The Republic of Yemen remains a country of concern to U.S. policy makers. Although Yemen itself is a resource-poor nation, it is strategically located next to Saudi Arabia ( Figure 1 ), one of the world's major oil producers, and the Bab al Mandab strait, through which commercial oil tankers carry an estimated 3.4 million barrels per day (3.5% to 4% of the global oil supply). Yemen's 1,184-mile coastline abuts the Red Sea and the Gulf of Aden across from the Horn of Africa, which until recently had been a major area of Somalia-based piracy. For more than a decade, U.S. officials and Members of Congress have been concerned with the threat of terrorism emanating from Yemen and directed against the United States. Yemen is home to Al Qaeda in the Arabian Peninsula (AQAP), an affiliate of Al Qaeda (AQ). The U.S. Department of Homeland Security considers AQAP to be the AQ affiliate "most likely to attempt transnational attacks against the United States." To date, the terrorist group has unsuccessfully attempted to target the United States at least three times (in 2009, 2010, and 2012) using concealed explosive devices designed to destroy commercial aircraft or detonate inside parcel packages. The intelligence services of Saudi Arabia helped disrupt two of these plots. Issues such as terrorism and Yemen's political stability are tied to broader questions regarding the country's long-term economic and environmental viability. According to the 2014 United Nations Human Development Index, Yemen ranks 154 out of 187 countries. Its poverty has been exacerbated by the quadrupling of its population over the last 30 years. Agricultural development has been decimated by water shortages, political strife, and lack of investment, making the country dependent on food imports for up to 90% of basic staples. In May 2014, the World Food Program estimated that 10 million Yemenis out of a total population of 25 million could be categorized as either severely food insecure or close to it. Such dire socio-economic prospects, combined with Yemen's proximity to both Africa and Arab Gulf states, have made it a global transit and destination point for migrants and refugees. Each year, thousands of asylum-seekers and economic migrants from Somalia, Ethiopia, and Eritrea make what can be a perilous journey to Yemen, where they either remain or seek passage to the wealthier Gulf monarchies. At the same time, at least a million Yemenis work abroad, and expatriate remittances provide a major boost to the local economy. Particularly for Saudi Arabia, the number of Yemeni laborers working in the kingdom is an apparent source of trepidation. In recent years, Saudi authorities have begun deporting more and more Yemeni workers, thus exacerbating bilateral tensions. Hopes for progress and stability arising from Yemen's 2011-2012 political transition have been eroding throughout 2014 and early 2015. Before that, the Obama Administration and other observers considered Yemen to be one of the few relative Arab Spring "success stories"; the government had new leadership (President Hadi) and had managed to bring all the nation's political factions together under the rubric of the National Dialogue Conference (NDC) in an attempt to reach consensus on governance. However, in Yemen no one group, including the central government, has a monopoly on armed force; various actors can act as "spoilers" to disrupt the system in pursuit of their own interests ( Figure 2 ); and that dynamic played out throughout 2014. When the NDC concluded in early 2014, Yemen's political transition was still several key steps from completion; a constitution had yet to be drafted, so a referendum on its approval had yet to be held, and subsequent presidential and parliamentary elections were still on hold. After two years of transition and with the prospect of several more, many observers were concerned that momentum would shift from President Hadi to those opposed to the internationally backed transition process—namely former president Saleh and his Houthi allies who sought to redraw Yemen's internal boundaries more to their favor. Within weeks of the National Dialogue Conference's conclusion, the Houthi movement, a Zaydi revivalist political and insurgent movement in the north that has been at war with the government on-and-off since 2004, launched another military offensive against various tribal allies of President Hadi. Their campaign has continued, culminating in the summer 2014 takeover of the capital Sana'a and other parts of Yemen. Their battlefield successes have created a new balance of power, and this evolving political dynamic may challenge outside powers, such as the United States, to reassess how they can exert influence inside Yemen in pursuit of their national security interests, such as counterterrorism. In 2014 and early 2015, the Houthis have disrupted the political transition that the United States and Saudi Arabia orchestrated three years ago and have threatened to intensify Yemen's internal conflicts. This allegedly has been done with the support of former president Ali Abdullah Saleh or tribes aligned with him (see below). Houthis took over the capital and forced the central government to sign a cease-fire deal which gave the movement veto power over the selection of cabinet ministers. Moreover, the movement's military maneuvers have sparked internal uprisings elsewhere: southern Yemenis have renewed calls for independence and threatened to secede. AQAP has called for new Sunni Arab recruits to wage holy war against the Houthis, whom they regard as "Shia heretics." With the Houthis in control of the capital and pressing their own political process forward, most observers expect the movement to meet significant resistance in the coming weeks and months ahead. Opposition to the Houthi takeover could come from their erstwhile partner, former president Saleh, Sunni tribes in the oil-producing province of Marib, Saudi Arabia, AQAP, and tribal/political movements such as Islah whom the Houthis defeated months earlier. The status and loyalties of various Yemeni military brigades positioned throughout the country is unclear, and it is possible that some of these units could engage the Houthis or, at a minimum, remain on the sidelines. With the anticipation of further domestic unrest, the United States has closed its Embassy and relocated U.S. government personnel. Many U.S. policy makers have been concerned with the safety of remaining U.S. personnel in Yemen, particularly after a January 19 incident at a checkpoint in the capital during which Houthi gunmen shot multiple rounds at an Embassy armored vehicle. No casualties or serious injuries were reported. The Defense Department claims that counterterrorism cooperation continues and U.S. Special Operations forces remain in Yemen, but that recent political instability has certainly affected overall U.S. counterterrorism capabilities. Nevertheless, multiple media reports suggest that the United States has carried out three drone strikes against AQAP targets since President Hadi's resignation on January 22. Overall, the United States and others in the international community have not formally recognized recent Houthi declarations and attempts to form a government, maintaining that President Hadi remains the legitimate president of Yemen. The United States has insisted that all parties adhere to previous internationally-brokered agreements, such as the 2011 Gulf Cooperation Council transition plan and the September 2014 Peace and National Partnership Agreement. Despite the Houthis' recent advances, the international community, including the United States, does maintain a significant degree of leverage over the Houthis. International aid, particularly grants from Saudi Arabia, have helped fund the central government, allowing thousands of Yemeni public workers to receive salaries. As of February 2015, Saudi Arabia has suspended its payments to Yemen, and if the Houthis continue to unilaterally dictate the terms of the country's political process, they may find it difficult on their own to finance Yemen's national budget. If Yemen's economy collapses as the result of a government breakdown, then the United States and other European nations would, however, most likely continue to support humanitarian aid to those in most in need. Since Iran backs state and non-state actors in sectarian conflicts throughout the Middle East, many analysts believe that the recent Houthi-driven crisis in Yemen may benefit the Iranian regime. For years, Yemeni leaders have