borders usually function as bridges of cooperation, but the opposite has often been the case of late along a disputed boundary between the two countries.

The most recent talks on border demarcation between Riyadh and Sanaa -- Saudi Arabia's and Yemen's capitals -- started in 1995, and were followed by border clashes in 1997 that continued, sporadically, until quite recently. In the past several years, however, the two countries have been working toward resolving their disputes.

At the same time, there are several direct and indirect economic links between the two countries. One of the most significant current issues concerns the number of Yemenis that should be permitted to work in Saudi Arabia.

These issues, and others discussed below, are highly significant not only for Saudi Arabia and Yemen, but for their most important Great Power partner -- the United States. Following Saudi Arabia, Yemen is the largest and most populous country in the Arabian Peninsula. It occupies one of the Peninsula's most strategic sites, which is enhanced by the location of its deep-water port, Aden.

The undemarcated border area spans a de facto 1,300-mile disputed line extending from Oman out into the Red Sea, constituting by far the longest unsettled frontier in the Middle East. Given its length and the possible discovery of oil and/or gas deposits in the areas under contention, the potential stakes for both countries and investors are substantial.

Some Yemenis believe that Riyadh's objective is not so much to seize the territories where the incidents have occurred. Rather, they say, it is to "encroach here and there until a level of intolerance among Yemenis is reached which will provoke dissident elements to overthrow the country's president, Ali Abdallah Saleh, and his government." Yemenis who subscribe to this perspective assert the following:

* "Saudi Arabia, and to a lesser extent Kuwait, have been determined to overthrow Yemen's government ever since the 1990-91 Kuwait crisis," i.e., when Iraq invaded and occupied Kuwait. Yemen then served as chairman of the U.N. Security Council. In that capacity, Yemen voted against the resolution that authorized the use of force to liberate Kuwait, which was perceived by leaders in Kuwait, Riyadh, Washington and many other capitals as sympathetic toward Iraq;

* Prior to the Kuwait crisis, numerous Saudi Arabians expressed reservations regarding the May 1990 unification of South and North Yemen. They were concerned about the potentially negative implications of establishing a larger and more populous country on Saudi Arabia's southern border;

* Participants in former South Yemen's abortive secessionist bid during the civil war in Yemen of April-July, 1994, are believed to be determined to get back their positions and privileges.

Public demonstrations in the late 1990s against the Yemen government's implementation of economic reforms recommended by the World Bank and International Monetary Fund (IMF) have provided the exiled leaders and their supporters within Yemen a chance to advance their cause. Intermittent urban riots and tribal uprisings in protest against the Sanaa government's support for the reforms have led some to believe the moment to be propitious for a concerted effort to bring down President Saleh and his administration; and

* High-ranking Yemenis believe Saudi Arabia has concluded that "this (i.e., our) regime must go; our president and many others, in the eyes of Riyadh, have apparently become insufferable. After conceding the maximum possible to settle the dispute, we find that we are faced with unacceptable demands that we realign the limited demarcated boundary agreed to in the 1934 Treaty of Taif (see below) to allow the kingdom to obtain maritime territories and strategic land positions at our expense. For us to go along with such demands would be political suicide."

Some Saudi Arabians and former South Yemenis seek a reversion to a North and South Yemen. These theorists posit that, regardless of who rules Yemen, it is in Saudi Arabia's strategic interest to have a weak and divided country or two countries to its south.

Various other Saudi Arabians and Yemenis would like to create a third Yemen, or at least a different second one -- an East Yemen, comprising the Hadramaut and its neighboring governate to the east, Mahra, which abuts the Sultanate of Oman.

Some Yemenis argue that a major, and possibly the definitive, cause of the flare-ups over the past few years has to do with some of the more arch-conservative officials in the six Gulf Cooperation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The perspective posits that these officials are in varying degrees opposed to Yemen's form of government and would like to see it collapse. It focuses on Yemen's ongoing experiments with political pluralism, democratization and universal suffrage.

Yemenis who adhere to this perspective conclude that some GCC member-states' leaders are apprehensive that the spirit behind Yemen's political reforms, if left unopposed, could possibly spread to other countries in the Arabian Peninsula and threaten their more traditional systems of governance.

On the other hand, some prominent Yemeni intellectuals, and some Saudi Arabians as well, contend that lingering doubts, cynicism and a penchant for caution lie behind a perceived indecisiveness among leaders of both countries.

There is also a school of thought, popular with some Yemeni analysts, which contends that Saudi Arabian defense planners and other officials are either suspicious of or not pleased with the possible implications of Washington's and Sanaa's increasing bilateral (and potential multilateral) military discussions over the past few years.

In the view of one well-informed Yemeni adviser to the government in Sanaa, "The late July 1998 clashes between the kingdom's and Yemen's armed forces regarding the Red Sea island of Duwaimah were not likely isolated incidents. They could have been Saudi Arabia's way of displaying its displeasure with a perceived intent by our leaders, without the `blessing' of or even `appropriate consultation' with our most important neighbor, to develop a quite different defense relationship with the United States than in the past."

Finally, there are some Saudi Arabians and a few Yemenis who think the kingdom's strategic objective is to establish a firm and multifaceted foundation upon which to pursue Riyadh-Sanaa relations. Its proponents assert that the purpose behind the intermittent conflicts between the two countries, at least as far as the kingdom is concerned, is not to bring down the Yemeni president or his administration. Rather, it is to prod Sanaa into signing a comprehensive and durable Saudi Arabia-Yemen agreement. (The last partial accord between them occurred in 1934.)

