FACTBOX-Political risks to watch in Yemen

SANAA Thu Dec 6, 2012 9:50am EST

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SANAA Dec 6 (Reuters) - Yemen is struggling to stand on its own feet nearly a year after veteran President Ali Abdullah Saleh was forced to step down following protests that divided the poor Arabian Peninsula state and pushed it deeper into political and economic crisis.

Saleh's successor Abd-Rabbu Mansour Hadi, who took office in February, is struggling to implement a power transfer deal while trying to patch up divisions in the army and fighting al Qaeda in a U.S.-backed military campaign.

ISLAMIST MILITANCY AND AL QAEDA IN THE SOUTH

Yemen is the main base for al Qaeda in the Arabian Peninsula (AQAP), which has emerged as one of the network's most active and ambitious branches, carrying out attacks at home and abroad.

AQAP and Ansar al-Sharia group, its ally, seized parts of the southern Abyan province during the uprising against Saleh. A U.S.-backed military offensive has driven the militants out but has not prevented them from launching a series of attacks that have dealt damaging blows to the army and security apparatus.

What to watch:

- Further attacks and a re-emergence of militants whose southern strongholds have been recaptured in the military offensive.

SOUTHERN SEPARATISTS AND NORTHERN REVOLTS

Southern secessionists say northerners based in the capital Sanaa have discriminated against them and usurped their resources since the unification of North and South Yemen in 1990. They also complain that they have been frozen out of the political transition process since Saleh's fall and have hardened their calls for independence.

Northern "Houthi" rebels, who draw their name from a tribal leader and are members of the Zaydi branch of Shi'ite Islam, cite similar grievances of being left out of the transition process. Fighting has flared between Houthis and Sunnis who follow the Salafist tradition. The rebels are seeking autonomy in their northern province of Saada.

What to watch:

- Deadlock or collapse of talks aimed at bringing southerners and the Houthi movement into the transition process before planned national political dialogue on constitutional reforms ahead of 2014 elections.

- Violence deteriorating into civil war, either in the north or the south.

FINANCE, WATER AND FUEL CRUNCHES

Prolonged turmoil has further crippled an already battered economy in a country of 24 million people that has acute water shortages and a malnutrition rate of over 40 percent.

Protests in 2011 saw unemployment rise to an estimated half of the labour force, while basic commodities have rocketed in price. Yemen's modest oil exports have been halted by repeated attacks on its pipelines, with a recent shutdown since Nov. 12.

What to watch:

- More disruption to oil and gas sector due to violence.

- Pressure on rial, and government funding problems.

- Movement on emergency budgetary and humanitarian aid.

STATE COLLAPSE

The uprising weakened the central government's grip on parts of Yemen where its authority was already shaky. Hadi now faces the additional task of restructuring an army split into warring factions, pro and against Saleh.

The U.S.- and Gulf-sponsored power transfer deal that ended months of protests against Saleh mandates Hadi to oversee reforms during a two-year interim period to ensure a transition to democracy, including amending the constitution. It is intended to lead to presidential and parliamentary elections in 2014.

What to watch:

- Open challenges to Hadi's power by military leaders aligned with Saleh. (Compiled by Rania El Gamal; Editing by Sami Aboudi and Pravin Char)

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