Yemen's race against time: the Arab world's poorest country is facing economic collapse, and it's running out of water and oil, crises that are probably far more perilous than Al Qaeda's growing power or the escalating secret war against the jihadists being waged by Barack Obama.

Us President Barack Obama, awarded the Nobel Peace Prize in 2009 for "his extraordinary efforts to strengthen international diplomacy and cooperation between people", is stepping up his undeclared shadow war against Al Qaeda in Yemen.

He's blasting the jihadists with a whirl wind of air strikes by missile-firing drones as they struggle to set up an Islamist state on the doorstep of Saudi Arabia, the world's leading oil producer, whose monarch Osama bin Laden dreamed of bringing down.

But this may be a race against time to save Yemen, the poorest country in the Arab world, as its economy collapses after decades of inept governance under longtime President Ali Abdullah Saleh, who was forced to cede power in February, the fourth dictator driven from power amid the convulsions of the Arab Spring.

Yemen's oil reserves, pegged at 4 billion barrels in the 1990s, a meagre total by Middle East standards, are dwindling rapidly. That's critical because 75% of state revenue and 90% of exports come from off.

But more importantly, Yemen's water is also running out. The capital, the ancient mountain city of Sana'a with a population of 2 million, seems set to become the first metropolis in the world to run out of water by 2025.

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That is because the government allowed unlimited drilling of underground reservoirs. Saleh's regime provided little in the way of social services. The World Health Organisation estimates officials stole or squandered half of what little they allocated to healthcare.

Indeed, when Saleh was badly wounded in an assassination attempt in his palace on 3 June 2011, he had to be flown to Saudi Arabia for treatment because his neglect of Yemen's health service left him no choice.

'State failure'

Dominic Moran, the Arab World Project Coordinator for Greenpeace, says it's possible to trace a link between the growing intensity of the conflict between Al Qaeda and the US-backed government forces in southern Yemen in recent months and the crippling drought of 2008-09.

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The US National Intelligence Council noted in a report entitled Water Security a few weeks ago: "Water problems--when combined with poverty, social tensions, environmental degradation, ineffectual leadership and weak political institutions--contribute to social disruptions that can result in state failure".

Mark Janssen, of the Federation of American Scientists, observed: "This is particularly true in Yemen, which, perhaps more than any other state, sits at the nexus of water and national security ...

"Water insecurity may indeed adversely affect US national security in the future, but certain US national security operations can also contribute to water insecurity today."

Growing water scarcity, with highland acquifers shrinking by 10-20 feet a year, is threatening agriculture in Yemen, a country of 23 million, a population the World Bank says is exploding at an estimated 8% a year.

The water problem, obscured by the fighting and Al Qaeda's rise, is worsened because Yemenis use 40% of their available water to grow qat, a mildly narcotic plant that's Yemen's largest cash crop and highly prized by Arabs across the Arabian Peninsula, far more than they allocate to grow food.

"It's no coincidence that these areas are now outside government control," the Middle East Research and Information Project observed.

A report by the US firm McKinsey & Company for the Sana'a government said that worsening water shortages could cost Yemen 750,000 jobs and slash incomes by as much as 25% over the next decade.

Food emergency

Water shortages are causing a major demographic shift from the countryside to the cities, heightening the social crisis. Unlike the oil-rich Gulf states, Yemen cannot afford expensive desalination plants to overcome its water shortage. Yemen is one of the most arid countries on earth and relies almost exclusively on groundwater and rainfall for its water supply.

But it has other woes. The World Food Programme says one fifth of the population, around 5 million people, is in need of emergency food aid.

The United Nations has warned that 500,000 children may die in 2012 from malnutrition or famine, with around 750,000 children under five malnourished.

Rising food and fuel prices, drought, the global economic meltdown, political instability and years of bloodletting have all contributed to the crisis.

"For years the deteriorating crisis in Yemen has been ignored," lamented Joy Singhal, of Oxfam's humanitarian team in Yemen. "And now the country's at breaking point."

Al Qaeda's gains

In February, the wily Saleh was finally forced to step down by the Americans and their Gulf allies, ending 33 years of chaotic and corrupt rule.

For the last year of his hold on power, he fought for survival against a popular uprising, spawned by the Arab Spring, in which his troops shot hundreds of unarmed protesters in the streets of Sana'a. He was finally replaced in February by his long-time deputy, Abdu Rabbu Mansour Hadi, who appears to be America's creature, body and soul, unlike the Machiavellian Saleh.

His greatest skill was playing off tribes and factions against each other, as he did with Al Qaeda and the Americans for years, getting fat off the millions of dollars Washington provided for security that just wasn't there.

Now Hadi is busy trying to force Saleh's relatives out of the command positions they hold in the army and security services. But he's finding them deeply entrenched and in no hurry to surrender power, leaving Yemen in a political limbo and prey to Al Qaeda in the Arabian Peninsula (AQAP) as the divided army fights itself.

