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FACTBOX-Political risks to watch in Yemen

Source: Reuters - Thu, 25 Apr 2013 15:00 GMT
Author: Reuters
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SANAA, April 25 (Reuters) - President Abd-Rabbu Mansour Hadi is struggling to restore normal life to Yemen more than a year after his predecessor was forced to quit following protests and internal conflict that worsened a chronic economic crisis.

Hadi, who replaced Ali Abdullah Saleh in February 2012, has since taken several bold steps to restore state credibility.

In March he launched a national reconciliation conference aimed at mapping out constitutional reforms, and a month later replaced military leaders in a move to reunify the armed forces that split during the protests that began in 2011.

Here are some political risks facing Yemen:

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 anti-Saleh uprising. A U.S.-backed military offensive has driven the militants out but has not prevented attacks on the army and security apparatus.

What to watch:

- Further attacks and any re-emergence of militants in their former southern strongholds.

SOUTHERN SEPARATISTS AND NORTHERN REVOLTS

Southern secessionists say northerners have discriminated against them and usurped their resources since north and south Yemen unified 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 belong to the Zaydi branch of Shi'ite Islam, cite similar grievances of exclusion from the transition process. The rebels, who have clashed with militant Salafi Sunnis as well as with government forces, seek autonomy in the northern province of Saada.

What to watch:

- The fate of the newly launched political dialogue.

- Violence leading to civil war in the north or south.

FINANCE, WATER AND FUEL CRUNCHES

Prolonged turmoil has further crippled an already battered economy in a country of 25 million people that has acute water shortages and a malnutrition rate of over 40 percent.

Foreign reserves stood at $5.8 billion in February, $457 million less than in January. A third of Yemenis live on less than $2 a day. Unemployment is estimated at 35 percent.

Yemen's modest oil exports have been halted by repeated attacks on its pipelines, the latest of which occurred in April.

What to watch:

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

- Pressure on rial, government funding problems.

- Movement on emergency budgetary and humanitarian aid.

(Compiled by Sami Aboudi; Editing by Alistair Lyon)

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