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Although it is yet to be seen what effect (if any) the killing of Libyan leader Muammar Gaddafi by antigovernment

militants will have on President Ali Abdullah Saleh, it is likely to add urgency to his strategy

in some shape or form. It appears increasingly likely that Saleh and his cohorts genuinely believe

Yemen’s political structure can survive fates seen in Tunisia, Egypt and Libya by a combination of

compromise, perseverance and relevance to the US’s foreign policy.

Yemen remains in a state of political limbo, months after Saleh was forced to seek medical treatment in

Saudi Arabia following an attack on his residence in June 2011. Although Saleh sustained severe burns,

raising doubts about his ability to resume his duties, he continues to refuse opposition demands that he

resign the presidency. Vice-President Abdrabu Sayed Hadi Mansour has been acting as president in

Saleh's absence but he lacks the authority to maintain order. Meanwhile, the power vacuum led to clashes

between government and opposition forces, Islamist militants, and tribal groups. Although the Gulf Cooperation

Council (GCC) and the US had for some months been seeking to negotiate a power transition

from Saleh to the opposition, he has proved much harder to dislodge than the Tunisian and Egyptian

presidents earlier in 2011. Government forces are unable to quash the opposition, but the opposition is not

strong enough to force out the regime.

Indeed, measures such as a ceasefire between the government, rebels and defected army personnel signed

in October 2011 are likely to prove meaningless. With law and order breaking down, there is a golden

opportunity for Islamist militants and other groups to make parts of Yemen their own fiefdoms. The

deteriorating security situation is of great concern to neighbouring Saudi Arabia, which fears an influx of

refugees or militants to its own territory. It is also a risk to international shipping, given that the Asia to

Europe route passes through the Gulf of Aden and the Red Sea, both of which are adjacent to Yemen. The

approach to the Gulf of Aden is already precarious, due to instability in Somalia.

Meanwhile, many months of political protests and rising instability will undoubtedly take their toll on

Yemen's economy, which BMI forecasts to contract by around 13.1% in 2011. The IMF's representative

in Yemen expects inflation to surge to 30% in 2011, and the fiscal deficit to jump to around 10.0%, with

the latter negatively affected by damage to a key pipeline caused by armed groups in March 2011 (Yemen

relies on oil for 60% of revenues). The Yemeni rial, which is nominally pegged to the US dollar, will

likely depreciate further, raising the cost of imports.

Overall, we see no quick solutions to Yemen's woes. Even once Saleh is formally removed, there will not

be a restoration of stability. In fact, the opposite might occur, as various interest groups seek to maximise

their share of the political pie. BMI sees various scenarios playing out, including continuation of oneparty

rule, a democratic transition, an Islamisation of the state, civil war, or a peaceful secession of the

south. These are not mutually exclusive scenarios, and could occur in varying degrees together.