urces slipping as separatist regional
movements - typically based on ethnicity - gain momentum, e.g., in
many of the successor states of the former Soviet Union, in the
former Yugoslavia, in India, in Iraq, in Indonesia, and in Canada.
Externally, the central government is losing decisionmaking powers
to international bodies, notably the European Union. In Western
Europe, governments face the difficult political problem of
channeling resources away from welfare programs in order to increase
investment and strengthen incentives to seek employment. The
addition of 75 million people each year to an already overcrowded
globe is exacerbating the problems of pollution, desertification,
underemployment, epidemics, and famine. Because of their own
internal problems and priorities, the industrialized countries
devote insufficient resources to deal effectively with the poorer
areas of the world, which, at least from an economic point of view,
are becoming further marginalized. The introduction of the euro as
the common currency of much of Western Europe in January 1999, while
paving the way for an integrated economic powerhouse, poses economic
risks because of varying levels of income and cultural and political
differences among the participating nations. The terrorist attacks
on the US on 11 September 2001 accentuate a further growing risk to
global prosperity, illustrated, for example, by the reallocation of
resources away from investment to anti-terrorist programs. The
opening of war in March 2003 between a US-led coalition and Iraq
added new uncertainties to global economic prospects. After the
coalition victory, the complex political difficulties and the high
economic cost of establishing domestic order in Iraq became major
global problems that continued into 2005.

Yemen
Yemen, one of the poorest countries in the Arab world, has
reported strong growth since 2000, but its economic fortunes depend
mostly on oil. Yemen has embarked on an IMF-supported structural
adjustment program designed to modernize and streamline the economy,
which has led to substantial foreign debt relief and restructuring.
Yemen has worked to maintain tight control over spending and to
implement additional components of the IMF program, but a high
population growth rate and internal political dissension complicate
the government's task. Plans include a diversification of the
eco