The rationale for this view is rooted in the fact that, at the December, 1994, GCC Heads of State Summit in Bahrain, Saudi Arabia's King Fahd closed the meeting with a call for the member-states to mend relations and settle their countries' outstanding border disputes prior to the following summit, scheduled for December 1995 in Muscat. Thereafter, Saudi Arabia was unusually proactive, through direct talks and/or via intermediaries, in addressing its border issues with Oman, Qatar and Yemen. The kingdom's efforts to resolve its boundary disputes with Oman and Qatar were successful, and progress was registered toward an eventual resolution of its boundary dispute with Yemen.

Just prior to the Muscat Summit, however, King Fahd suffered a stroke and was represented by Heir Apparent H.R.H. Prince Abdallah. King Fahd has not attended a GCC summit since. Even so, the intervening twelve-month period produced positive results in Saudi-Yemeni relations. The two sides signed a 1995 Memorandum of Understanding declaring the intent to resolve their differences peacefully and reflecting agreement on what participants in the talks have indicated to this writer represents "more than 90 percent of the issues outstanding."

What remains to be settled is, inter alia, not only where the boundary will be drawn, but the level of compensation (if any) due Yemen for its willingness to compromise. Some outside analysts who have followed these events closely view the matter differently. Among them are those who are sanguine about the short-term prospects for a Saudi-Yemeni agreement of some kind but conclude

that what has the greatest possibility of being settled -- and, in their view, what most needs to be settled -- is the border.

In support of their view, they note that the border is only one part (Article 4) of the 1934 Saudi-Yemeni Taif Agreement. To paraphrase the view of one analyst sympathetic to Yemen, "If the two sides, even if only for now, can just settle their boundary dispute, this would be a giant step forward, one that would benefit both countries and ease the way for so much else."

IS SAUDI ARABIA AGAINST YEMEN'S GOVERNMENT?

Some of Yemen's highest officials believe Saudi Arabia wants Yemen's government overthrown and have far greater knowledge about the details and dynamics of the Saudi Arabian-Yemeni relationship than any outsider could hope to acquire. And two decades ago, at the height of the Cold War, many Saudi Arabians and Yemenis implicated Riyadh, and/or Yemeni forces allegedly seeking to curry its favor, in the ouster of two Yemeni presidents in succession -- Ibrahim Al-Hamdi and Muhammad Al-Ghasmi -- in 1977 and 1978, respectively.

The Cold War is over, however, and Yemeni-Russian and Yemeni-Chinese relations have been severely curtailed for quite some time. In addition, the exceptional scrutiny under which Saudi Arabia's international behavior is now placed makes it difficult to fathom why the kingdom could or should have any interest in being involved in such activities.

In the 1970s, there were valid concerns that the People's Democratic Republic of Yemen (PDRY, South Yemen), a Soviet client state and the first Arab Marxist-Leninist country in history, was preparing to overthrow the Sanaa-based government of North Yemen. At the time, the anti-Communists' fear of North Yemen were ten times greater than of South Yemen. According to the party's leaders, with whom this writer has conducted numerous interviews, South Yemen was never home to more than 35,000 members of the (Marxist and pro-Soviet) Yemen Socialist Party; North Yemen, by contrast, was home to 350,000, even though they were not legally recognized as such. Saudi Arabia's concerns about who would preside over the most populous country on the kingdom's lengthy southern doorstep were, therefore, understandable.

The record to date reflects Saudi Arabian support for the regime of President Saleh, who has provided Yemen a degree of leadership continuity and stability that had not existed since the country's 1962 revolution. Soon after Saleh's assumption of the presidency in 1978, Riyadh established a close relationship with the former military officer.

The Aid Factor

From the 1970s until several years prior to the Kuwait crisis, Saudi Arabia provided significant infrastructural and financial aid to Yemen. It did so alongside other aid providers, including the United Nations Development Program, the World Bank, various regional development funds, Kuwait, Abu Dhabi, the United States, the Soviet Union, China, Japan, West Germany, the Netherlands and several Soviet Bloc and Scandinavian nations.

However, owing largely to the down-turn in oil prices and government revenues from 1983 onwards, the kingdom had little choice but to suspend its project aid and financial transfers to the Yemen government. Having underwritten a large portion of Yemen's development needs through direct cash payments and in-kind contributions, Saudi Arabia, from the mid-1970s to the mid-1980s, helped pay for a substantial portion of the medical clinics, hospitals, mosques and schools built in Yemen. Moreover, Saudia, the national airline of Saudi Arabia, took a major equity stake in Yemen's national air carrier, Yemenia, as a means of enabling Yemen to have its own independent fleet of civil aircraft.

In addition, dating from a specific clause in the TaifTreaty of 1934, (North) Yemenis were allowed to enter and work in Saudi Arabia without a visa. Yemenis contest this point. One high-ranking official went so far as to state, "The idea that Saudi Arabia `allowed' Yemenis to enter and work in the kingdom is highly exaggerated. It was a matter of right and recognized as such in the side letters to the Taif Treaty."

Saudi Arabian officials familiar with the treaty's background and context do not dispute this point, at least not on technical grounds. Yet, in emphasizing what they claim to have been their predecessors' intent, they view the matter not so much in terms of a "right" as a "privilege" -- one granted no other nationality -- that the kingdom agreed to extend to Yemen at the time of the Taif Treaty.

Regardless of how one interprets the 1934 treaty, officials from both countries acknowledge that, by the late 1980s, more than a million and a half Yemenis annually resided within the kingdom. Using the yardstick of an average of seven Yemenis per nuclear family, and September 1998 official census figures that put the Yemeni population at 17.6 million, the minimum number of individuals inside Yemen whose families' essential living requirements were met as a result of the Yemeni workers in Saudi Arabia was on the order of seven million people, at the time (a decade earlier than the census figures cited) more than half the entire Yemeni population.

