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Ali Abdullah Saleh is not an especially lovable ally. Once known as "Little Saddam"—whom he hero-worshiped back in the day—Saleh is the longest-serving ruler in the Middle East after Libya's Muammar Kaddafi. During interviews, the Yemeni president slouches in his chair like a bored schoolboy, anxiously knocking his knees together as a question is asked. If he thinks he has said something particularly witty, Saleh smirks and flashes a wink at his aides to make sure they have heard it. Otherwise Saleh, a self-styled field marshal, doesn't try very hard to please anyone, even visiting American officials, who control about $70 million in aid for Yemen's military. It's a budget that could soon be at least doubled, and he will continue to do as he pleases, whatever the U.S.'s advice happens to be. Saleh has a standard response when asked about cooperation with Washington. "We're not your employees!" he barks

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Fair enough. No Middle Eastern leader can afford to look like an American stooge, and a little theatrical insolence goes a long way in this part of the world. The last thing the Obama administration wants is another Pakistan or Afghanistan, where local resentment of America's tactics in fighting jihadists has seemed to create more jihadists. Still, Saleh is caught in a harsh spotlight now—one that Barack Obama plans to keep trained on him despite the risk that the Yemeni leader will lose credibility among his own people. U.S. officials have been surprised by what they've discovered about the resurgence of Al Qaeda in Yemen in the aftermath of the Christmas Day bombing attempt by a Nigerian student who says he was trained and equipped there. Al Qaeda in the Arabian Peninsula (AQAP), as this offshoot is called, is linked directly to the "core" group in Pakistan and it is now "one of the most lethal" affiliates, White House counterterrorism coordinator John Brennan said at a news conference. "We know there have been plenty of communications between FATA [the tribal regions in Pakistan] and Yemen," said another senior administration official who was authorized to speak only anonymously.

Nashville Couple makes $7500/month onlineCouple explains in interview how anybody can make money from home Get details... Nashville: Local Mom Makes $77/hr Online!Unemployed Mom Makes $6,397/Month Working Online! Read How She Did It. Get details... As a result, the smart-alecky antics of Ali Abdullah Saleh have begun to seriously grate on Washington. Saleh's U.S. critics point out that while his government occasionally cracks down, it has been hopelessly ineffective at keeping Al Qaeda from infiltrating the country—and possibly even Yemen's own security services. And as Yemen's economic situation gets more desperate—thanks in part to the Saleh government's corruption—Al Qaeda's presence in the country is growing. What's worse, some of the men around Saleh occasionally seem to be encouraging the militants: a 2006 prison break that reinvigorated Al Qaeda's local operations was considered to have been an inside job, though no evidence linked it directly to Saleh. Hawks in Congress like Connecticut Sen. Joe Lieberman breathlessly repeat warnings about Yemen going the way of Iraq and Afghanistan, destined to become "tomorrow's war."

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The problem Obama has is that if Saleh is an SOB, he's America's SOB. There just isn't anyone else Washington can rely on in Yemen, which is one reason why in September, Obama sent Saleh a letter pledging full U.S. support. A poor relation of Saudi Arabia that sits at the southern tip of the peninsula, Yemen is, as one British official puts it, "Afghanistan by the Sea." The nation is a topographical mix of desert and savage mountains, with a xenophobic tribal culture. Hopelessly fractious, divided by seven local dialects (Saleh, when he gets excited, will often abandon standard Arabic and lapse into his native Sanani), it is an urgent nation-building problem as much as a terrorist haven, experts say. Saleh is beset by an exploding population, crushing unemployment, an acute water shortage—Yemen's cities have water for only a couple of hours a day—and oil output expected to dry up in less than a decade. And he's running out of money: the president spends most of his dwindling reserves on fighting a grinding civil war in the north and a resurgence of separatist sentiment in the south.

Distracted and deficit-ridden itself, the United States may have neither the patience nor the resources to stop Yemen from sliding into failed statehood. Yet if Saleh fails, there is, one U.S. official says, "a real prospect that Yemen may become a Somalia on the Arabian Peninsula," a no man's land ruled by warlords. So the only policy choice is to give more aid to Saleh and hope that, much like Afghan President Hamid Karzai—who is sometimes dismissed as the "mayor of Kabul"—the Yemeni leader can gradually wrest control of more of his country than the capital city of Sana. Saleh himself compares his constant balancing and maneuvering among tribes and factions to "dancing in a circle of snakes."

Yemen is part of the fluid, ever-shifting "Jihadistan" that keeps opening up new fronts in troubled parts of the world, including neighboring countries like Somalia. As recently as 2006, Al Qaeda was thought to be all but eliminated from Yemen. But in a global game of whack-a-mole, every time U.S. forces crack down in one place, like Afghanistan, Pakistan, and Iraq, jihadists seem to pop up elsewhere. In the case of Yemen, therebirth of Al Qaeda is also a result of successful operations in neighboring Saudi Arabia

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By Kevin Beraino and Michael Hirsh and the participation of John Barry in Washington