claimed that Iran meddles in Yemeni affairs by supporting secessionist movements at odds with its rival Saudi Arabia. Many analysts long considered these claims to be exaggerated, aimed at attracting more Western attention and Gulf Arab financial aid. However, in recent years, there have been U.S. reports detailing allegedly increased Iranian activity in Yemen. In a War Powers letter to Congress, President Obama noted that in January 2013: A U.S. Navy warship with Yemeni Coast Guard personnel aboard entered Yemeni territorial waters, at the invitation of the Government of Yemen, to assist the Government of Yemen in intercepting and inspecting a vessel suspected of smuggling contraband into Yemen. Upon boarding and searching the vessel, a combined U.S. and Yemeni team discovered various conventional weapons and explosives, apparently of Iranian origin, concealed within the vessel. The vessel was escorted to Aden and turned over to the Yemeni Coast Guard on January 30, 2013. An unnamed U.S. official reportedly said in 2012 that Iranian smugglers backed by the Quds Force (an elite unit of Iran's Revolutionary Guard Corps) used small boats to ship AK-47s, rocket-propelled grenades and other arms to replace older weapons used by Houthi rebels in the north. In the south, Ali Salim al Beidh, the leader of the secessionist Southern Mobility Movement, has boasted publicly of his movement's willingness to accept assistance "from any regional actor"—a formulation widely interpreted to refer to Iran. Moreover, Hezbollah has reportedly provided financial aid and media training to southern Yemeni leaders in exile in Beirut, Lebanon. Many analysts are now comparing the Houthis in Yemen to Hezbollah in Lebanon in terms of their aspirations to form a "state within a state." One Houthi spokesman cautioned against taking this comparison too far: What we have in common with Iran or Hezbollah [because the comparison was also made between the so-called Houthis' takeover of Sanaa and the Hezbollah takeover of Beirut in May 2008] or Hamas and Islamic Jihad, is that we have a common stand vis-a-vis Israel and the United States and we will cooperate with any political actor in the region who stands in the face of the U.S. regional designs. But to grasp the complexities of the situation in Yemen, we should only look in Yemen for answers and not in Tehran or Lebanon for that matter. As the Houthis continue to consolidate their gains in Yemen, Iranian officials have become more outspoken in support of the group. According to one account, Ali Akbar Velayati, a spokesman for Iran's Supreme leader Ayatollah Ali Khamenei, said "the Islamic Republic of Iran supports the rightful struggles of Ansarullah [the Houthis] in Yemen, and considers the movement part of the successful Islamic Awakening." According to U.S. officials, AQAP, a U.S.-designated Foreign Terrorist Organization (designated in 2010) operating in Yemen, remains the Al Qaeda affiliate "most likely to attempt transnational attacks against the United States." AQAP has attempted on several occasions to bomb U.S. commercial aircraft and indoctrinate what the intelligence community refers to as "homegrown violent extremists" or HVEs. To date, there is public information on three AQAP attempted attacks or disrupted plots against the United States homeland, including: a failed bomb attack against Northwest Airlines Flight 253 on Christmas Day 2009; a failed attempt (disrupted by Saudi intelligence) to ship explosive parcel packages to Jewish sites in Chicago in October 2010; and a disrupted bomb plot (disclosed in May 2012), in which AQAP provided a concealed explosive device to a Saudi double agent who subsequently turned the device over to authorities. In addition to hatching transnational terrorist plots against the "far enemy" (the United States), AQAP is also focused on seizing territory from the Yemeni government ("the near enemy") and attacking neighboring Saudi Arabia. Since 2011, it has waged an Islamist insurgency in the country's remote southern provinces under the banner of a militia known as Ansar al Sharia (in English: Partisans of Sharia, or Islamic law). The group was most militarily successful in 2011, when infighting among elites in the capital distracted the central government from halting AQAP advances in the south. Since the government recaptured urban areas formerly under AQAP control in 2012, the group has continued to fight in other provinces, most recently in the province of Hadramawt. Overall, political and economic conditions in the provinces that formerly made up South Yemen (particularly the provinces of Abyan, Shabwa, Aden, and Hadramawt) offer fertile ground for AQAP's insurgency to grow ( Figure 3 ). In the south, the central government has a limited presence and disaffection is widespread, due in part to a lack of investment in the area. Politics are complex, with the interests of tribes, southern secessionists, local officials, and AQAP militants overlap in some areas and clashing in others. Yemenis who have returned from the battlefields of Afghanistan, Iraq, and Syria are interspersed with the population and seek young recruits in areas where tribal authority may have eroded. Though at times the government has succeeded in turning local actors against AQAP, the overall prospects for uprooting the group entirely in the foreseeable future remain slim. Although AQAP has not repeated its earlier successes at seizing territory, it is still able to harass government and tribal-allied forces, using tactics such as car bombings, kidnappings, and assassinations. For the United States, Yemen presents formidable counterterrorism challenges. Central government power has eroded and AQAP has evolved into both a transnational terrorist group and a domestic insurgency. In turn, press reports suggest that the United States has been forced to expand the mission and scope of reported covert operations in Yemen, from the sole pursuit of a few high value targets to a broader counterinsurgency effort in Yemen's remote provinces. U.S. airstrikes in Yemen, acknowledged by President Obama in his May 2013 speech at National Defense University, reportedly have increased markedly (according to various open source tracking) since political unrest began in 2011, and since AQAP created its Ansar al Sharia (AAS) militia. Multiple reports suggest that the Administration has been wary both of characterizing its air operations in Yemen as war, and of becoming entangled in Yemeni domestic politics and counter-insurgency operations in remote areas of the country, where it is difficult to distinguish friend from foe. John Brennan, the Director of the Central Intelligence Agency (CIA) and one of the leading architects of U.S. policy in Yemen, has at times expressed the difficulty of limiting the scope of U.S. air operations while also responding to the terrorist threat on the ground. In 2012 remarks at the Council on Foreign Relations, Brennan said: So while we have aided Yemen, the Yemeni government, in building their capacity to deal with an AQAP insurgency that exists on the ground there, we're not involved in working with the Yemeni government in terms of direct action or lethal action as part of that insurgency....But where we get involved on the counterterrorism front is to mitigate those threats, those terrorist threats....We're not going to sit by and let our fellow Americans be killed. And if the only way that we can prevent those deaths from taking place is to take direct action against them, we will do so. The Obama Administration has argued that it has the legal authorities, under both U.S. and international law, to conduct military operations against AQAP. Administration officials have repeatedly said that the United States is in "an armed conflict with al Qaeda, as well as the Taliban and associated forces," and that P.L. 107-40 , the 2001 Authorization for Use of Military Force (or AUMF), enables it to target AQAP. According to General Counsel for the Department of Defense Stephen W. Preston: The U.S. military currently takes direct action (capture or lethal operations) under the AUMF outside the United States and areas of active hostilities in the following circumstances: First, in Yemen, the U.S. military has conducted direct action targeting members of al-Qa'ida in the Arabian Peninsula (AQAP), which is an organized, armed group that is part of, or at least an associated force of, al-Qa'ida. The determination that the AUMF authorizes the use of force against AQAP is based on information about both AQAP's