(Reuters) - Yemen faces a series of trials, including rising al Qaeda militancy spreading beyond its borders, violence from southern secessionists and crushing poverty.
Yemen, a neighbor of top oil exporter Saudi Arabia, shot once more to the forefront of global security concerns in October when two air freight packages containing bombs -- both sent from the country and addressed to synagogues in Chicago -- were intercepted in Britain and Dubai.
Al Qaeda's Yemen-based regional branch, al Qaeda in the Arabian Peninsula (AQAP), claimed responsibility for the parcel plot, just under a year after the group's failed attempt to bomb a U.S.-bound plane that also caused global alarm.
Worries about instability and corruption have deterred significant foreign investment in Yemen beyond the oil industry, limiting economic growth and worsening unemployment.
Nearly a third of the workforce is out of a job. More than 40 percent of Yemen's 23 million people live on under $2 a day.
AL QAEDA AND ISLAMIC MILITANCY
The parcel bomb plot sealed AQAP's reputation as one of the most aggressive arms of al Qaeda's globally scattered sympathizers and affiliate groups. Its most recent attack outside Yemen had been a failed attempt by a Nigerian Islamist to down an airliner heading for Detroit on December 25, 2009.
The device, hidden in the underwear of Umar Farouk Abdulmutallab, failed to detonate. Abdulmutallab had visited Yemen and had been in contact with militants there.
In another audacious, if unsuccessful hit, an al Qaeda suicide bomber tried to kill Prince Mohammed bin Nayef, Saudi Arabia's anti-terror chief in August 2009.
The group had also been more active locally. In recent months, clashes between al Qaeda and Yemeni security forces have risen as it staged numerous attacks on foreign and government targets inside the country in response to a U.S.-backed crackdown against the militants.
In April, a suicide bomber tried to assassinate the British ambassador to Yemen and since June, militants have attacked several state targets in the south, including a raid on an intelligence headquarters in Aden which killed 11 people.
Western powers and Saudi Arabia have long feared al Qaeda wants to turn Yemen into a launchpad for attacks in the region and beyond. Washington has stepped up training, intelligence and military aid to Yemeni forces, helping them stage raids on militant hideouts, some of which have also killed civilians.
A U.S. diplomatic cable leaked last month confirmed the United States was itself carrying out air raids on al Qaeda targets in Yemen and was in an agreement with Yemen to conceal this from the public.
"We'll continue saying the bombs are ours, not yours," President Ali Abdullah Saleh was quoted as saying in the cable.
But Al Qaeda's actions over the past year have raised doubts about whether the campaign against AQAP was working.
