Yemen can
no longer feed its people as its economy buckles under the strain of
declining oil and water resources, corruption and violent conflicts.




One in three of Yemen's 23 million people suffer chronic hunger and
more than one in 10 Yemeni children are acutely malnourished, U.N. aid
agencies said on Tuesday.
Such bleak economic realities feed into the political challenges to President Ali Abdullah Saleh's 31-year rule.
Secessionist
unrest in the south looms as his gravest immediate problem now that a
fragile ceasefire has calmed a long-running northern "Houthi" revolt --
although that truce risks unravelling, with breaches reported on both
sides.
Islamist militancy, fuelled by poverty, poses a lesser
threat, analysts say, despite last month's failed attack by an al Qaeda
suicide bomber on the British ambassador in Sanaa.
"The south is the
real challenge," said Yemeni political analyst Abdul-Ghani al-Iryani.
"The regime is not dealing with the grievances of southerners, raising
the spectre of a civil war. Arguably a low-level civil war is already
in progress."
Southern discontent, rumbling since a 1994 civil war,
has flared into mass protests and almost daily clashes with security
forces. Secessionist groups are split and lack outside support.
"There
is no doubt, however, that the Southern Movement has the potential to
develop into a major challenge to the legitimacy of the government, the
stability of the country and eventually to the integrity of the state,"
argued a paper published in April by the Dubai-based Gulf Research
Center.
Instability or state collapse in Yemen, a small Arab oil
producer, risks dire consequences for oil giant Saudi Arabia and its
other neighbours in the Gulf and the Horn of Africa.
North and south
Yemen united in 1990, but many in the south, home to most Yemeni oil
facilities, say northerners usurp their resources, warp their identity
and deny their political rights.
President Saleh has complained that southerners nurture a "culture of hate" against the north.
"Southern
disaffection has gone beyond the point of no return," Victoria Clark,
author of a recent book on Yemen, told Reuters. "Saleh's biggest
mistake would be to crack down on southerners as hard as he has tried
to do on the Houthi rebels."
Southerners, comprising less than a
fifth of the population, no longer have the tanks, aircraft and heavy
weapons to fight a conventional war as they did in the 1994
secessionist revolt.

"INEVITABLE DUST-UP"

"My best guess
would be that the break-up of the state will happen in the inevitable
dust-up that will follow the removal of Saleh, which will happen when
the money to pay the army and civil service runs out," Clark said.
The
Sanaa government is already strapped for cash. This week it raised fuel
prices to ease the burden of diesel subsidies which Central Bank
officials say cost around $2 billion a year.
Yemen, whose rial has
lost over 10 percent of its dollar value this year, said in January it
needed $2 billion a year in aid to stay afloat and double that to turn
its economy around.
"The regime pretends it's just a matter of
fine-tuning an otherwise well-running machine, but the machine is
broken and without an overhaul we face disaster," said Iryani, listing
economic woes such as tariff collection failures, declining foreign
investment, diesel smuggling and capital flight.
Yemen lies near the bottom of Transparency International's corruption index, ranking 154 out of 180 countries last year.
Yemeni officials, however, blame falling oil income for aggravating economic, financial and security problems.
Western
donors, alarmed by a Christmas Day attack on a U.S. airliner by a
Yemen-based al Qaeda militant, say they want to improve governance and
the capacity of Saleh's government to spend $4.7 billion of aid pledged
as long ago as 2006.
Throwing development money or counter-terrorism
aid at Yemen will not correct what a Carnegie paper by Australian
academic Sarah Phillips called "the heavily centralised system of power
that keeps resources and political leverage in the hands of a select
few and further entrenches Yemenis' economic hardship".
That
hardship is perhaps nowhere more acute than among the 270,000 people
who fled battles between government forces and Houthi rebels in and
around the northern city of Saada.
A February ceasefire halted six
months of fierce fighting in the north, but U.N. officials say many of
the displaced have sold their last livestock while waiting to see if it
holds.
"People have three options after that -- revolt, migrate or die," said World Food Programme spokeswoman Emilia Casella.
Senior
Yemeni officials say al Qaeda recruiters can also thrive in a country
with 35 percent unemployment, coupled with poverty affecting 42 percent
of a young population.
Iryani, the Yemeni analyst, described al
Qaeda in the Arabian Peninsula (AQAP), which is thought to have no more
than a few hundred militants, as a minor concern that could be laid to
rest if the grievances that helped it recruit were addressed.
"Poverty,
injustice, callous disregard for the law and rampant corruption that
have undermined the legitimacy of the regime: once we deal with these
we can easily deal with AQAP." (Editing by Samia Nakhoul)