current and historical connections to al-Qa'ida and the fact that AQAP has repeatedly launched attacks against the United States, including the December 2009 "underwear bomber" attack and the 2010 "printer cartridge" attack. In addition, AQAP continues to plan and attempt attacks against U.S. persons, both inside and outside Yemen. After nearly five years of heightened U.S. military involvement in Yemen, ranging from apparent airstrikes against militants to the training and equipping of select Yemeni security forces, President Obama identified U.S. counterterrorism policy in Yemen as a "model" that can be applied elsewhere, such as in Iraq and Syria. Examples of presidential statements in 2014 include the following: Remarks by the President on the Situation in Iraq , June 19, 2014 – "You look at a country like Yemen—a very impoverished country and one that has its own sectarian or ethnic divisions—there, we do have a committed partner in President Hadi and his government. And we have been able to help to develop their capacities without putting large numbers of U.S. troops on the ground at the same time as we've got enough CT, or counterterrorism capabilities that we're able to go after folks that might try to hit our embassy or might be trying to export terrorism into Europe or the United States. And looking at how we can create more of those models is going to be part of the solution in dealing with both Syria and Iraq. But in order for us to do that, we still need to have actual governments on the ground that we can partner with and that we've got some confidence are going to pursue the political policies of inclusiveness. In Yemen, for example, a wide-ranging national dialogue that took a long time, but helped to give people a sense that there is a legitimate political outlet for grievances that they may have." Statement by the President on ISIL (Islamic State in Iraq and the Levant), September 10, 2014 – "But I want the American people to understand how this effort will be different from the wars in Iraq and Afghanistan. It will not involve American combat troops fighting on foreign soil. This counterterrorism campaign will be waged through a steady, relentless effort to take out ISIL wherever they exist, using our air power and our support for partner forces on the ground. This strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have successfully pursued in Yemen and Somalia for years. And it is consistent with the approach I outlined earlier this year: to use force against anyone who threatens America's core interests, but to mobilize partners wherever possible to address broader challenges to international order." Evaluating the strengths and/or shortcomings of various aspects of U.S. counterterrorism policy in Yemen may have important implications for future U.S. policy and military operations both in Yemen and elsewhere. Yet, it is difficult to assess Administration CT policy in Yemen absent consensus on what the end goals are in the broader U.S. fight against Islamist extremism. Unanswered is whether the United States seeks to contain the transnational terrorist threat in Yemen, or to eliminate it entirely. Proponents of the current U.S. approach assert that the United States has had some success in degrading AQAP's leadership without incurring American casualties and while maintaining broad international support. According to one analyst, "Yemen so far has worked....It's not stable. It's not clear what direction it is moving in, but the U.S. has exercised considerable influence there." Critics argue that any apparent U.S. successes scored against AQAP are partial or illusory; after five years, the terrorist group has not been defeated, it continues to plot attacks at home and abroad, and moreover, the threat has morphed from a handful of individuals to a broader movement that requires a much larger military response than is currently under consideration. According to one analyst, "This effort in Yemen is more focused on the leaders, and not necessarily helping the Yemenis defeat the insurgency....This approach in one sense is effective in containing and mitigating; it's not effective in defeating." Others suggest that Yemen's internal politics are so divisive and its long-term socio-economic prospects are so bleak, that it would seem that the United States may have to be militarily active there indefinitely in order to address an environment arguably enabling transnational terrorism. Finally, many observers suggest that because many U.S. military activities in Yemen may be classified, it is difficult to publicly assess whether U.S. CT efforts there can truly be considered a model. An extensive and transparent government-sponsored cost-benefit analysis of U.S. drone strikes in Yemen may not exist. According to one report, "The costs of drone strikes—both human and financial—are difficult to measure, but the benefits are perhaps even harder to quantify. It is nearly impossible to assess whether drone strikes in Yemen—or elsewhere—are achieving US counterterrorism objectives since the drone program is shrouded in such secrecy." Factors to consider when evaluating U.S. counterterrorism policy in Yemen may include the following: Minimal U.S. Civilian Casualties . Since Yemeni and Saudi militants merged to form AQAP in 2009, no U.S. civilians have been killed by a direct AQAP terrorist attack in the continental United States. However, the late Yemeni-American cleric and AQAP terrorist Anwar al Awlaki either directly motivated or indirectly inspired others to commit terrorist attacks on U.S. soil, such as the mass killing at Ford Hood, Texas, in November 2009 and, reportedly, the Boston bombings in 2013. In addition to directly targeting the U.S. homeland, AQAP continues to publish its online English-language magazine, dubbed "Inspire," in the hopes of indoctrinating more homegrown violent extremists to commit acts of terrorism on American soil. Minimal U.S. Military/Government Casualties . Since AQAP's inception in 2009 and subsequent U.S. lethal and non-lethal action to counter it, there have been no publicly reported killings of U.S. military personnel in Yemen. Proponents of the Obama Administration's policy in Yemen claim that the United States is able to effectively counter AQAP using a "light footprint" strategy which relies on minimal "boots on the ground," thereby reducing the risk of incurring casualties. Nonetheless, AQAP apparently continues to target American and other diplomatic personnel in Yemen. Having assessed heightened risk, the U.S. State Department has ordered a reduction of U.S. government personnel from Yemen. In May 2014, two U.S. Embassy officers killed two armed Yemeni s who allegedly were attempting to kidnap them.Success in Degrading AQAP's Leadership . Since 2009, apparent U.S. strikes have degraded AQAP's leadership, including the 2013 killing of the group's second-in-command, Saudi national Said al Shihri. However, several high value targets remain at large, and the U.S. Department of State's Rewards for Justice Program is offering rewards totaling up to $45 million for information leading to the locations of eight key leaders of AQAP including: Nasir al Wuhayshi (leader), Qasim al Rimi (military commander), Othman al Ghamdi (fundraiser), Ibrahim Hassan Tali al Asiri (bombmaker), Shawki Ali Ahmed Al Badani (plotted against U.S. Embassy in Sana'a in 2013), Jalal Bala'idi (regional commander), Ibrahim al Rubaysh (propagandist and recruiter), and Ibrahim al Banna (chief of security) ( Figure 3 ). Host Country Approval . Since President Hadi assumed office in 2012, he has permitted the United States to conduct airstrikes on Yemeni territory. In a 2012 interview with the Washington Post , Hadi remarked that "Every operation, before taking place, they take permission from the president." In December 2013, Yemen's Foreign Minister Abu Bakr al Qirbi said that drone strikes were a "necessary evil" and a "very limited affair" that happens in coordination with the Yemeni government. Proponents of the use of unmanned air strikes in Yemen suggest that drone warfare is not only safer for U.S. forces but less politically complicated for the U.S. and Yemeni governments, since it obviates the need to discuss how either party might detain and/or extradite terrorist suspects. However, in late 2013, after an alleged errant U.S. strike against a Yemeni wedding party killed more than a dozen innocent civilians, Yemen's parliament passed a non-binding resolution calling for an end to U.S. drone strikes in Yemen. International