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In the midst of Yemen’s ongoing violence, President Abd-Rabbu Mansour Hadi has been making carefully calculated progress towards stabilisation, steadfastly removing allies of predecessor Ali Abdullah Saleh and proving himself committed to long-term systemic reform

A suicide bomber killed senior Yemen military commander Major General Salem Ali Qatan in Aden on 18 June.

Sanaa had been hoping its Gulf neighbours – and Saudi Arabia in particular – would help plug its massive budget deficit at the June donor meeting, now postponed.

In a blow to hopes that vast sums of aid would soon be pouring into Yemen, Riyadh has cancelled a donor meeting planned for the Saudi capital in late June, aid agency and diplomatic sources have told GSN.

As well as the urgent need to plug a projected budget deficit of $2.3bn-$2.4bn in 2012, Yemen is facing a growing hunger and poverty crisis which aid workers say will not be averted without a rapid injection of funds.

A suicide attack on a rehearsal for a military parade has killed scores of Yemenis and wounded hundreds more. Al Qaeda linked militants have claimed responsibility for the bombing, which is seen as the consequence of a stepped-up army campaign

Saudi Arabia has pledged $3.25bn in aid to Yemen, at the start of a one-day donor meeting in Riyadh.

Published in May 2012, this graphic illustrates data for the Middle East North Africa region taken from the IMF World Economic Outlook. Selected indicators include real GDP, consumer price inflation and current account balance. A map of the region is shaded to show revisions to 2012 GDP growth forecasts, while a chart shows fiscal breakeven oil prices.

Yemen is two months into a transition period, expected to last two years, that is intended to steer the troubled state towards multi-party democratic elections. Ali Abdullah Saleh, who was president for 33 years, finally stepped down in early 2012. He was replaced by Abd-Rabbu Mansour Hadi, vice-president since 1994, who was sworn in on 25 February at a ceremony in Sanaa.

After more than two weeks of wrangling and the temporary closure of Sanaa airport, the head of Yemen’s air force, Mohammed Saleh Al Ahmar – a half-brother of former president Ali Abdullah Saleh – stepped down on 24 April, a resignation seen as a major victory for President Abd-Rabbu Mansour Hadi in his attempt to restructure the military

There appears to have been a rise in Al-Qaeda activity in Yemen since Abd-Rabbu Mansour Hadi became president in February (GSN 918/1). Al-Qaeda in the Arabian Peninsula and the related Ansar Al-Sharia group have claimed responsibility for a number of major attacks, and seem to have expanded their operating arena.

Summary The US has been talking up Iranian involvement in Yemen, suggesting Tehran is involved not only in the northern conflict between Houthis and Salafis, but also in the southern separatist movement – a view many analysts approach with caution, saying support is most likely to be in the form of money or influence, rather than military.

Saudi Arabia’s deputy consul in Yemen was kidnapped outside his house in Aden on 28 March. According to newswires, gunmen snatched Abdallah Al-Khalidi as he was about to get into his car, bundled him into another car and sped off.

Saudi Arabia’s covert operations have been mostly focused in Yemen, a country that some US observers term ‘Saudi Arabia’s Mexico’. In the 1960s, Saudi Arabia bankrolled the north Yemen civil war, a long-running royalist guerrilla war against the new Egyptian-backed Yemeni Arab Republic that inflicted just under 100,000 Egyptian fatalities in eight years.

Like Saudi Arabia, the UAE has acted to counter purported Iranian influence in Yemen’s Houthi uprising.