Yemen is not currently a failed state, but it is experiencing huge political and economic problems that can have a direct impact on U.S. interests in the region. It has a rapidly expanding population with a resource base that is limited and already leaves much of the current population in poverty. The government obtains around a third of its budget revenue from sales of its limited and declining oil stocks, which most economists state will be exhausted by 2017. Yemen also has critical water shortages and a variety of interrelated security problems. In Sa’ada province in Yemen’s northern mountainous region, there has been an intermittent rebellion by Houthi tribesmen (now experiencing a cease-fire) who accuse the government of discrimination and other actions against their Zaydi Shi’ite religious sect. In southern Yemen, a powerful independence movement has developed which is mostly nonviolent but is increasingly angry and confrontational. More recently, Yemen has emerged as one of the most important theaters for the struggle against al-Qaeda. Yemen is among the worst places on earth to cede to al-Qaeda in this struggle, but it is also an especially distrustful and wary nation in its relationship with Western nations and particularly the United States. All of these problems are difficult to address because the central government has only limited capacity to extend its influence into tribal areas beyond the capital and major cities. The United States must therefore do what it can to support peaceful resolutions of Yemen’s problems with the Houthis and Southern Movement while continuing to assist the government’s struggle against al-Qaeda forces in Yemen. It must further pursue these policies in ways that avoid provoking a backlash among the Yemeni population which will not tolerate significant numbers of U.S. combat troops in Yemen.