Support . Since taking office, President Obama has attempted to increase multilateral participation in addressing global conflicts, including Yemen. In conjunction with Arab Gulf States such as Saudi Arabia, the United States and other countries have worked through the United Nations to buttress President Hadi's Administration. The United Nations Security Council has passed three resolutions (UNSCRs 2014, 2140, and 2051), including UNSCR 2140 that could impose sanctions on anyone threatening the stability of Yemen. The United States and Great Britain also helped form the Friends of Yemen Group, a multilateral forum of 24 concerned countries that was launched at a January 2010 conference in London in order to raise funds for Yemen's development and increase donor coordination. The "Forever War"? President Obama himself has openly addressed the dilemma in countering violent extremist groups, stating "We cannot use force everywhere that a radical ideology takes root; and in the absence of a strategy that reduces the wellspring of extremism, a perpetual war—through drones or Special Forces or troop deployments—will prove self-defeating, and alter our country in troubling ways." Yet in the case of Yemen, though U.S. policy makers have articulated strategies to help Yemen stabilize both politically and economically in the long term, few public officials claim that such efforts are sufficient given the country's political, geographic, and religious divisions. Yemen's Commitment to Fighting Terrorism may be Fickle. Although most analysts would agree that President Hadi has been a committed U.S. partner, he or other future leaders may not always be inclined to cooperate with the United States against transnational terrorism. His predecessor, Saleh, adeptly used the terrorism issue as a means to secure international support and legitimacy for his rule, and he placated domestic jihadist groups when it was politically expedient to do so. While there is a dearth of reliable polling on Yemeni public opinion, anecdotal evidence suggests that cooperation with the United States is often viewed as unpopular, given repeated civilian casualties from air strikes, the continued U.S. incarceration of Yemenis at Guantanamo Bay, Cuba, and a perceived lack of financial support from the international community. Government Corruption and Mismanagement is Pervasive. Some observers note that while President Hadi himself may be viewed positively in the United States, there is widespread skepticism over the government's ability writ large to effectively provide services and security to the general population. In February 2014, AQAP successfully freed 19 of its militants from a central prison in the capital, despite warnings from prison officials to government officials that a planned AQAP prison break was imminent. Partner Ground Force Capacity is Lacking . Although President Hadi has removed former Saleh family members from the heads of Yemen's various security agencies, the military still remains divided and, according to the U.S. State Department, "The military and security restructuring process, intended to unify the command structure of the armed forces, remained incomplete, with front-line units often poorly trained or poorly equipped to counter the threat posed by AQAP." The government relies heavily on what are called "Popular Committees," armed non-state militias, to hold territory and conduct local law enforcement. Though members of these militias receive salaries, according to one expert, "they have limited capacity to cope with the deteriorating situation" and their members have been targeted by AQAP and its associated armed movement. Partner Air Force Capacity is Limited. According to multiple reports, Yemen's Air Force is woefully underequipped; its planes cannot fly nighttime missions due to lack of navigational instruments; its Soviet-era MiG 29 fighter jets do not carry precision-guided munitions necessary for targeted strikes; and, according to Jane's , "there were reports that levels of serviceability had declined alarmingly, with a substantial number of aircraft and helicopters being grounded as unsafe for flight." Yemen can deploy both fixed and rotary wing aircraft for troop transportation purposes, but it is difficult to see how the Yemeni Air Force could conduct operations against remote targets without U.S. support. According to the Wall Street Journal , "American officials in the past have said that without the U.S. drone program, AQAP would overrun parts of Yemen." Collateral Damage and Backlash A gainst the United States . Critics of U.S. airstrikes in Yemen argue that targeted killings sometimes kill innocent civilians, thereby fueling popular anger against the United States and increasing the popularity of terrorist groups like AQAP. Others note that some Yemenis have "offered qualified support for the strikes, casting them as the best of a slate of bad options." In summer 2014, the Washington Post reported that the Yemeni government had compensated families of those killed or injured by an alleged U.S. drone strike in December 2013. Yemen has formally been unified since 1990, though functionally much power remains vested in non-state actors. According to one expert on Yemen, "Since the rise of Islam, if not well before, the idea of Yemen as a natural unit has been embedded in literature and local practice. Unified power has not." Presently, Yemen is riven by regional, sectarian, and tribal fissures. Peripheral political and armed movements are constantly challenging the center. However, whereas in the past, regional strife in Yemen may have been of minimal consequence to the United States, today these conflicts threaten to exacerbate the terrorism threat, creating a multitude of armed conflicts that groups such as AQAP may exploit. Internal turmoil diverts Yemeni government attention and resources, thereby reducing both its will and capacity to counter transnational terrorism. As mentioned above, for a decade, the Houthi family, a prominent Zaydi religious clan that claims descent from the prophet Muhammad, have led an armed revolt against the central government and clashed with northern tribes and AQAP. The family seeks to redress historical grievances committed against Zaydis, expand their political base in their home province of Sa'da and beyond, and counter Saudi Arabian "Wahhabi" or "Salafi" influence in Yemen, including Saudi-sponsored proselytizing in Sa'da. More recently, the Houthis have been opposed to President Hadi's efforts through the National Dialogue Conference to create six federal regions in Yemen, whereby Sa'da would be absorbed into a region tied to the capital. For years, southern Yemenis have been disaffected because of their perceived second-class status in a relatively recently unified state from which many of their leaders tried to secede during the civil war in 1994. After the 1990 unification, power sharing arrangements were established, but in practice, north and south were never fully integrated, and the civil war effectively left then- President Saleh and his allies unwilling to consider further compromise. Largely as a result, southern Yemen's political and economic marginalization gradually worsened. Civil unrest in Yemen's southern governorates reemerged in 2007, when past civil servants and military officers from the former People's Democratic Republic of Yemen (PDRY, or South Yemen) began protesting low salaries and the lack of promised-pensions. That started as a series of demonstrations against low or non-existent government wages but turned into a broader "movement" channeling popular southern anger against the government based in Sana'a. The key demands of south Yemenis include equality, decentralization, and a greater share of state welfare. Many southerners reportedly have felt cut off from services and jobs and see persistent infiltration of central government influence in their local area. Southerners have accused the government of selling off valuable southern land to northerners with links to the regime and have alleged that revenues from oil extraction, which takes place mostly in the south, disproportionately benefit northern provinces. In addition, commerce in the once prosperous and liberal port city of Aden has deteriorated, as most business must now be conducted in the capital of Sana'a. In 2009, former southern secessionist leader and vice president Ali Salim al Beidh (alt. sp. Bid or Beidh) announced that he was resuming his political activities after nearly two decades in exile in