SANAA (Reuters) - Yemen's president offered on Wednesday to step down by the end of the year in a bid to appease mounting demands for his resignation, but opposition groups showed no sign of easing up on efforts to force him out.
Weeks of protests against the 32-year rule of President Ali Abdullah Saleh in the impoverished Arabian state have raised alarm in Western capitals at the prospect the country where al Qaeda has entrenched itself could fall apart.
U.S. Defense Secretary Robert Gates said it was too soon to determine the outcome of the political turmoil and said Washington had not planned for an era without Saleh in office.
"I think things are obviously, or evidently, very unsettled in Yemen. I think it's too soon to call an outcome. We've had a good working relationship with President Saleh. He's been an important ally in the counter-terrorism arena," Gates said, speaking in Cairo.
"But clearly there's a lot of unhappiness inside Yemen. And I think we will basically just continue to watch the situation. We haven't done any post-Saleh planning," he said.
Saleh, whose opponents have been inspired by the fall of dictators in Tunisia and Egypt, has been an ally of Washington and of Saudi Arabia in the confrontation against al Qaeda.
But the killing of more than 50 demonstrators on Friday has accelerated a wave of defections to the opposition by the elite. State news agency Saba said three people were arrested over the shootings and handed over to prosecutors.
Having tried at first to fend off calls to quit by saying he would not seek a new term in 2013, Saleh has since made greater concessions and on Wednesday offered constitutional change and elections to replace parliament and the head of state this year.
"At this historic moment Yemen needs wisdom to avoid slipping into violence ... that would destroy gains and leave the country facing a dangerous fate," Saleh said in a letter passed to opposition groups in a bid to reconcile differences.
Opposition groups, which had earlier called for massive rallies in the capital Sanaa on Friday to force Saleh from power, said they were studying the offer.
The letter, also sent to army commander Ali Mohsen, who has declared support for the protesters, contained a proposal to hold a referendum on a new constitution, then a parliamentary election followed by a presidential poll before the end of 2011.
Yemen borders the world's biggest oil exporter, Saudi Arabia, and major shipping routes. Al Qaeda cells in Yemen have in the past two years attempted attacks outside Yemeni soil in Saudi Arabia and the United States.
It is unclear who might follow Saleh and the country faces the danger of fragmentation.
Defections including generals, tribal leaders, diplomats and ministers, gained momentum after gunmen loyal to Saleh opened fire on protesters on Friday, causing the deaths of 52 people.
Saleh sacked his cabinet and declared a state of emergency which parliament rubber stamped on Wednesday for a 30-day period. But the bloodshed has lent protests a new severity.
One Wednesday, protesters carried placards saying "No to emergency rule, you butcher!" Some had begun selling T-shirts saying "I am a future martyr".
"As sure as the sun is in the sky, he will go," said protester Suleiman Abdullah, 28.
Complaining of neglect, southerners have said they want to secede and minority Shi'ites in the north have staged several rebellions against the perennial survivor, who is now in the biggest fight of his political life.
Long backed by Arab and Western countries as the strongman holding the fractious tribal country together, Saleh is raising the specter of civil war and disintegration if he is forced out in what he says would be a coup.
Defections among the ruling elite have reached top military commanders, including General Mohsen, commander of the northwest military zone and Saleh's kinsman from the al-Ahmar clan.
Security sources said Saleh had beefed up his personal security for fear of an assassination attempt or a coup by his widening circle of opponents.
Yemeni authorities also withdrew the licenses of Al Jazeera correspondents in Yemen and ordered them to stop work, the head of the network's Sanaa office Saeed Thabit told Reuters. Yemeni state media said the Arab satellite network was accused of bias.
Political analyst Abdul-Ghani al-Iryani said he thought Saleh realised his time was up.
"I think he is just maneuvering for favorable exit terms. Still, with tanks facing off in the streets of Sanaa, he is holding the city hostage," he said. Iryani said Saleh would be seeking immunity from prosecution and protection of assets.
More soldiers were milling around on Wednesday among the thousands of protesters who have been camped in the streets near Sanaa University since early February.
Some were wearing red roses to demonstrate support for what is being termed the "youth revolution". "We are its protection", said one soldier, with a plastic rose affixed to his rifle.
But protesters are divided over what they think of Mohsen, an Islamist who was popularly regarded as the second most powerful man in the country before he abandoned Saleh.
Some protesters have displayed the general's picture on their tents in the protest encampment in Sanaa, but opposition leaders regard his motives with suspicion and few would want him to have a role in any future transitional government.
Followers of the Houthi movement of Zaidi Shi'ites in the north resent his role in suppressing their recent rebellions.
"We see Ali Mohsen's joining us as a corruption of the revolution. The revolution is not against an individual but against a system," said Abdullah Hussein al-Dailami, 33, from Saada in the north. He said Mohsen had been Saleh's accomplice.
The standoff is taking its toll on Yemen's fragile economy.
Liquefied natural gas producer Yemen LNG has told customers unrest could lead to supply disruptions, leading stakeholder Total said.
Opponents complain that Yemen under Saleh has failed to meet the basic needs of the country's 23 million people. Unemployment is around 35 percent and 50 percent for young people. Oil wealth is dwindling and water is running out.
Additional reporting by Khaled Abdullah, Mohammed Ghobari, Alistair Lyon, Andrew Hammond; Writing by Andrew Hammond; Editing by Samia Nakhoul and Matthew Jones