Moreover, for more than a decade, dating from the mid-1970s, annual remittances sent home from Yemeni workers in Saudi Arabia were the single largest source of Yemen's foreign exchange. U.N. reports indicate that the total amount of development aid plus remittances coming into Yemen from the kingdom during that period was one-third higher than all other overseas development assistance to Yemen. Through this assistance, Sanaa was able to cover its annual balance-of-payments deficits.

In the aftermath of the cessation of official Saudi Arabian (and other GCC countries') aid in 1990, Riyadh has continued its longstanding policy of providing cash subsidies to prominent personalities and leaders of tribes in the northern and westernmost regions of Yemen, where the de facto borders of the two countries come together. According to some Saudi Arabians, a major objective in providing such payments has been to ensure a measure of peace and stability. Many Yemenis, however, claim that the underlying motivation of the aid givers has not been altruism but opportunism. The recipients of such aid from the kingdom have often been among the principal forces of opposition to the regime in Sanaa.

Yemeni critics and many outside observers of such an arrangement have long complained that such policies represent an intrusion into the domestic affairs of a neighboring country. The critique, however, overlooks or downplays the following:

* With the exception of assistance from Abu Dhabi, which helped to rebuild the Marib Dam (in what was formerly North Yemen), and continuing aid from the World Bank, Germany, the Netherlands and several Scandinavian nations, the Yemeni government remains largely bereft of the financial resources to provide its northern-most regions the kind of development assistance that its northern neighbor can provide;

* The kingdom's assistance, regardless of however altruistic or opportunistic its intentions may be, has helped free Yemen's limited government funds to be used in other regions; and

* From the inception of Saudi Arabia's economic assistance to Yemen, high-ranking Yemeni elected officials -- for example, the country's vice-president, speaker of the Parliament, and head of the Hashid tribe, to which the president belongs, and the heads of the Bakil and other border tribes -- have actively solicited (and received) the assistance, knowing full well that comparable amounts of aid would be hard to come by elsewhere.

The 1994 Civil War

In stark contrast to this evidence of one country's assistance to another was Saudi Arabia's and other GCC countries' de facto support for an attempted breakaway movement from April to July 1994. The movement, which ultimately failed, was led by Ali Salim Al-Baidh, the former PDRY president, (unified) Yemen s vice-president and Yemen Socialist party (YSP) head.

The six GCC countries contributed a substantial sum to support the failed secessionist bid. The money was allocated for arms and related forms of assistance designed to ensure the insurgents' victory. In the end, none of the arms actually reached the rebels, U.S. and other Western diplomatic recognition was not forthcoming, and Yemeni President Saleh succeeded in out-maneuvering his opponents.

Some Saudi Arabian and Yemeni analysts agree that the GCC countries' policies were forged in response to former South Yemeni leaders' skill at playing upon the following:

* Lingering resentment among the GCC countries over the aforementioned positions and roles that Yemen took during the Kuwait crisis;

* A palpable degree of distrust of the Yemeni president, manifested especially during the Kuwait crisis, by several GCC member-countries' heads of state; and

* A discernible pan-GCC bias in favor of South Yemenis over North Yemenis.

The latter factor dates from the era of British control over South Yemen from 1839 to 1967. During that period, South Yemenis had a long and close relationship with what would become the GCC countries based on trade -- especially with Kuwait, Oman and Saudi Arabia -- and on the trust and confidence inspired by those who served in the security forces of Bahrain and Qatar as well as the seven Trucial States (from 1971 the United Arab Emirates).

Despite these relationships, the rebels were unable to counter or compensate for three other factors, which doomed their effort from the start. One was their under-estimation of President Saleh. Although the Yemeni president accepted almost every international call for a cease-fire, he urged his commanders on the ground to continue fighting until the rebels surrendered.

Second, the rebels could hardly have chosen a more inappropriate time to declare their attempt to secede. Their move came barely months after the United States announced its "Two MRCs Policy" of intervening in no more than "two major regional crises" at a time. With one key component of U.S. forces bogged down at the time in Somalia and another steaming toward the Pacific in response to signs that North Korea might invade South Korea, the policy ruled out the rebels' hopes of achieving their strategic objective of winning Washington's support.

Third, even without Washington's "Two MRCs Policy," which some American analysts insist was not a factor in any event, the United States and the GCC countries would have been hard-pressed to reconcile their support for a breakaway government in Yemen with their simultaneous insistence on maintaining the territorial integrity of the countries of the region. Indeed, providing such support would have contradicted both the Clinton administra-tion's and the GCC countries' commitment to a unified Iraq, despite the many Kurds in the north and Shia in the south who, given their preference, would opt for the creation of autonomous entities or independent states.

Changed Circumstances

Of greater relevance to understanding Saudi-Yemeni developments since the latter half of the 1990s are the following points:

* There have been more high-level visits between Riyadh and Sanaa in the past five years aimed at resolving their differences than in the entire previous decade. Each visit has registered progress on the matters in dispute;

* Saudi Arabia and Yemen have repeatedly reaffirmed the aforementioned 1995 Memorandum of Understanding to resolve their disputes peacefully; and

* Senior leaders on both sides acknowledge that the remaining differences are related not to whether agreement is possible but, rather, to when it will be reached, where the border will be drawn, and, insofar as Yemen's people and government are concerned, whether and how Riyadh will be able to meet the standard international criteria of prompt, adequate and effective compensation (if any) for Yemen's decision to relinquish its claims to the disputed areas.

Diplomacy's Challenge

Overcoming the remaining obstacles will try the patience and skill of the best mediators and negotiators on both sides. One issue is the reported willingness of Saudi Arabia to readmit as many as 650,000 Yemeni workers, two-thirds the number of those residing in the kingdom prior to the 1990-91 Kuwait crisis. These workers lacked visas and sponsorship and were repatriated. If Saudi Arabia is willing to readmit them, it would be evidence of Riyadh's interest in arriving at a mutually beneficial agreement. If compensation were the issue, it would be proof as well of the kingdom's ability to devise "creative financing."