Oman. He then declared himself leader of the southern separatist movement (known as the Southern Mobility Movement, or SMM) and called for the resurrection of the PDRY. He has many supporters, but there are enough rivals to his claimed mantle of leadership to keep the SMM divided and, therefore, less effective in its stance against the government. Bidh currently is in exile in Beirut, Lebanon, but occasionally broadcasts recorded messages on southern Yemeni television. The SMM has resisted attempts through either the now-concluded National Dialogue Conference (NDC) and by President Hadi himself to create six federal regions in Yemen. The NDC called for Aden and the Hadramawt to be the south's new two federal regions, with the remaining four to be northern, while the capital Sana'a would have a special status. The SMM eventually abandoned the NDC in protest, charging that northerners were driving its agenda. Southerners who support federalism believe in a two-federal region plan dividing the country between north and south and within the southern portion, between eastern (Aden) and western (Hadramawt) sub-regions. Southerners have held demonstrations calling on the United Nations to recognize the right of southerners to self-determination. Most international actors with prominent influence in Yemen, especially the United States and Saudi Arabia, publicly support Yemen's continued unity. The discovery and production of oil in the Arabian Peninsula has profoundly affected Yemen's economic history—perhaps not always for the better. In the 1960s, North and South Yemen were among the least developed countries outside of post-colonial sub-Saharan Africa. Their economies were essentially agrarian. However, as oil wealth transformed neighboring Saudi Arabia in the early 1970s through the mid-1980s, millions of Yemeni male laborers migrated to the kingdom, and their remittances increased national incomes several fold. There are estimates that 30% to 40% of Yemeni male laborers worked in Saudi Arabia at that time, supporting nearly half the population. However, while remittances from the oil boom drove incomes higher, the influx of cash did not stimulate long-term growth; instead, consumer spending rose and labor shortages ensued, making it difficult to reinvest capital in economically productive sectors. In 1990, Saudi Arabia expelled hundreds of thousands of Yemeni laborers in retaliation for Yemen's support for Saddam Hussein during the first Gulf War, and while Yemeni workers still remain in the kingdom, their remittances no longer have the same impact on national incomes as decades earlier. Yemen itself became an oil producer in the mid-1980s, though at far more modest levels than Saudi Arabia due to smaller domestic reserves. Since then, royalties from oil production have replaced remittances as the country's primary source of foreign exchange; however, hydrocarbon production also has not spurred long-term growth. Instead, former president Saleh used the country's limited oil funds to buy tribal loyalties, expand Yemen's bureaucracy with patronage jobs, and depress energy prices. The subsidization of fuel for the masses and private industry has encouraged oil smuggling on the black market. Although the former president was a shrewd political operator before Yemen began substantial production of oil, his exploitation of the country's natural resources helped solidify his rule for 22 years. Future leaders of Yemen could confront a public budget bereft of hydrocarbon-generated revenue. According to the U.S. Energy Information Administration (EIA), oil production last peaked in 2001 at 440,000 barrels per day (bpd); in early 2014, the country was producing less than a quarter of that (100,000 bpd). Revenue from hydrocarbon production accounts for nearly all of Yemen's exports and up to 50% of government revenue, yet most economists predict that, barring any new major discoveries, Yemen will deplete its modest oil reserves at some point between 2017 and 2021. Yemen's main oil export pipeline is informally called the Marib (alt. sp. Ma'arib, Maarib) pipeline. The 272-mile pipeline begins at a refinery in Marib province (east of the capital) and extends westward through difficult highland terrain until it reaches the Red Sea oil terminal of Ras Isa ( Figure 4 ). Its capacity ranges between 70,000 and 90,000 barrels per day (bpd). Because of its financial importance as the main conduit for the country's oil exports, the pipeline is frequently attacked by independent tribesmen or tribes allied with former president Saleh. Yemen's natural gas pipeline, which leads to its liquefied natural gas (LNG) terminal at Balhaf in the Gulf of Aden, also is frequently attacked. In 2012, LNG production was halted for nearly six months due to sabotage, damaging both exports and domestic electricity production generated from gas-fired power plants. Although Yemen's domestic production and export of oil have dropped for a number of reasons (lack of investment, theft, natural depletion of wells, lack of new exploration), sabotage has been a significant factor in the decline. In 2013, Yemen exported 124,000 bpd; a decade earlier it was exporting more than 350,000 bpd. According to the U.S. Energy Information Administration (EIA), "The combination of declining production in its mature fields and frequent attacks on its energy infrastructure has left Yemen's oil sector in poor shape. In 2013, there were at least 10 attacks on Yemen's oil and natural gas pipeline system, and some industry sources estimate closer to 24 attacks. In 2012, there were more than 15 attacks, and oil exports were completely offline for most of the first half of the year." Yemen's Oil Ministry estimates that sabotage has cost the government billions of dollars in import replacement and repairs. In December 2013, the ministry claimed that sabotage had cost the government $4.75 billion over a two-year period between March 2011 and March 2013. The government said that bombings against the Marib pipeline alone had cost the government about $400 million in lost revenue for the first quarter of 2014. According to one report, in 2013 Yemen spent more on oil imports ($2.93 billion) than it earned from oil sales at home and abroad ($2.66 billion). Globally, Yemen ranks in the bottom fifth of countries ranked by per capita gross domestic product. Its economy declined sharply amidst political unrest in 2011 and is slowly recovering; however, according to the International Monetary Fund (IMF), "the fledgling economic recovery remained insufficient to make a dent in unemployment and poverty." The IMF signed a $554 million lending facility agreement with the Yemeni government in September with the expectation that Yemen would curtail fuel subsidies. However, recent nation-wide conflict coupled with a possible restoration of subsidies calls into question the government's commitment to structural economic reform. Yemen has been facing a balance-of-payments crisis due to its annual budget deficit. It requires at least $1.6 billion a year in external aid to help cover its fiscal gap. According to the Economist Intelligence Unit , the IMF loan was conditional on raising other sources of funding from the World Bank, the Arab Fund, and Saudi Arabia. As of July 2014, Yemen's foreign currency reserves were only $5.2 billion, enough to secure only a few months of food and fuel imports absent replenishment. Humanitarian conditions for millions of Yemenis continue to deteriorate. The IMF estimates that Yemen has some of the highest poverty (54%) and youth unemployment rates (35%) in the world. According to the latest figures from the United Nations, approximately 60% of the entire Yemeni population is in need of humanitarian aid, and 44% of the population has been designated as "food insecure." International aid agencies consider Yemen one of the most food-insecure countries in the world. Since taking office, President Obama has indicated that the United States cannot be solely responsible for Yemen's development and security. In order to increase donor coordination and widen the scope of support, the United States and Great Britain helped form the Friends of Yemen Group, a multilateral forum of 24 concerned countries that was launched at a January 2010 conference in London. To date, total pledges by the Friends of Yemen equal $8 billion, of which an estimated $2.6 billion has been disbursed, including $1 billion in Saudi Arabian deposits at Yemen's Central Bank. The IMF notes that donors have earmarked funds for capital