By Cynthia Johnston
DUBAI, March 26 (Reuters) - Yemen risks a sustained separatist insurgency in the south, scene of increased tit-for-tat violence, unless it seriously addresses grievances of southerners who say their region is neglected by the state.
President Ali Abdullah Saleh, who a week ago declared that Yemen's separate war with Shi'ite rebels in the north was over, has offered dialogue with opponents in the south. But there is little evidence so far of a rush to the negotiating table.
"If the escalation continues it will be a big, big problem. It will be a war," Yemeni analyst Nasser Arrabyee said, but added he was optimistic Sanaa would strike a political power sharing deal to prevent further armed conflict. Sanaa came under international pressure to quiet domestic unrest and focus its fight on al Qaeda, a bigger global threat, after the group's Yemen-based arm claimed responsibility for a failed December bomb attack on a U.S.-bound plane.
But the president's limited offer for dialogue with the south has come hand-in-hand with a security crackdown and arrests campaign that left a trail of dead and wounded on both sides in recent weeks even as violence elsewhere in Yemen fades.
Security forces continue to occasionally fire on often provocative anti-government demonstrations. In one case, a protester was shot dead while trying to remove a Yemeni flag from a government building and replace it with a separatist one.
Deaths of protesters have typically sparked clashes, easily ignited in a heavily armed society where many civilians carry arms and state control is weak. The unrest has often targeted northerners, and northern-owned businesses have been set aflame.
Exiled southern politician Ali Salem al-Beidh, who briefly led a secessionist south Yemen in 1994, said Sanaa was turning its sights on the south after ending the northern war.
"What we fear is that they will push us from the path we have chosen, the peaceful path. Citizens will be forced to defend themselves. When you see a tank in front of your house, what do you do?"
Asked if an armed movement would emerge, he said: "We are not thinking of this, and we don't have an army."
North and South Yemen united in 1990, but many in the south -- home to most of Yemen's oil facilities -- complain northerners have seized resources and discriminate against them.
MOVE TOWARD INSURGENCY
There have already been signs, such as recent ambush-style attacks blamed on separatists that have killed at least five people, that the southern conflict is becoming more and more like an insurgency and less a peaceful protest movement.
The protest movement, while not unified behind a single organisation, has been sophisticated in its approach, and wants to maintain the peaceful non-violent nature of its protest, analyst Abdul-Ghani al-Iryani said.
"But given the fact that the government has been non-responsive, I think they or some elements within the movement, have chosen to use violence in certain areas. And the pattern over the period of say the past two years ... has been escalating," Iryani said.
"The increase in violence in different areas has been uniform, which tells you there is a nucleus of planners who are quite sophisticated. And I wouldn't be surprised if they happen to be outside of the country," he added.
A Yemeni court on Tuesday sentenced a separatist leader to 10 years in prison. The judge said Ahmad Bamuallim, a former parliamentarian, had been calling for an armed insurrection.
Western countries and neighbouring Saudi Arabia, the world's biggest oil exporter, fear al Qaeda is exploiting instability in impoverished Yemen to launch attacks in the region and beyond.
Saleh has placed limits on an offer for talks with the south, saying he would only speak with pro-unity elements, not secessionists. But the southern movement has no single leadership, and Sanaa would need to deal with a collection of disparate leaders, often with similar but not identical agendas.
Diplomats say previous talks offers have not been followed by concrete action to address southern complaints that Sanaa neglects the southern region and treats southerners unfairly, including in property disputes, jobs and pension rights.
A southern war could be averted if Sanaa takes steps to resolve key differences and makes progress on power sharing, with a national unity government or by naming more southerners to key roles in local government and security forces.
"It will be very difficult and a long process ... In the coming weeks there will be nothing. In Yemen we don't count by weeks, we count by years," analyst Ali Seif Hassan said.
Iryani hoped outside players such as the wealthy Gulf Cooperation Council, which Yemen hopes to join, could use its weight to press for a solution, and maybe play a mediating role. (Writing by Cynthia Johnston; Editing by Samia Nakhoul)