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Yemen is one Middle Eastern country Americans don't hear much about, even though it was the site of one of the earliest al-Qaida strikes against America - the attack on the USS Cole in 2000. Yemen was at first helpful in finding and punishing the militants in its midst. But as it's become less so, the US has become less happy with Yemen. For their part, Yemeni officials say Washington's new harder line could backfire. NPR's Peter Kenyon reports from Yemen's capital, Sana'a.

PETER KENYON: Yemen is a land endowed with stunning physical beauty and a long and rich human history as the ancestral heartland of the Arabs. It also is burdened with crushing poverty and explosive population growth and is viewed with mistrust by its wealthy Persian Gulf neighbors. Lately, Washington has been taking an even dimmer view.

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KENYON: Inside the walled capital city of Sana'a, the late-afternoon sun casts a gingerbread-house glow on the mud brick buildings that rise as high as nine stories above the narrow streets. Shopowners call out to the few European tourists wandering through one of the oldest continuously inhabited places on earth. Americans are even scarcer here. The State Department has issued a travel advisory, and the U.S. embassy evacuated nonessential personnel following a mortar attack in March. Perhaps most damaging to Yemen's reputation in Washington has been the government's failure to keep convicted Islamist militants in custody.

In 2006, a prison break freed a number of militants, including Jamal al-Badawi, one of the organizers of the 2000 USS Cole bombing at the port of Aden that left 17 American sailors dead - one of al-Qaida's more significant pre-September 11th attacks. Badawi was returned to custody, but then quietly released after agreeing to help locate other militants. American officials demanded his extradition, without success. Yemen is at a crossroads, says a senior diplomatic source here, who adds that there has been a series of internal problems that have reinvigorated al-Qaida in Yemen, and as yet there's been no real injection of governmental effort to stop it. That, he says, has to happen.

Former Yemeni Prime Minister Adbul Kareem al-Eryani says security is a serious problem for his struggling country.

Dr. ABDUL KAREEM AL-ERYANI (Former Prime Minister, Yemen): We do have a problem with terrorists. There's no question about it. We have a view about how to handle some of the cases, which is not the right policy as far as the United States is concerned. But I think the debate should continue.

KENYON: Yemeni officials argue that for one thing, their constitution bars the extradition of Badawi, and for another, handing over Yemeni citizens to the Americans is politically impossible with elections looming next year. As for confrontation, one senior Yemeni official says they tried that a few years ago in the mountainous north, and the ensuing stalemate served mainly to weaken the army's image and embolden other antigovernment groups.

Analyst Abdullah al-Fiqah at Sana'a University says he initially opposed the government's effort to open a dialogue with the militants, but now he's not sure there's any other option.

Mr. ABDULLAH AL-FIQAH (Analyst, Sana'a University): You know, some people in the West think, well, the Yemeni government is making friends with al-Qaida. Well, if you cannot make them enemies, then it's better for you to make them friends. I don't think the government is in a position that it can confront al-Qaida. They can overrun the government if they want to.

KENYON: Unfortunately for Yemen, its Gulf neighbors seem to prefer it in a weakened state. When formerly socialist south Yemen fought a civil war for independence from the north in 1994, all six members of the Gulf Cooperation Council sided with the rebels.

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KENYON: Perhaps not unexpectedly, the Bush administration's foreign policies have made it as unpopular here as anywhere in the region. Yemenis say sermons at Friday Muslim prayers frequently condemn both America and Israel. Meanwhile, a series of other conflicts continues to distract the government. To the north, Islamist militants are increasingly aggressive, and in the oil-producing parts of southern Yemen, infighting has sprung up between tribes vying for jobs and revenues. Dr. Eryani, the former prime minister, says he understands the American desire to see terrorists brought to justice. But suspending aid to a country as desperately poor and volatile as Yemen could rebound in unexpected ways.

Dr. ERYANI: Totally unproductive. Absolutely. You see, Yemen is a very critically positioned country. Disruption of public life in Yemen is very serious to its neighbors. And the same is true in the interests of the United States. So squeezing is not the answer.

KENYON: At the moment, Yemen is being squeezed by a severe drought and critical water shortages, soaring food prices and plummeting tourism revenues. With the U.S. deeply involved in its own election-year drama, Yemenis don't expect much change in their status as a place that doesn't get much attention until something goes very wrong indeed. Peter Kenyon, NPR News, Sana'a.

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