Meantime, Al Qaeda and its local affiliate, Ansar Al Shariah, have been taking over cities in the restive south and since June 2011 have held vast swathes of territory that Yemen's poorly led military is unable to recapture.

In one battle in March around the rebel-held city of Zinjibar, capital of Abyan Province, an AQAP stronghold, the jihadists and their allies killed 185 government soldiers and captured another 70.

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That was a massive defeat for Hadi, elected in a one-man presidential race in February, making it difficult to see how he will ever be able to push Al Qaeda out of Abyan. AQAP and Ansar Al Shariah are slowly establishing a rudimentary state in the south, which for years has been agitating for secession from rule by northerners in Sana'a.

Northern revolt

Meantime, in the mountainous north, Houthi tribesmen, who have aged an intermittent rebellion against the Sana'a government for years, are showing signs of exploiting the turmoil convulsing Yemen to rise up again.

There is increasing evidence that Iran, locked in an increasingly bitter confrontation with Iran, a potentially explosive extension of the 1,300-year-old religious feud between Sunni and Shi'ite, is arming and funding the Houthis, who belong to a branch of Shi'ite Islam.

This alarms the Saudis, who in 2010 had to step in to help Saleh crush the revolt in Houthi-dominated Saada Province on their southern border, the Saudi military's fiorst combat since the 1991 Gulf War.

Riyadh fears an Iran presence there, just as it worries about Al Qaeda mounting a new terror offensive against the kingdom from Yemen. Many of the jihadists with AQAP are Saudis who survived an ill-fated Al Qaeda campaign in the kingdom in 2003-06.

Bombing plot

The Americans consider AQAP to be the most dangerous of Al Qaeda's branches because it has made several attempts to attack the continental United States. The last was a plot in April to blow up a US-bound airliner with a bomb with no metal parts, that was thus able to get through airport security checks.

The plot failed when the would-be suicide bomber recruited by AQAP to carry out the attack turned out to be a double agent working for Saudi intelligence.

He turned over the bomb, an advanced version of the so-called underwear bomb with which AQAP tried to blow up a US jetliner over Detroit on Christmas Day 2009, to the Americans. The undercover operation was seen as a major blow against AQAP, but there's little doubt they'll try again.

The Americans' response has been to step up covert operations against AQAP, with MQ-8 Reaper unmanned aerial vehicles armed with Hellfire missiles, air strikes by eight F-15E Eagle jets on hush-hush deployment at the US counter-terrorism base in Djibouti, a former French colony across the Gulf of Aden from Yemen.

They even use cruise missiles fired from cruisers of the Bahrain-based US Fifth Fleet patrolling in the Red Sea and the Arabian Sea.

US forces also operate against Islamists of the Al-Shabaab group in Somalia which seems to be drawing closer to AQAP in what western security chiefs say could pose a threat to the chokepoint Bab El Mandeb Strait at the southern end of the Red Sea that links the Mediterranean to the Arabian Sea and Indian Ocean, a strategic shipping and oil tanker route.

Meantime, US Special Forces units, supposedly assigned to train Yemeni counter-terrorism troops, have been operating clandestinely in Yemen for some time now against Al Qaeda, but little is known of their activities. Overall, Obama seems determined to crush AQAP whatever the cost.

Seeking sanctuary

The battle could intensify because right now, in the wake of the 2 May 2011, assassination of Bin Laden by US Special Forces and the steady attrition of Al Qaeda Central's leadership through US drone attacks, the jihadist organisation is looking for a new haven.

They need somewhere safer than the Waziristan badlands of northwestern Pakistan that increasingly have become a death trap for AQ's core leadership under Bin Laden's successor, the veteran Egyptian jihadist Anwar Al Zawahiri.

Some security analysts believe that Yemen could become just such a sanctuary if AQAP can exploit the chaos there to establish a stronghold among sympathetic tribes and topple Hadi's government as it struggles to restore some semblance of order in a state that's steadily sliding towards collapse.

"It is likely that Zawahiri will try to exploit the regional chaos to achieve his central goal: establishing a new haven for Al Qaeda," Peter Bergen, an expert on Al Qaeda, observed is his new book on Bin Laden's demise, Manhunt.

"The one place where he might be able to pull this off is Yemen.

"Like Bin Laden, many of Al Qaeda's members have roots in Yemen, and US counter-terrorism officials have identified the Al Qaeda affiliate there as the most dangerous of the group's regional branches. And the civil war now engulfing Yemen has already provided an opportunity for jihadist militants to seize towns in the south," Bergen wrote.

"Surely Al Qaeda will want to build on this feat in a country that's the nearest analogue to pre-9/11 Afghanistan, a largely tribal, heavily armed, dirt-poor nation scarred by years of war."