Source: Reuters, 04/01/2011
SANAA -Yemen faces a series of major threats, including rising al Qaeda militancy spreading beyond its borders, violence from southern secessionists and sporadic clashes with Shi'ite rebels, all fed by crushing poverty.
Yemen, a neighbour of top oil exporter Saudi Arabia, shot to the forefront of global security concerns when two air freight packages containing bombs, both sent from the country and addressed to synagogues in Chicago, were intercepted in Britain and Dubai in October 2010.
Al Qaeda's Yemen-based regional branch, al Qaeda in the Arabian Peninsula (AQAP), claimed responsibility for the parcel plot, just under a year after the group's failed attempt to bomb a U.S.-bound plane.
Worries about instability and corruption have deterred significant foreign investment in Yemen beyond the oil industry, limiting economic growth and worsening unemployment.
Nearly a third of the workforce is out of a job. More than 40 percent of Yemen's 23 million people live on under $2 a day.
AL QAEDA AND ISLAMIST MILITANCY
The parcel bomb plot sealed AQAP's reputation as one of the most aggressive arms of al Qaeda's globally scattered sympathisers and affiliate groups. Its most recent attack outside Yemen had been a failed attempt by a Nigerian Islamist to down an airliner heading for Detroit on Dec. 25, 2009.
The device, hidden in the underwear of Umar Farouk Abdulmutallab, failed to detonate. Abdulmutallab had visited Yemen and had been in contact with militants there.
In another unsuccessful hit, an al Qaeda suicide bomber who had spent time in Yemen tried to kill Prince Mohammed bin Nayef, Saudi Arabia's anti-terror chief in August 2009.
The group had also been more active locally. In recent months, clashes between al Qaeda and Yemeni security forces have risen as it staged numerous attacks on foreign and government targets inside the country in response to a U.S.-backed crackdown against the militants.
In April, a suicide bomber tried to assassinate the British ambassador to Yemen and since June last year, militants have attacked several state targets in the south, including a raid on an intelligence headquarters in Aden which killed 11 people.
Western powers and Saudi Arabia have long feared al Qaeda wants to turn Yemen into a launchpad for attacks in the region and beyond. Washington has stepped up training, intelligence and military aid to Yemeni forces, helping them stage raids on militant hideouts, some of which have also killed civilians.
A U.S. diplomatic cable leaked in November said the United States was carrying out air strikes on al Qaeda targets in Yemen, but had agreed with Yemen to conceal this from the public.
"We'll continue saying the bombs are ours, not yours," President Ali Abdullah Saleh was quotdd as saying in the cable.
But Al Qaeda's actions over the past year have raised doubts about whether the campaign against AQAP was working.
Yemen has combated al Qaeda on and off since before the Sept. 11, 2001 attacks on the United States, often in concert with Washington, but its approach to dealing with militants has been criticised in the West as half-hearted and ineffective.
Al Qaeda#s activity picked up in 2009 after the group's Saudi wing, hit hard by a crackdown in the kingdom, merged with the Yemeni arm to create the Yemen-based regional organisation.
The leaders of the Al Qaeda in the Arabian Peninsula include Nasser al-Wahayshi, once a close associate of Osama bin Laden.
Its declared aim is to target Westerners in the oil-exporting Gulf region and bring down the Saudi royal family.
Growing violence in south Yemen in recent months, from separatist ambushes to armed clashes with security forces, has raised fears of a sustained insurgency.
North and South Yemen formally united in 1990 but some people in the south, where many of Yemen's oil facilities are located, complain northerners have used unification to seize resources and discriminate against them.
People in the south say the government deprives them of jobs and usurps their land. Leading positions in the south are typically assigned to Sanaa government loyalists, often brought in from the north.
Many southerners believe they were better off before unity, when South Yemen had a welfare state established with Soviet aid. They say discrimination became worse after a brief 1994 civil war, sparked by an attempt by southern leaders to break away from a unified Yemen.
Violence earlier this year was the worst the south has seen since the 1994 war and could escalate.
Sanaa has offered dialogue with the opposition, including southerners, but efforts to calm southern unrest have included widespread arrests and extra troop deployments to the region that have heightened hostility toward the north.
Suspected separatists have attacked state vehicles. The army has surrounded and shelled the flashpoint southern town of Dalea and clashed with separatist protesters.
Each side blames the other for the violence in a heavily armed society where state control is weak. Separatists insist their movement is peaceful and any fighting is in self-defence against a disproportionate clampdown by security forces.
Meanwhile, the government of President Ali Abdullah Saleh says armed separatists are a minority of outlaws who indiscriminately and sometimes brutally target northerners.
CONFLICT WITH NORTHERN SHI'ITE REBELS
Yemen is working to cement an increasingly shaky truce with northern Shi'ite rebels sealed in February to end a civil war that has raged on and off since 2004. Saudi Arabia intervened militarily last year after rebels seized some Saudi land.
The rebels, who belong to the minority Zaydi sect of Shi'ite Islam and who are known as Houthis after their leaders' clan, complain of religious and socio-economic discrimination.
The ceasefire, along with prisoner releases by both sides, has halted major combat, but sporadic violence persists.
In August, the government and the Houthis signed a Qatari-mediated deal to start a dialogue to end the conflict. But previous truces in a war that has displaced 350,000 people have not endured, and no lasting peace is yet in sight.
Almost a third of Yemen's inhabitants suffer chronic hunger, jobs are scarce, corruption is rife, and oil and water resources are drying up, further straining the economy.
The cash-strapped government is almost powerless to meet the needs of its expanding population and there are fears that Yemen may tip into chaos if it cannot pay public sector wages.
Oil revenues are declining steeply and the government said earnings from Yemen's multi-billion dollar Total-ledliquefied natural gas (LNG) plant will be less than expected due to delays in the production start-up.
A recent tumble in the Yemeni rial further added to the country's economic woes, forcing the central bank to inject some $850 million, around 15 percent of its reserves, into the market in 2010 to support the currency.
Despite some Western and Saudi support, donor money is hard to come by and slow to reach those who need it most. Only a fraction of $4.7 billion promised at a donor conference in 2006 has been distributed so far.
Corruption is also pervasive. Yemen is near the bottom of Transparency International's corruption index, ranking 154 out of 180 countries last year.
As part of badly needed economic reforms, Yemen has begun reducing fuel subsidies, a huge burden on state finances, but is having to do this gradually to avoid stoking public anger. Previous moves to raise fuel prices provoked riots.
Yemen also faces a water crisis, deemed among the worst in the world and aggravated by excessive irrigation by farmers growing qat, a mild narcotic leaf chewed by most Yemenis and whose consumption weighs on productivity.