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Same-Day Analysis

Twin Attacks on U.K. Diplomat and European Oil Workers Heighten Fears over Security in Yemen

Published: 07 October 2010
Twin attacks in Yemen's capital yesterday signal an attempt by militants to expand their targets once again to include diplomats and foreign workers employed in the country’s energy sector, as they escalate their war with the embattled central government.

IHS Global Insight Perspective

 

Significance

The attacks in Yemen's capital yesterday came on the back of a deteriorating security situation across the whole country and reports that militants are continuing to gain the upper hand despite vital new investment in the government's counter-terrorism campaign.

Implications

Investors in Yemen are likely to become increasingly nervous over such developments, despite already being accustomed to a high level of risk. This is particularly the case when it comes to the country's oil sector.

Outlook

Prospects for improvements in Yemen's operating environment indeed appear miserable as the government becomes caught up in an ever widening cycle of bloody violence from which it seems increasingly unlikely to emerge. The likelihood that the government will be able to attract the investment it needs with the aim of shoring up its lacklustre economy remains unlikely, while the risk that companies with existing investments in the country may withdraw is increasing.

An armoured vehicle carrying five British Embassy staff, including the deputy chief of mission, was targeted in an attack yesterday within hours of another attack targeting a French national working for Austrian firm OMV. Militants fired a rocket-propelled grenade at the car around 3 kilometres from the British Embassy in the capital, Sana’a. Only one staff member suffered injuries and is receiving treatment, according to the British Foreign Office. Two bystanders were also injured. Yemen, the ancestral home of Osama bin Laden, has been the scene of a resurgence in militant activity over the past few years. Capitalising on brewing discontent with the central government, lawlessness and pressures on the Yemeni military as a result of conflicts in the north and south of the country, militant groups have successfully strengthened their foothold. Al Qaida, which has yet to claim responsibility for either attack, but nonetheless remains the likely culprit, has established a strong presence in the country and continues to seek to destabilise the current government.

Attacks of this nature are by no means unusual in Yemen, although there has not been an attack like this for several months. Fighting between the security forces and militants has been increasing amid growing pressure from the United States to confront the problem of al-Qaida more aggressively. This followed an attempt by a young Nigerian to blow up a Detroit-bound airliner on Christmas Day last year. The Nigerian had spent some time in Yemen and is believed to have been under the instruction of the leaders of the Yemeni wing of al-Qaida. Hundreds of militants have been killed as the government, buoyed by record levels of assistance from the United States, stepped up its campaign. As the situation escalates it seems that al-Qaida may once against resort to expanding the focus of its attacks beyond purely military and security targets, as it has done for the last few months.

Overall it was a difficult day for the British diplomatic mission in the country, with nationals having been targeted in both of the violent incidents. This is not the first time that U.K. citizens have been targeted; last April a suicide bomber attacked a British diplomatic convoy in which the ambassador had been travelling. Until yesterday the incident was the last attack against foreign embassy personnel since then. There is no particular reason why the United Kingdom would have been more of a target than any other European nation, although there have been reports that the British SAS has been playing a key role in training Yemeni security personnel. The United Kingdom, like many countries, remains concerned that a strong al-Qaida presence in Yemen threatens its own interests, both at home and abroad. U.S. interests have been repeatedly targeted in the past, with one of the worst incidents occurring in 2008 when a gunfight outside the U.S. Embassy compound left 16 people dead, including one dual Yemeni-U.S. national.

The French national killed yesterday was working for OMV, whose offices are located just on the outskirts of the capital, Sana’a. A British contractor who was also at the office at the time was seriously injured during the attack. A security guard employed by the firm is believed to have carried out the attack. According to a statement from the company, the French national was a procurement officer and the British national was a specialist at the company’s office. The energy sector has repeatedly been targeted in Yemen: pipelines have been attacked, offices targeted, and personnel kidnapped. Although attacks taking place against oil facilities and installations from time to time has been factored into the international oil company (IOC)’s calculations when investing in Yemen, a fatality is a serious escalation and will only exacerbate growing investor discomfort over what is seen as a slipping security situation in the impoverished country. Yemeni security forces have traditionally devoted large efforts to the protection of IOCs and their operations, with much of the threat normally coming from tribal groupings interested in low-level sabotage or short-term kidnappings, mainly in order to draw attention to their grievances and enlarge their share of the patronage stream paid out from the central government.

The interest of tribal groupings has therefore not been in any large-scale disruption of the oil and gas flow, as ultimately they have attempted to increase their access to the oil revenue. More violent Islamist elements, probably associated with al-Qaida, have repeatedly made threats against oil companies, given how vital they are to the Yemeni state, but given their relatively limited operational capabilities outside of urban areas and the ease with which perimeter security can be upheld in the sparsely populated desert regions holding most of Yemen’s IOC-developed oil and gas acreage, few large-scale attempts at disruption have succeeded. A casualty at the Yemeni representative office in Sana’a, however, changes what is seen to be an already deteriorating security situation in Yemen, where a southern independence movement has been stepping up its activity, potentially disrupting government control in many of the oil areas, while much of the security forces' capacity has been tied up in operations to quell the northern Sa’ada uprising. Yemen’s rapidly declining mature output and its few remaining upstream exploration opportunities are already making new investment hard to attract in the country, with the complete breakdown of security in its waterways, due to Somali piracy, making sure that interest in its offshore potential also remains small.

Outlook and Implications

The twin attacks serve to reinforce concerns over the security situation in the country and may point to the return of the emphasis on targeting foreigners and diplomatic missions. The energy sector, a vital lifeline for Yemen, will remain a key target, at least for the foreseeable future. Although an incident like this will not be enough to make IOCs leave existing projects, it will count heavily towards the country’s ability to sign up new investors over the coming year, which is a big blow to Yemen, given that it would need cash-strong, skilled IOCs to commit significant investment in expensive and challenging enhanced oil recovery (EOR) techniques, to try stemming mature decline and raise the recovery rates from its remaining oilfields in order to protect its revenue flow from shrinking much further. With concerns over lower revenues from oil exports and the inability to maximise the opportunities from exporting LNG, the country’s future continues to look bleak. More than 40% of Yemen’s 23-million-strong population continue to live in poverty and concerns over violence and instability have made prospects for growth and employment generation worse. Although the situation can clearly worsen, the prospects of state collapse nonetheless remain extremely limited given the stakes involved for Western partners and their likely willingness to move in to prop up the ailing government of Abdullah Saleh should it be threatened to such a degree.
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