While al Qaeda has recently declared Yemen a new sanctuary, the growing aggressiveness of the government against any opposition makes it unlikely that the terrorists will be doing anything significant there, any time soon. Yemeni government has also been unable to give its full attention to outfits like al Qaeda lately. That's because Yemen has been fighting Shia Islamic militants in the north for most of the year. The government believes that the Shia rebels are getting support from Iran. For the last two months, the army has been steadily advancing in the north, forcing over 100,000 civilians from their homes. Hundreds of armed rebels have died, and whatever aid Iran may be providing, isn't working.
The Shia rebels want to restore local Shia rule in northern Yemen. This rule was shut down by the central government in 1962. The Shia of Yemen are not mainstream Shia, but a sect called the Zaydis. There are about a million of them in Yemen, and they dominate the northern part of the country. Overall, about fifteen percent of the 19 million people in Yemen, are Shia. The rest are mainstream Sunni. In nearby Saudi Arabia, Shia are considered heretics. The bin Laden family are Sunnis from Yemen, and Osama bin Laden's al Qaeda has been brutal in its persecution of Shias. Ironically, the Sunni dominated government of Yemen is quite pro-American, while the Shia, particularly the several hundred thousand followers of Shia radical al Houthi, are very anti-American. While al Qaeda are present in Yemen, rebellious Shia like the al Houthi crowd, are considered a much bigger domestic problem.
While the battles with the Shia tribesmen have been going on since 1962, they have been more intense in the last five years. Until last year, things had been quiet for two years. In 2005, nearly a thousand troops and tribesmen died, while in 2004 some 400 died. There have been several truces, but the al Houthi supporters keep breaking them. The rebels keep demanding more concessions from the government (which is a coalition of Shia and Sunni groups). What is ironic about all this is that the president of Yemen, Ali Abdullah Saleh, is a Zaidi. But the rebels consider Saleh a traitor for dealing with the Sunni majority.
The government also has many enemies among the population because of a civil war that ended, sort of, in 1994. That war was caused by the fact that, when the British left Yemen in 1967, their former colony in Aden because one of two countries called Yemen. The two parts of Yemen finally united in 1990, but a civil war in 1994 was needed to seal the deal. That fix didn't really take, and the north and south are pulling apart again. So it should be no wonder why Yemen is not devoting all its attention to al Qaeda operations within their borders.
Long term, the situation is not good for Yemen. It is the poorest country in Arabia, with a third of the workforce unemployed. There are growing water shortages and dim prospects all around.