Yemen’s faltering economy key in terrorism fight

World powers will use talks Wednesday to offer pledges to bolster Yemen’s faltering economy and strengthen attempts to tackle a rising threat from al-Qaida in the wake of the failed Christmas Day airliner attack in the United States.

U.S. Secretary of State Hillary Clinton arrived in London Wednesday morning for a hurriedly convened meeting with delegates from the Middle East, Russia and Europe over the risk posed by Yemen following the botched Detroit bombing.

Delegates will discuss fears that declining oil revenues will weaken Yemen’s ability to deliver basic services, stirring dissent and allowing terrorists to get a firmer foothold in the country.

Officials said about 20 nations joining the talks with Yemeni representatives will launch a new international organization – the Friends of Yemen – to help the country carry out political and economic reforms.

British officials believe a declining economy could hamper attempts to halt the spread of terrorism, and acknowledge there may be only a limited time to prevent Yemen’s state from failing completely.

About 75 percent of Yemen’s government revenues come from oil, but production is slowing and the loss won’t be made up by a developing gas industry, Britain’s ambassador to Yemen, Tim Torlot, said.

“If the economy continues to deteriorate in the way that we see at the moment, apart from anything else there will be a severe humanitarian crisis,” said Torlot, who will attend the talks.

Torlot said that continued conflict in Yemen and pressure on resources – including water shortages – could lead to a migration of “unstable, ill-educated populations with the capacity for violence and, to a lesser extent, terrorism” across the Northern Gulf and elsewhere.

Intelligence officials are concerned about the ability of al-Qaida affiliates to operate in Yemen, and British security officials say Western Muslims are traveling to the country to seek out radical clerics and terrorists.

Last week, British Prime Minister Gordon Brown warned of the dangers posed by the Yemen-based Al-Qaida in the Arabian Peninsula group. The U.K. raised its terror alert status, partly in response to the threat.

Delegates at the two-hour talks – which include the World Bank and International Monetary Fund – won’t pledge any new funds, but instead will offer to help Yemen spend $5 billion donated following a conference in 2006, most of which remains untouched.

The Friends of Yemen will help the country identify priorities for the aid, officials said. It will include the Group of Eight countries, members of the Gulf Cooperation Council and other neighboring nations.

Yemen “doesn’t have the capacity to be able to cope with the assistance that is available,” said Frank Baker, head of the British Foreign Ministry’s Middle East department. The Friends of Yemen group “will look at ways to help Yemen build its capacity to be able to disburse the funding,” he said.

Italy’s government said the group will help consolidate Yemen’s government but respect its sovereignty.

“We must increase our efforts in formation and nation-building, our participation in the consolidation of the Yemenite government, our help in patrolling the coastline,” said Giampiero Massolo, the Italian Foreign Ministry’s secretary general.