There are strong differences of opinion among high-ranking Yemeni officials as to the possible readmission of 650,000 workers to Saudi Arabia. Already, more than 500,000 Yemenis are residing in the kingdom. The latter number includes those who, through special arrangements, managed to return since the Kuwait crisis and others who, through one means or another, never left.

Laboring the Point

If another 650,000 Yemenis were allowed to return to the kingdom to work, nearly five million additional Yemenis would stand to benefit in terms of their economic well-being. Sanaa, moreover, would gain access to a source of desperately needed hard currency. With the resultant increase in revenues, Yemen's political and economic stability might improve. The country's deteriorating economic situation was a key factor behind the June 1998 demonstrations against the government's price hikes on fuel, electricity, water and other vital commodities.

However, rapid and potentially far-reaching changes within the kingdom's own work force compound the uncertainties and complexities of how the Yemeni labor factor may or may not enhance the prospects for a settlement. Since 1997, Saudi Arabia has mounted a major campaign known as "Saudization" to reduce the country's reliance on expatriate workers. A major objective of Saudization is to increase the number of employment opportunities for the kingdom's citizens. In the process, more than a million and a half illegal foreign workers -- the overwhelming majority from South and Southeast Asian countries -- have been repatriated. The percentage of positions previously held by these workers that is likely to be filled by Saudi Arabians and the percentage that might be filled by Yemenis are, at this writing, unknowns.

Legal Considerations

With regard to the "right" of Yemenis to live and work in Saudi Arabia without a visa, the international legal principle of rebus sic stantibus (changing circumstances) may apply. The issue in question is whether a signatory to an international bilateral treaty that contains certain provisions beneficial to the other party can be legally compelled to uphold the provision under any and all circumstances. In the 66 years since the Tail Treaty came into force, intervening circumstances, over which neither side has had either control or adequate influence, have radically and profoundly altered beyond recognition the ones that were in play when the benefit was bestowed. Saudi Arabia would be held legally liable for enforcement of a provision regarding the right of (the then North) Yemenis to live and work in the kingdom without a visa or local sponsor. This would be tantamount to requiring that, as a matter of law as well as policy, Riyadh do something that could produce immediate and substantial adverse consequences to its own citizens, who are in greater need of employment opportunities than ever before.

By what system of law, Saudi Arabians ask, could a country be forced to adhere to terms of a treaty two-thirds of a century old that could pose a serious threat to its economic, social and, potentially, political stability?

Finally, providing further insight into the diminishing prospects for special treatment being extended to Yemeni laborers, in August 1998, Saudi Arabia waived its Saudization policy for nationals of fellow GCC states. In exchange, Riyadh received a similar exemption from other GCC countries' efforts to reduce their dependence on foreign labor.

BACK TO A NORTH YEMEN AND A SOUTH YEMEN?

It is true that some native Saudi Arabians and others of Yemeni ancestry would like to revert to the pre-May 1990 situation of a divided Yemen. These individuals fall mainly into two categories. The first is made up of an older and more conservative generation. The second category has two sub-groups: Yemenis living in various GCC states, Egypt, Syria, the United kingdom and elsewhere who long to return to the days when they were in power; and expatriates of both countries who are attracted to the potential for personal gain in the establishment of an additional Yemen.

The interplay among such phenomena as globalization, privatization, market economies and revolutionary technologies are ali relevant in assessing Yemen's development prospects. Yemen's southern port city of Aden, a British Crown Colony from 1937 to 1967, is the vortex in which all four factors come together. Positioned at the southernmost reaches of the Red Sea and at the far northwestern quadrant of the Indian Ocean, Aden straddles the world's major east-west maritime routes.

The port of Aden, one of the largest natural harbors in the Middle East, is an area of potentially great economic opportunity for shipping companies, international freight forwarders and industrial and free-trade-zone investors. After serving for a century as a strategic outpost of the British empire, Aden, together with the southern Omani port of Salalah, has returned to a potentially front-and-center position for some of the world's largest shipping lines. Among the maritime giants are American Presidential Lines and Maersk (Denmark). The latter controls more than half of the world's maritime container-cargo trade. Maersk is actively engaged in expanding Salalah's port facilities to capture some of the highly lucrative seaborne commerce bound for the Gulf, the Indian subcontinent and points east.

A Singapore Sling?

In the Indian Ocean region, Aden fits into a bold and visionary counter-trend of economic regionalization led by the Port of Singapore Authority (PSA). Singapore was one of the first Southeast Asian countries to accept the implications of globalization and to carve out a niche for itself within that context. In time, Singapore, also a former British Crown Colony, may be judged as equally prescient for being the first among its neighbors to add or -- in the process of re-evaluating globalization in the aftermath of the Asian financial crisis -- to re-add regional and sub-regional components to its economic destiny.

In analyzing the economic dynamics and technological transformations occurring within the international shipping industry, PSA has revisited the adage that, in commercial competition, location can spell the difference between success and failure. Accordingly, PSA has concluded that, for purposes of off-loading large volumes of cargo in the Arabian Peninsula for use either there or for transshipment via smaller vessels to ports in the Red Sea, the Horn of Africa and along the coast of east Africa as far south as the Cape of Good Hope, shippers will increasingly discover it makes less sense to use the UAE port of Dubai in the Gulf than an Indian Ocean site such as Aden and/or Salalah.

A Nautical Necklace

Yemeni development officials and PSA and other would-be investors in Yemen's port facilities, in delving into the region's modern history, did not have to look far for evidence supporting their assessment of Aden's future prospects. Aden has been important internationally since the British first occupied it in 1839, when it became one of "the `jewels' in the imperial necklace of Queen Victoria." The others, each of which also became crown colonies and lay astride or adjacent to prominent shipping routes, were Gibraltar, Malta, Singapore and Hong Kong. As an aid to empire, the barren volcanic rock out-cropping of Aden was initially valued as a coaling station to support British naval and commercial needs. In 1869, it took on added economic, military and geostrategic importance following the opening of the Suez Canal.

