Where is Yemen?
In one of the most volatile regions on earth. Located at the southern tip of the Arabian Peninsula, the desperately poor, politically unstable Republic of Yemen borders Saudi Arabia to the north, Oman to the east, and, across the Gulf of Aden to the south, Somalia. A unified state only since 1990, Yemen is ruled by President Ali Abdullah Saleh, 67, but his corrupt, repressive government holds limited sway outside the capital city of Sanaa. The rest of the country consists largely of oases scattered among rugged mountains and vast, sprawling swaths of desert. Out in these sparsely populated regions, tribal warlords exercise virtually unchecked power.

Is the country peaceful?
Quite the opposite. Yemen is one of the most heavily armed societies in the world, with an estimated 60 million guns for a population of 28 million. Saleh’s army is currently embroiled in two separate armed conflicts. In northern Yemen, a Shiite army, the Houthi, is trying to bring down Saleh’s Sunni-dominated government. Meanwhile, separatists are waging a secession struggle in the south, which was autonomous until 1990. They are angry that their region gets little aid from Sanaa, though the south contributes 80 percent of Yemen’s $2 billion or so in annual oil revenue. With his forces stretched thin, Saleh can bring few resources to bear against an increasingly aggressive al Qaida presence.

How long has al Qaida operated in Yemen?
Al Qaida’s presence in Yemen dates back at least to 1992, three years after Osama bin Laden founded the group. It launched sporadic attacks on U.S. troops stationed in Yemen, and in 2000 carried out the bombing of the USS Cole, which killed 17 American sailors. It has also attacked the U.S. and British embassies in Sanaa. Its ranks have swelled in recent years, as jihadists returning from fighting in Iraq and Afghanistan have sought safe haven in this largely lawless Islamic state. They’ve been joined by al Qaida members who fled Saudi Arabia when the government there cracked down on the movement following 9/11. Today, say Western intelligence officials, there are anywhere from 300 to 500 hard-core al Qaida fighters in Yemen, aided and sheltered by sympathizers. Last year, Yemen’s homegrown al Qaida movement formally merged with the Saudi wing to form al Qaida in the Arabian Peninsula, which Western intelligence says dispatched Nigerian Umar Farouk Abdulmutallab on his failed mission to bomb an international flight to Detroit on Christmas Day.

Why does Yemen breed terrorists?

An unemployment rate above 35 percent has left many of Yemen’s young men deeply disaffected and open to the message of radical imams. The imams blame the West for the Arab world’s humiliating poverty, and preach that violent struggle will restore their dignity and establish Islam’s dominion over the world. “You cannot prevent contacts between these impressionable young men and their jihadist heroes,” says Yemeni political analyst Abdul-Ghani al-Iryani. Among these heroes is Osama bin Laden, whose father was born in Yemen, and Imam Anwar al-Awlaki, the American-born scion of a prominent Yemeni family who was radicalized by an 18-month stint in the country’s notoriously brutal prison system. “He is charismatic, and some students listen to him,” says Usama Hasan, a moderate Muslim academic in Britain. Al-Awlaki reportedly met last year with Abdulmutallab before his bombing attempt, and exchanged e-mails with Nidal Hasan, the U.S. Army psychiatrist accused of massacring 13 soldiers at Fort Hood, Texas, in November.

What is the U.S.’s role there?
The Obama administration is supplying Saleh’s forces with weapons, intelligence, and training, with some success. The Yemeni army has recently carried out several attacks against al Qaida strongholds. But with anti-Western sentiment running high, Saleh can’t appear to be too close to the U.S. “The government has to care for its survival, and its survival depends on powerful tribal and social groups,” says Yemeni political scientist Abdullah al-Faqih. “And some of these groups have strong connections to al Qaida.” When asked about Yemen’s relationship with the U.S., Saleh’s standard response is: “We’re not your employees!’’

Is there any hope for Yemen?
The future looks bleak. The country’s scant oil reserves will vanish altogether within a few years, raising fears of total economic collapse. Water supplies are running out. And poverty, which grips almost half the population, continues to deepen as the country’s birth rate explodes—Yemeni women have an average of six children apiece. Yemen’s government is wary of appearing to be a puppet of the U.S., but it needs its help to maintain power. And despite misgivings about Saleh’s commitment to fighting al Qaida, the U.S. needs Yemen’s cooperation to keep itself secure. So they’re stuck with each other. “The trust between the U.S. and Yemen comes and goes,” says former Foreign Minister Abdel-Karim al-Iryani. “Everyone has his own calculations on what they want from this relationship.”

Saleh, the survivor
Foes underestimate Ali Abdullah Saleh at their peril. In 1978, Saleh, then a young army officer, was named president of what was then North Yemen, after the two previous presidents were assassinated. Military leaders installed him in the post believing he would serve as their puppet. Almost 32 years later, he remains president of now-unified Yemen, maintaining power by buying off tribal leaders, installing relatives and members of his Hashid tribe in key government offices, and cleverly pitting his enemies against one another. Friends and enemies alike consider Saleh—once dubbed “little Saddam’’—to be a canny player of power politics. His time may be running out, however. He briefly considered resigning in 2006, but instead was re-elected in a vote marred by violence and the jailing of opposition politicians. He’s now angling to install his oldest son, Ahmed, as his successor, though many doubt that the son has his father’s smarts and iron will. “Ruling Yemen is difficult,” Saleh himself has admitted. “I always say it is like dancing with snakes.”