spending and humanitarian needs rather than cash assistance to help the government deal with its deficit. It remains unclear exactly how and within what time frame the funds will be disbursed to the Yemeni government. Disbursement of international aid also is related to concerns regarding domestic corruption. The Yemeni government, economy, and tribal and military elites are intertwined in a patronage system that makes reform efforts difficult. Control over state resources provides power brokers with authority and creates channels of influence and obligation that, if upset, could prove politically disruptive. Yemen was ranked 167 of 177 countries in Transparency International's 2013 corruption perception index. Although the Friends of Yemen process indicates some degree of international support for Yemen's development, Saudi Arabia is, by far, Yemen's most important economic benefactor. Saudi Arabia has long sought to shape political and security conditions in Yemen as a means of preventing threats from emerging on the kingdom's southern flank. The Saudi royal family has general concerns that a united Yemen, which is more populous than its northern neighbor, could one day challenge Saudi hegemony on the Arabian Peninsula. In the more immediate term, Saudi Arabia seeks to prevent Yemen-based terrorists from conducting attacks inside the kingdom, and Houthi rebels from establishing a semi-autonomous Iran-aligned Zaydi theocracy in northern Yemen. The United States seeks a stable, unified Yemen that is no longer home to transnational terrorist groups targeting Western or Saudi interests; however, whether or not the United States and the broader international community have the will or means to achieve this goal is an open question. A modern, politically unified Yemen has only been in existence for 24 years, and in many respects unity has been more aspirational than functional. The United States government has committed itself to furthering Yemen's unity while supporting the devolution of some power from the capital to the provinces. The convening of the 2013-2014 National Dialogue Conference, which the United States supported, was an attempt to foster reform through a Yemeni-driven process that addressed issues such as federalism, resource sharing, and restructuring of the armed forces. In September 2014, a State Department spokesperson said: We call on all parties, to participate peacefully in Yemen's transition process, which offers a historic opportunity to build an inclusive system of governance that ensures a stable and prosperous future for all Yemenis. The United States remains firmly committed to supporting President Hadi and all Yemenis in this endeavor and to our enduring partnership with the Yemeni government to counter the shared threat from al-Qa'ida in the Arabian Peninsula. However, as regional revolts have recently jostled the country's political order, U.S. and international efforts to support an orderly transition of power are unraveling. At a time when the constitutional drafting process remains incomplete following the 2011-2012 political transition, Yemen is trending more toward dissolution than unity, a pattern that may raise questions about the overall focus of U.S. policy. Houthi rebels and southern separatists almost certainly do not consider the transition process to serve their interests, but rather those of traditional northern Yemeni elites. The U.S. State Department has called on the Houthis to "cease efforts to take territory by force," to turn over "all medium and heavy weapons to the State," and to abide by a September 21, partially U.S.-brokered cease-fire. However, despite U.S. condemnations of Houthi unilateralism, at this juncture, the actions of separatist movements—rather than the international community—appear to be driving the terms of Yemen's delicate transition. On May 16, 2012, President Obama issued Executive Order 13611, which sanctions individuals who threaten the "peace, security, or stability of Yemen," and those who threaten to disrupt Yemen's political transition. From May 2012 to November 2014, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) had not sanctioned any Yemeni under E.O. 13611. However, on November 10, 2014, two days after the issuing of targeted United Nations sanctions under UNSCR 2140 (see below), OFAC designated three individuals, including former President Saleh and two Houthi leaders, as Specially Designated Nationals. In general, it is uncertain what kind of impact U.S. sanctions will have in deterring individuals from disrupting Yemen's transition. In most cases, possible targets of U.S. sanctions are unlikely to have substantial assets under U.S. jurisdiction. Broader international sanctions, such as those created under UNSCR 2140, may have a greater impact. According to one Yemeni journalist discussing the possibility of sanctioning former president Saleh, "[sanctions] could affect thousands of people, worth millions of dollars," however, it would be less potent against the Houthis, who "don't have bank accounts, and they don't travel, so sanctions on them will have no influence in any way, at least in the next couple of years." In annual foreign operations legislation, Congress does not typically earmark aid to Yemen, but the Administration makes country-specific requests for congressional consideration. After the passage of a foreign operations appropriations bill, federal agencies allocate funds to Yemen across multiple aid accounts. They then submit a country allocation report (653a Report) to Congress for review. Unlike countries or entities (such as Israel, Egypt, Jordan, and the Palestinians) that generally receive much larger amounts of U.S. assistance from two or three main accounts, Yemen receives U.S. aid in any given fiscal year from as many as 17 different aid programs managed by multiple agencies, including the Department of State, USAID, and the Department of Defense ( Table 1 ). The State Department reports that the United States committed more than $142 million in assistance to Yemen in FY2014, in addition to $256 million in FY2013 and more than $356 million in FY2012. CRS can account for most but not all of these allocations. Program details are available in congressional aid obligation notification documents provided to the authorizing and appropriating committees of jurisdiction. Yemen receives U.S. economic aid from multiple accounts, the largest of which are typically the Economic Support Fund (ESF) account, the Development Assistance (DA) account, and the Global Health Child Survival (GHCS) account. The State Department and USAID, in partnership with relevant Yemeni government ministries and local NGOs, channel funds from these accounts into various democracy assistance, global health, education, economic development, and humanitarian aid programs. U.S. democracy assistance supports programs to update Yemen's national voter registry, reform the judicial system, and empower women to participate in civic life. U.S.-funded global health programs seek to increase Yemenis' access to fresh water, improve nutrition, and expand the delivery of basic healthcare. Education programs are focused on improving school facilities, student attendance, reading skills, and teacher training. USAID funding for economic development supports micro-finance projects, market access for Yemeni agricultural products, and vocational training. In FY2013 and FY2014, the United States provided over $180.9 million in humanitarian aid to Yemen. These funds were provided to international aid organizations from USAID's Office of Foreign Disaster Assistance (OFDA), USAID's Food for Peace (FFP), and the U.S. Department of State's Bureau of Population, Refugees, and Migration (State/PRM). The United States is by far the largest single contributor of humanitarian aid to Yemen on record, with its assistance nearly double the amount contributed by the next largest donor (European Commission). U.S. military and other security assistance to Yemen comes from both State Department-managed accounts (FMF, NADR, INCLE, IMET) and Department of Defense-managed accounts (Section 1206). The United States provides Yemen's conventional armed forces modest amounts of FMF grants mainly to service aging and outdated equipment. The Defense Department's 1206 "train and equip" fund has become the major source of overt U.S. military aid to Yemen. Section 1206 Authority is a Department of Defense account designed to provide equipment, supplies, or training to foreign national military forces engaged in counterterrorist operations. In general, 1206 aid aims to boost the capacities of Yemen's air force, its special operations units, its border control monitoring, and coast guard forces. 