Events surrounding the canal in this century, however, twice pushed Aden out of the picture. The first time followed Israel's invasion of Egypt in 1956, which closed the canal for nearly a year. The second resulted from Israel's invasion of Egypt in 1967, which shut the canal for eight years, until 1975.

In the 1950s, Aden ranked behind only the ports of London, New York and Liverpool in terms of number of ships and tonnage handled. For this reason, Great Britain, which ruled Aden until its independence (as part of South Yemen) in 1967, did the following:

* Relocated the British Petroleum (BP) refinery (then the world's largest) in Abadan, Iran, to Aden in the early 1950s;

* Chose Aden to be the headquarters of all British armed forces in the Middle East after the British Middle East Command withdrew from Cyprus in the late 1950s; and

* Established major (BP and Royal Dutch Shell) re-fueling facilities in Aden for the Royal Navy, Air Force and British commercial ships.

In addition, the American firms Caltex, Exxon and Mobil established terminals in Aden to serve the bunkering fuel requirements of their ships and those of their customers. For these reasons, the United States, until well into the 1960s, was only lukewarm to the idea of Aden's becoming independent of British rule.

As the 1960s progressed and the United States deepened its military involvement in Vietnam, Washington wanted London to retain sovereign control over its bases at Aden and elsewhere in South Yemen. Military strategists in the Johnson administration viewed these bases as allied assets upon which they hoped the United States could rely if the Southeast Asian conflict escalated.

The Constraints

The situation today, however, is remarkably different. Aden is a prime site for the hub of the next century's international maritime traffic and container cargo. Still, most potential project financiers and would-be joint-venture partners are reluctant to invest in Yemen due to its uncertain prospects for sustained economic and political stability. In what is viewed by many as a troublesome and risky neighborhood, most foreign investment remains a coward.

Yemeni officials also acknowledge that the port's bloated civil-servant labor force -- a remnant from the days of socialism and Soviet influence (1967-1990) -- is an additional disincentive to foreign and national investors. Another of Aden's challenges is the replacement or updating of the port's antiquated infrastructure and equipment, very little of which has been modernized since the British withdrew in 1967.

Compounding the situation are innumerable complex claims to the land surrounding the port. These claims were filed by Adenis who insist on the return of property that was confiscated by the former socialist regime. The land in dispute encompasses an area that planners envisage transforming into an industrial free-trade zone.

Time, Law and Venture Capital

The solution to these constraints requires time, adequate legal redress for the litigants and considerable investment. All of these are dependent upon a combination of variables, chief among which are sustained political stability and success in implementing free-market, privatization and related economic reforms. Meanwhile, Adenis and other South Yemenis will likely remain central to Aden's port and to its future industrial operations. This continues to buttress the hopes of some that a separate South Yemen will be created, once again showcasing Aden as its commercial center and political capital, but this time with two additional features -- an industrial free-trade zone and a role as a regional hub for international container cargo.

This said, many who once favored this option -- and they include those who lost their positions of power as far back as the transformation from colonial rule to national sovereignty in 1967 -- effectively shelved their dream when Yemen's civil war ended in 1994. Even those who cling to the hope admit that this possibility, at least for the foreseeable future, has been marginalized. None of its proponents are in positions of power or have sufficient influence, either by themselves or in association with outside powers, to make it a reality. The quest to develop Aden's economic and commercial potential, however, remains a key factor in Yemen's hope of being able to solve its border dispute with Saudi Arabia in the near future. In addition, wealthy Saudi Arabians of Yemeni ancestry -- for example, the Bin Mahfouz Group, owners of the National Commercial Bank, the kingdom's largest -- have a substantial stake in Aden's development prospects, having committed, in the mid-1990s, more than a quarter of a billion dollars in investment.

A REPUBLIC OF EAST YEMEN? (THE HADRAMAUT AND MAHRA)

This perspective envisages the establishment of a third country, or a different second Yemen, to be called herein "East Yemen." It would consist of the Hadramaut and Mahra, the country's easternmost governate, which lies adjacent to it.

An analysis of this perspective reveals the following:

The Minuses

* Throughout not only the era of British imperialism in south Arabia but also the period of independence since 1967, the Hadramaut and Mahra have been part of a larger governmental entity. In this century, they have never been independent. In contrast to what used to be North Yemen and the western part of what was South Yemen -- specifically Aden, the capital - their people lack skills and first-hand experience in diplomacy and national defense;

* Moreover, unlike Aden and South Yemen, the Hadramaut and Mahra have no record of modern industry. Their people inhabit a subsistence-level farming and fishing region. Despite recent oil production in the Hadramaut, there is no refinery or energy industry;

* While a breakaway South Yemen and any combined or separate effort to sever the country's easternmost parts are definitely opposed by Sanaa, it is not known whether a successful breakaway south, with its would-be capital presumably in Aden, would support or oppose a breaking away by the Hadramaut and Mahra to establish their own independent state.

The Pluses

* Hadramis are culturally distinct. In recent centuries, they have shared a broader and longer common history than their Yemeni fellow citizens in the western parts of the country;

* There are many wealthy Hadramis working in the GCC countries, some of whom might wish either to return to try to make even greater fortunes in a new East Yemen or give favorable consideration to becoming major investors in such a state; and

* The region has significant tourist potential, not only as a living archaeological museum, but also as a tourist destination with nearly a thousand miles of unspoiled beaches and islands.

