Al-Jazeera reports that the Yemeni army killed 35 al-Qaeda fighters in the south of Yemen during fierce fighting this week.  The attack came after al-Qaeda claimed responsibility for a suicide bombing at a military parade rehearsal in the capital, Sana'a, and killed 100 Yemeni soldiers.

Western and Gulf Arab countries have watched with mounting alarm as a political crisis in Yemen has given al-Qaeda the opportunity to develop a base from it can draw recruits and launch attacks around the world.

The Lowy Institute has been monitoring the situation in Yemen. Non-resident Fellow Dr Rodger Shanahan, co-authored an in-depth research paper with Dr Sarah Phillips in late 2009, which forecast the rise of al-Qaeda in Yemen.

Dr Shanahan says, 'Al-Qaeda took advantage of the Yemeni government’s paralysis during the year-long standoff between Saleh and the opposition to seize and hold ground in the country’s south.  The virtually unsupported Yemeni military suffered heavy losses in increasingly sophisticated conventional attacks by al-Qaeda and its affiliates.

'Now the United States is simultaneously supporting its own and Yemeni government interests through an increasingly aggressive campaign of drone strikes logistical, intelligence and advisory  support at the same time as supporting the Hadi regime through executive orders.  President Obama has staked much on the future of Yemen, citing it at the recent G8 meeting as a possible model for the peaceful transition of power in Syria.

'But al-Qaeda also realises that its survival is at stake, and is using its religiosity and opposition to external interference as rallying cries  for support amongst the local population. 

'With continuing unrest in the north murmerings of a renewed confidence amongst southern secessionists and a full-blown war against Islamic militants the prognosis for a successful transition of power is not good,' he says.