1206 funds have supported the Yemeni Air Force's acquisition of transport and surveillance aircraft. Since FY2006, Yemen has received a total of $401.326 million in Section 1206 aid. The following is a list of existing statutes that could restrict U.S. assistance to Yemen under various conditions. Control of Armed Forces by Terrorist Organization. P.L. 113-76 , the FY2014 Omnibus Appropriations Act, states that "None of the funds appropriated by this Act for assistance for Yemen may be made available for the Armed Forces of Yemen if such forces are controlled by a foreign terrorist organization, as designated pursuant to section 219 of the Immigration and Nationality Act." Child Soldiers . The Child Soldiers Prevention Act of 2008 seeks to restrict certain U.S. military assistance to countries known to recruit or use child soldiers in their armed forces, or that host non-government armed forces that recruit or use child soldiers. The President may waive aid sanctions in cases where the continuation of aid would promote U.S. national interests superseding anti-trafficking policy goals. On September 30, 2013, President Obama issued a full waiver to Yemen. CRS Report RL34317, Trafficking in Persons: U.S. Policy and Issues for Congress , by [author name scrubbed] and Liana Rosen. Human T rafficking . Pursuant to the Victims of Trafficking and Violence Protection Act of 2000 (TVPA, Division A of P.L. 106-386 ), the United States may restrict non-humanitarian, nontrade-related foreign aid from certain governments that do not show progress in eliminating severe forms of trafficking in persons. The President may waive this restriction and has done so in the case of Yemen, most recently for FY2015. Budget Transparency . Direct government-to-government assistance, including aid to Yemen's central government, could be restricted under provisions in recent annual appropriations measures that pertain to the transparency of a recipient nation's national budget (see Section 7031 of P.L. 113-76 ). The Obama Administration has waived these restrictions, stating that continued assistance is in the U.S. national interest. The continued U.S. incarceration of Yemeni prisoners in Guantanamo Bay, Cuba, has long been a source of tension in U.S.-Yemeni relations. The Yemeni government has sought to repatriate and rehabilitate Yemenis detained at Guantanamo; however, U.S. officials have indicated concern that the Yemeni government, due to public pressure from Islamists, would be unable to properly detain and/or monitor returnees, some of whom may pose security threats. The Obama Administration suspended repatriations to Yemen after the December 25, 2009, failed airline bomb attack by AQAP. In May 2013, President Obama stated his intention to close the detention facility and lift the moratorium against repatriating Yemenis. Amongst the 149 prisoners there, at least 86 are Yemeni nationals, of whom 58 have been cleared to return to Yemen and are expected to be transferred on a case-by-case basis. Some Yemeni prisoners were on hunger strikes to alert the public of their situation, and an estimated 17 Yemeni prisoners were reportedly force-fed by prison authorities. Located at the southwestern tip of the Arabian Peninsula, Yemen struggles with the lowest per capita GDP in the Arab world ($2,300) for its population of 24.7 million people. The country's rugged terrain and geographic isolation, strong tribal social structure, and sparsely settled population have historically made it difficult to centrally govern (or conquer). This has promoted a relatively pluralistic political environment, but also has hampered socioeconomic development. Outside of the capital of Sana'a, tribal leaders often exert more control than central and local government authorities. A series of Zaydi Islamic dynasties ruled parts of Yemen both directly and nominally from 897 until 1962. The Ottoman Empire occupied a small portion of the western Yemeni coastline between 1849 and 1918. In 1839, the British Empire captured the Arabian Sea port of Aden near the country's southern tip. The British held Aden and some of its surrounding territories until 1967. The 20 th century political upheavals in the Arab world driven by anti-colonialism and Arab nationalism tore Yemen apart in the 1960s. In the north, a civil war pitting royalist forces backed by Saudi Arabia against a republican movement backed by Egypt ultimately led to the dissolution of the Yemeni Zaydi Imamate and the creation of the Yemen Arab Republic (YAR). In the south, a Yemeni Marxist movement became the primary vehicle for resisting the British occupation of Aden. Communist insurgents eventually succeeded in establishing their own socialist state (People's Democratic Republic of Yemen or PDRY) that over time developed close ties to the Soviet Union and supported what were then Palestinian and Marxist terrorist organizations. Throughout the Cold War, the two Yemeni states frequently clashed, and the United States assisted the YAR, with Saudi Arabian financial support, by periodically providing it with weaponry. By the mid-1980s, relations between North and South Yemen improved, aided in part by the discovery of modest oil reserves. The Republic of Yemen was formed by the merger of the formerly separate states of North Yemen and South Yemen in 1990. Ali Abdullah Saleh, a former YAR military officer and ruler of North Yemen (from 1978 to 1990) became president of the newly unified state in 1990. However, Yemen's support for Iraq during Operation Desert Storm in 1991 crippled the country economically, as Saudi Arabia and other Gulf states expelled an estimated 850,000 expatriate Yemeni workers and the United States cut off ties to the newly unified state. In 1994, government forces loyal to then President Saleh put down an attempt by southern-based dissidents to secede. Many southerners still resent what they perceive as northern political, economic, and cultural domination of the country. Yemen under Saleh and Relations with the United States Under Saleh's rule, political power gradually coalesced around his immediate family, whose members filled key posts in various security services. Corruption was rampant, and the country remained the poorest in the Arab world and one of the most destitute nations on earth. Saleh managed to stay in power for over four decades, but the country's long-term structural resource and economic challenges worsened during his rule. During Saleh's presidency, U.S.-Yemeni relations were constantly strained by a lack of strong military-to-military ties and commercial relations, general Yemeni disapproval of U.S. policy in the Middle East, and U.S. distrust of Yemen's commitment to fighting terrorism. Since Yemen's unification, the United States government has been primarily concerned with combating Al Qaeda and similar terrorist groups inside Yemen. Al Qaeda's attack in 2000 against the USS Cole , coupled with the attacks of September 11, 2001, a year later officially made Yemen a place of significant concern in the "war on terror." During the early years of the George W. Bush Administration, bilateral relations improved under the rubric of the war against Al Qaeda, although Yemen's lax policy toward suspected terrorists and U.S. concerns about corruption and governance led to limits on U.S. support. Saudi Arabia's forceful campaign against Al Qaeda in the Arabian Peninsula drove militants to seek refuge in Yemen in the middle of the decade, compounding Yemen's struggle with terrorism. In 2009, the Obama Administration initiated a major review of U.S. policy toward Yemen. That review, coupled with the attempted airline bombing over Detroit on Christmas Day 2009, led to a new U.S. strategy toward Yemen, referred to as the National Security Council's Yemen Strategic Plan. This strategy is essentially three-fold, focusing on combating AQAP in the short term, increasing development assistance to meet long-term challenges, and marshalling support for global efforts to stabilize Yemen. Yemen and the "Arab Spring" As unrest spread across the Arab world in 2011, a youth-led popular demonstration movement challenged President Saleh's rule in Yemen. First inspired by Tunisia's Jasmine Revolution and then galvanized by the overthrow of Egyptian President Hosni Mubarak, a student protest movement managed over the course of several months to maintain