* The area could become a revenue-earning route for a pipeline to a refinery and/or export terminal at the port of Mukalla on the Hadramaut's Indian Ocean coast for Saudi Arabian and Yemeni oil fields in the southernmost reaches of the vast Rub Al-Khali, the world's largest desert. This fourth possibility has caught the eye of private-sector investors in some GCC countries. Quite a few are keen to bid on the potentially lucrative business opportunities that would likely follow any decision to build a pipeline, refinery or export terminal and related facilities in the region.

More Minuses than Pluses

Even were such schemes to succeed, the gains to Saudi Arabia and others that might accrue would likely be far out-weighed by the disadvantages:

* Incurring region-wide condemnation for promoting the break-up of an Arab state;

* Generating an additional major foreign-assistance responsibility; and

* Creating a potentially far-reaching precedent for other would-be breakaway movements in Iraq, Iran, Jordan, Morocco, Pakistan, Sudan and Turkey.

Yemen's Political System and Its Neighbors

Many Yemenis believe that Saudi Arabia and other GCC states are disenchanted with Yemen's form of governance and the extent to which it has encouraged popular participation in the political process. In Sanaa, the official line is that Yemen's political situation is unique and not for export, that its antecedents pre-date unification in May 1990, and that since then the citizenry's sense of national unity has been strengthened.

At the unofficial level, many Yemenis find it difficult to resist boasting about their country's political achievements over the past decade. They express doubts that neighboring and other nearby countries could be pleased. Many Yemenis have indicated to this analyst that they think the GCC countries' leaders see key aspects of Yemen's political system as being at odds with their own. "They're uncomfortable with attempts to establish a multi-party political structure. They don't appreciate the degree of freedom of expression allowed, and they would like it to stop."

Many non-official Saudi Arabians disagree, saying that Yemen's preference for one political system over another has been and should be its own choice. Several high-ranking Saudi Arabian officials agree. They point to their next-door neighbor Kuwait, where, for over 40 years, experiments in expanding popular participation in the political process have taken place. Kuwait's history of press freedoms and parliamentary as well as student, cooperative and trade-union elections is considerably more advanced than what has occurred to date in unified Yemen.

The Absence of Alternatives

The kinds of governmental structures that Yemen has had in the recent past have no counterparts in the Arab Middle East or the wider Islamic world. Forty years ago, Yemen consisted of one imamate, one sharifdom, one British Crown colony, one federation, two countries comprising the Yemen Arab Republic (North Yemen) and the People's Democratic Republic of Yemen (South Yemen), two protectorates, four sultanates, and 17 shaikhdoms, states or emirates.

In addition, prior to 1967, the same British (Aden and South Yemen-related) jurisdiction administered all of these governments except the imamate (which was independent and based in Sanaa), as well as islands in the Red Sea off North Yemen; in the Indian Ocean off South Yemen and East Africa; and far to the north and east in the area south of the Arabian Sea, off Oman.

Most observers who have studied the alternatives find it remarkable that a single country could have emerged from so many disparate entities. Indeed, among specialists there exists a national, regional and international consensus that it is difficult to imagine how either the unification of Yemen in May 1990 or the country's subsequent national development process could have occurred -- or could be sustained -- in any other way.

By what other form of government or political process could one envision an avowedly Marxist government -- led by the South's Yemen Socialist party (YSP) -- merging with an ardently anti-communist regime (North Yemen)? And where else can one find a parallel to what happened afterwards? The leaders of South Yemen's largely single-party socialist regime agreed with the General People's Congress, the party of many officials and leading personalities in the north, to share power with a third major party, Islah. What is notable is that Islah, by its nature and orientation (religious, traditional and tribally based), differs in profound ways from both. The fact that Yemen's Marxist YSP shared nearly equal political power with this Islamist party from 1993 to 1997 is without precedent in Arab and Islamic history.

Yemen's dramatically varied subregions and political history would have been far more volatile, even violent -- in ways antithetical to the strategic interests and stability of Saudi Arabia and a great many other countries -- had there been an attempt to exclude one or more of Yemen's major political forces, given the number of their respective supporters and substantial influence in various sectors of Yemeni national life.

NO END IN SIGHT?

Saudi Arabians and Yemenis with this perspective occupy positions that enable them to keep abreast of day-to-day as well as longer-term developments in their respective country's external relations. They are dismayed at what they profess to be a lingering inability of their governments to seize the moment and do what is right for both countries, the surrounding region and the world at large. They claim to have had high hopes before for an imminent resolution of the issues outstanding between the two countries, only to have them dashed. This experience, coupled with their resentment at playing no more than a marginal role in disputes, has produced skepticism that lasting progress will be made. These individuals doubt that the shortcomings of the central players are likely to be subordinated to an agreement that would be accepted by the Saudi Arabian and Yemeni governments and peoples.

High-ranking Yemenis bristle in reaction to this depiction, as they think Yemen has been sincere and forthcoming in its efforts to reach a settlement, only to be met with new demands.

By contrast, Saudi Arabian officials are bothered by what they consider the condescending tone of such a perspective.

Their typical response has been to take exception to the perceived sense of urgency that many Yemenis impute to such "strategically important and highly complex issues."

In addition, some Saudi Arabians and Yemenis question the wisdom of either side's trying to solve so many issues simultaneously. Some among them suggest that, for now, it ought to be enough to reach an agreement on the border. Achieving a breakthrough on this issue should provide the necessary framework to deal with many other matters, such as trade and the number of Yemenis permitted to work in Saudi Arabia.

Critics on both sides agree it is difficult to envision the indefinite prolongation of a situation that, beyond endangering the region's stability and security, is of questionable benefit to the strategic interests of either side, not to mention the interests of their friends and would-be working partners, especially foreign investors.

REGIONAL MILITARY ROLE FOR YEMEN?

Some Yemenis, as noted, believe that Saudi Arabia opposes any significant increase in defense cooperation between Sanaa and Washington. Behind their concern is an awareness that Yemen, despite not having been part of the coalition that liberated Kuwait in 1991, has increasingly shown a willingness to cooperate on defense issues with the United States. Sanaa is already working closely with U.S. military personnel in a major humanitarian project involving the removal of close to a million land mines in various parts of Yemen.

In the eyes of U.S. and GCC defense strategists, any development that increases the prospects for weaning countries such as Jordan and Yemen further away from Iraq, which had long counted them as allies, makes eminent sense. Analysts differ on the merits of such a strategy. However, many Saudi Arabian, Yemeni and American strategists agree that their mutual goal is deterrence of would-be challengers to the existing order in the Arabian Peninsula and the Gulf.

Official Views and Popular Consensus

It is doubtful that there may still be a high-level game plan in one or more of the GCC countries to punish Yemen for its stance during the Kuwait crisis, although high-ranking Yemenis continue to feel victimized for having failed to join the Allied Coalition in its reversal of Iraq's aggression against Kuwait.

A growing number of Kuwaitis point to the fact that their government gave its de facto endorsement of a prominent Kuwaiti delegation's one-week visit to Yemen in 1997 as a sign of Kuwait's eagerness to drive whatever wedges it can between Baghdad and its previous partners. The purpose was to explore the possibility of forging cooperation between the two countries and renewing an appreciation of their common interests on a broad range of issues. Yemeni officials who hosted the delegation, however, acknowledge that the visit achieved little. More important, they stress, has been the improvement in official attitudes, since 1998, resulting from several September meetings in succession in New York between Kuwait's deputy prime minister and foreign minister and Yemen's deputy prime minister and foreign minister, in conjunction with the annual U.N. General Assembly sessions.

Among the more pressing regional issues that lay behind these meetings, viewed from the perspective of military strategists in Kuwait and several other GCC countries, is a desire to see Yemen become part of a broadened, U.S.-led approach to bolstering the Arabian Peninsula and GCC states' deterrence and defense capabilities against Iraq and Iran. They point out that, although Yemen's candidacy for admission to the GCC is not under active consideration, Yemen's lack of membership does not preclude the development of a GCC-Yemen defense agreement of informal understanding of some kind.

Yemen, from its side, is predisposed to join Kuwait and other GCC states to enhance the prospects for its reintegration into the geopolitical nexus of Arab countries that joined the allied coalition. Sanaa, moreover, is also aware that, unless it is able to restore its close relationship with Kuwait, Saudi Arabia and the UAE, it has little hope of an imminent resumption of these countries' previous support, directly or via regional funds, for Yemeni economic and social development projects.

In addition to these considerations, all the GCC countries' leaders recognize that Yemen's deep-water port in Aden is situated along strategically vital sea lanes. It was through these lanes, not the region's air corridors, that the overwhelming majority of heavy equipment essential to Kuwait's liberation was brought into the region. In any future Gulf conflict, they are likely to remain vital.

Geopolitics as a Constant

For defense planners, of additional importance is the geopolitical role that Yemen could be expected to play in any regional conflict. In the Kuwait crisis, Sanaa's behavior fell far short of the expectations of the Allied Coalition and the five permanent members of the U.N. Security Council -- Great Britain, France, the People's Republic of China, the Russian Federation and the United States -- where Yemen, as noted, was president and held the seat reserved for a representative of the then 21-member League of Arab States.

The League, on August 3 and 10, 1990, voted 12 to 9 on two historic Kuwait crisis resolutions. The first condemned the Iraqi invasion unequivocally. The second called for the members to mobilize and deploy their armed forces to Saudi Arabia to prevent the invasion from spreading to other Arab countries. Yemen was one of nine countries that either voted against or abstained on both resolutions.

Yemen as Potential Balancer

One of the twelve countries voting in favor of the resolutions was Somalia, a country that, because it has since imploded, might not vote the same way were a similar conflict to occur. It is also possible that, in a future conflict, Morocco might not be as forthcoming in support of the GCC countries as before. In 1990, Morocco, because it voted in favor of both resolutions, was convulsed with anti-Coalition demonstrations that, not surprisingly, emboldened Iraq.

Compounding the difficulty of predicting what a vote tally might be in response to an attack by Iraq, Iran or any other country is the fact that the League has acquired a new member in the interim: the Comoros Islands, a poor nation in the Indian Ocean off the coast of east Africa and north of Madagascar. No one can say how Comoros would have voted had it been a member of the League when the Kuwait crisis erupted. Neither can one with any certainty predict what its position or actions might be in response to an attack against a fellow League member.

The outcome of future League votes in any conflict involving an Arab country is, therefore, far from certain. For example, the result could easily be a deadlocked League, with half its members voting in favor of cooperating to resist the threat and half opposed. In such a situation, a Yemen that voted to mobilize and deploy forces to assist the victim of aggression -- something it did not do the last time around -- could tilt the balance.

Deterrence and Defense Capabilities

Senior defense officials, chiefs of staff and armed-forces commanders in Saudi Arabia and Yemen acknowledge their respective and joint interests in the promotion of regional peace and stability. As evidence, they decided some years ago to establish a joint military committee. The committee has held innumerable meetings (see below), but none in which either geopolitical issues or proposals to enhance mutual security against outside aggression have been discussed. More important than the fact that such meetings are held, however, is what might transpire in a differently configured and empowered committee among the parties by way of increased understanding, new initiatives and shared responsibilities.

Much seems possible in a context where the major issues in dispute between Riyadh and Sanaa have been resolved. For example, one can envision Saudi Arabia and Yemen concurring on an appropriate division of labor in conjunction with their respective future planning, training and, possibly, specific accords related to regional deterrence and defense. That would be a significant achievement.