nation-wide demonstrations and attract broad popular support that called for Saleh to step down from power. Seeing an opportunity to displace the president and his family, Saleh's rivals from within the political and military elite, such as the powerful Al Ahmar family and the Commander of the First Armored Division, General Ali Mohsin (defected on March 21, 2011), joined opposition demands for the president's resignation. What began as a popular revolt against a longtime ruler ultimately evolved into a confrontation between competing elites for executive power. This confrontation turned violent in mid-2011, as street battles erupted in Sana'a and other cities between forces loyal to Saleh and supporters of his opponents. As political rivals openly fought in the capital, government forces were recalled from outlying provinces to protect the regime, leaving a security vacuum in areas known to harbor Islamist militants and other separatists. Soon, militias associated with Al Qaeda in the Arabian Peninsula seized territory in one southern province. Concerned that the political unrest and resulting security vacuum were strengthening terrorist elements, the United States, Saudi Arabia, and other members of the international community attempted to broker a political compromise. Saleh was able for several months to resist international attempts to broker his managed departure, in spite of a bombing attack that nearly killed him and forced his temporary exile to Saudi Arabia. However, a combination of greater international pressure, as exemplified by the passing of United Nations Security Council Resolution (UNSCR) 2014 (which reaffirmed UN support for a political settlement as soon as possible), defections from his loyalist security forces, and their mounting losses on the ground to rival tribal militias, seem to have led him to conclude that his political position had become untenable. In early November 2011, some European Union member states had begun to openly threaten sanctions, including asset freezes against the President and his family, if Saleh did not adhere to UNSCR 2014. Yemen's Tenuous Transition On November 23, 2011, after 11 months of protests and violence that claimed over 2,000 lives, Saleh signed on to a U.S.-backed, Gulf Cooperation Council (GCC)-brokered transition plan. As part of the plan and in return for his resignation, Saleh and his family were granted immunity from prosecution and the former president was able to retain his role as head of the General People's Congress (GPC), the former ruling party. After a 90-day transition period, Yemen held a presidential "election" in February 2012 with one consensus candidate on the ballot—former Vice President Abed Rabbo Mansour al Hadi. Al Hadi received 6.6 million votes and, on February 25, 2012, was inaugurated as president. After the election, attention shifted toward the next phases of the GCC plan: the convening of a national dialogue; the redrafting of the constitution; the holding of a constitutional referendum; the development of an electoral law; and the holding of parliamentary and/or presidential elections. In January 2014, after ten months of talks, Yemen's National Dialogue Conference, a forum that was backed by the United Nations for the purpose of reaching broad national consensus on a new political order, officially concluded without agreement between northern and southern politicians on how to organize a new federal system of democratic governance. The conference brought 565 representatives from Yemen's various political groups together to reach agreement on thorny political issues, such as power sharing between northern and southern regions, among other things. Tensions, including some linked to the previous existence of two separate Yemeni states from the 1960s to 1990, appear to linger as a result of a number of political and identity-based differences. The conference, which was supposed to end four months earlier according to the official transition timeline, concluded with President Hadi forming a committee (which he will lead) to determine whether Yemen should be divided into two or six federal regions. Southern Yemenis favor a two-region system, believing it will put them on more equal footing with the traditionally more politically dominant north while securing their access to a larger share of Yemen's oil resources, which are located in the south. Yemen's entire political transition was to end in February 2014, but at the conclusion of the National Dialogue, participants supported a presidential decree extending President Hadi's term by another year, presumably at least until February 2015. According to Jamal Benomar, the United Nations Special Adviser on Yemen, "The old regime is still very deep and some elements feel that they have been induced to give up a lot....They have a lot of resources and believe they can turn back the clock. The gains achieved in this transition could easily evaporate." Yemeni legislators and other politicians have yet to write a new constitution, hold a public referendum on its approval, write a new electoral law, and hold presidential and parliamentary elections. In sum, Yemen's transition could take several additional years.

Summary: This report provides an overview and analysis of U.S.-Yemeni relations amidst evolving political change in Yemeni leadership, ongoing U.S. counterterrorism operations against Al Qaeda in the Arabian Peninsula (AQAP) operatives in Yemen's hinterlands, and international efforts to bolster the country's stability despite an array of daunting socio-economic problems. Along with determining how best to counter terrorist threats emanating from Yemen, Congress and U.S. policy makers also may consider the priority level and resources that should be accorded to attempts to stabilize Yemen and to establish and maintain strong bilateral relations with Yemeni leaders. On November 23, 2011, after eleven months of protests and violence that claimed over 2,000 lives, then-President Ali Abdullah Saleh of Yemen signed on to a U.S.-backed, Gulf Cooperation Council (GCC)-brokered transition plan. In line with the plan, Yemen held a presidential election in February 2012 with one consensus candidate on the ballot—former Vice President Abed Rabbo Mansour al Hadi. President Hadi took office in February 2012 shortly after his election. He resigned on January 22, 2015, and is under house arrest, surrounded by fighters from the Houthi movement. Many Administration officials have declared that Al Qaeda in the Arabian Peninsula, the Yemen-based terrorist organization that has attempted several attacks on the U.S. homeland, presents the most potent threat among Al Qaeda's remaining affiliates. In recent years, the Administration and Congress have committed greater resources to counterterrorism and stabilization efforts there. Amid debate over the accomplishments and objectives of U.S. military and intelligence operations in Yemen, President Obama has suggested that U.S. policy in Yemen may inform U.S. policy in other cases, such as the military campaign against the Islamic State Organization in Iraq and Syria. It is unclear whether and how lessons from Yemen's specific situation might apply in other contexts. Many analysts assert that Yemen is or is becoming a failed state and safe haven for Al Qaeda operatives for a variety of reasons and as such is likely to remain an active theater for U.S. counterterrorism operations for the foreseeable future. Given Yemen's contentious political climate and its myriad development challenges, most long-time Yemen watchers suggest that security problems emanating from Yemen may persist in spite of increased U.S. or international efforts to combat them—an argument with which few would disagree given the events of early 2015. As recently as the fall of 2014, the Obama Administration expressed cautious optimism about Yemen's trajectory, though the 2014-2015 takeover of Sana'a by the Houthis, a clan from the Zaydi sect (related to Shia Islam) has upended Yemen's political transition. The State Department reports that the United States committed more than $221.4 million in assistance to Yemen in FY2014, in addition to $316.23 million in FY2013 and more than $353 million in FY2012. U.S. military assistance to Yemen has focused on bolstering its unmanned aerial surveillance capabilities and training its armed forces. Current annual appropriations language includes a provision that would restrict U.S. funding of Yemen's military were it to be controlled by a foreign terrorist organization.