THE END GAME IS NEAR

This perspective is anchored in the view that the prospects for an early settlement of one or more issues contested by Riyadh and Sanaa are now greater than they have been in quite some time. There has been renewed energy and time spent conducting an increasing number of high-level visits and meetings of Saudi Arabian and Yemeni officials entrusted with improving their bilateral relationship. There seems to be an awareness that little benefit is to be gained by either side from prolonged postponement of a settlement.

An agreement deemed acceptable to the greatest possible number of people on each side is arguably in both countries' strategic, economic, political, commercial and human-resource-development interests. An early settlement would free energies that could be spent on other challenges and allow both countries to reallocate the costly defense expenditures associated with the border dispute. It would help remove one of the major obstacles deterring would-be investors from the disputed areas.

A successfully implemented agreement would enable Riyadh to focus more on the kingdom's two military-strategic challenges, Iran and Iraq. A favorable position granted to Yemeni workers contributing to Saudi Arabia's (and Yemen's) economy would carry within in it a seed that could nurture an improved interstate relationship in the immediate future.

For Yemen, the benefits of an acceptable agreement successfully implemented are substantial. The country could focus more effectively on its immense developmental needs in infrastructure, technology, education, employment, health and human-resources training. Yemen's present development foundation is considerably stronger than before it undertook, in partnership with the World Bank and IMF, to implement far-reaching economic reforms. Yet, on balance, the overall base of its economy remains weak, not only because of the uncertain prospects for sustained political stability, but for other reasons as well: (1) the antiquated infrastructure in the south left over from former British and Soviet rule, (2) an earlier era of mismanagement and scarcity of resources in the north, and (3) an extended period in the east of neglect combined with inadequate administration and a paucity of resources.

A resolution of the Saudi Arabia-Yemen dispute would enable Yemen to deal more effectively with its pressing domestic economic situation and to strengthen and expand its development opportunities without the previous distraction of externally focused priorities and the substantial allocation of scarce funds for defense.

For Saudi Arabians and Yemenis there is a sense that time is of the essence. This is not to imply that a settlement of the matters in dispute is equally urgent to booth parties. Saudi Arabian leaders, much more than their Yemeni counterparts, call for patience, pointing out that their country has far more issues on its plate. For example, it is pressed to deal with challenges in its, relationships with 13 neighbors, more than three times as many as Yemen has.

Saudi Arabians emphasize that, unlike Yemen, the kingdom's leaders, in light of their role as custodians of Islam's two holiest places and as the world's largest oil producer and exporter, have to deal with a larger number and a more diverse range of complex issues of global importance. Accordingly, they stress that, while they are keen to settle their disputes with Yemen, they are, on balance, in less of a hurry than Sanaa.

However, Saudi Arabians and Yemenis alike, despite their different perspectives, acknowledge that their national-defense and security interests are overriding and that there is danger in delay with regard to arriving at a settlement, including the risk that matters might escalate. Both also agree that the prospects for arriving at a mutually satisfactory resolution later are not likely to be as good as they are now, when the principal leaders of the two sides are not only capable and broadly experienced but have dealt with the issues in dispute for more than two decades.

In addition, Saudi Arabia's and Yemen's friends and allies would be very pleased the moment they learned that these two strategically important countries had settled their longest-standing bilateral dispute.

Opportunities would follow that would benefit both countries as well as their key partners. The Allied Coalition countries would be freed to think and plan on ways to strengthen and expand the region's peace and stability. They would be relieved of having to postpone initiatives in the area of intraregional and bilateral development as well as defense cooperation that stand to benefit Saudi Arabia, Yemen and the Coalition alike.

Regional and Global Interests at Stake

No one denies that a Saudi Arabia-Yemen agreement that meets the minimal requirements of both parties would contribute handsomely to a regional and global need for the two countries to be at peace and in close cooperation with one another. After all, they live in a volatile region that contains within and adjacent to it energy resources and maritime routes important to the entire world.

Significant numbers of Saudi Arabians and Yemenis believe it would be hard to imagine a moment more propitious than the present for reaching an agreement. The substance and shape of an accord would envision the two sides putting behind them as many of their disputes as possible; acknowledging those matters that continue to elude settlement and will require further consultation; and setting a timetable for subsequent meetings, deliberations and recommendations pursuant to a final resolution.

This timetable is a key to what lies ahead. A good beginning was made at the meeting on July 29, 1998, in Riyadh between a Yemeni delegation, led by its minister of foreign affairs, and its Saudi Arabian counterparts and a visit the next week to Sanaa by the kingdom's foreign minister.

Following these meetings, Riyadh and Sanaa reiterated their resolve to settle the issues outstanding between them. To this end, joint military and technical committees continued to meet in 1999 and 2000 with a view to finalizing the remaining matters in dispute regarding the location of their common border.

As further indication of the two countries'joint commitment to press ahead toward a solution of the boundary issue, Crown Prince Abdallah and Foreign Minister Prince Saud Al-Faisal headed a large delegation of Saudi Arabian leaders to Sanaa in May 2000 to attend ceremonies commemorating the tenth anniversary of Yemeni unity, reciprocating a visit to Riyadh earlier in the year by President Saleh.

In the heady afterglow of these high-level exchanges between the two countries' most prominent decision-makers, the hopes of many on both sides were raised commensurately. Indeed, the prospects for a near-term resolution of one of Arabia's longest unresolved international disputes seemed nearer to hand than any point since the signing of the 1995 Memorandum of Understanding.

[On June 12, 2000, the Kingdom of Saudi Arabia and the Republic of Yemen signed a treaty on their international land and sea borders based on the 1934 Taiftreaty and its annexes.-Ed.]

Dr. Anthony is the founding president and chief executive officer of the National Council on U.S.-Arab Relations and a founder, board member and secretary of the U.S.-GCC Corporate Cooperation Committee.