Yemen has become America's surprise ally in fighting terrorism. But can the Muslim nation survive its own struggle with endemic poverty and extremism? By Kevin Whitelaw 3/13/06 SANA, YEMEN--The roar from the shoulder-fired rocket echoes off the jagged peaks, followed by the steady crackling of automatic weapons. Systematically, the Yemeni snipers, prone against the dusty desert terrain, lay down cover fire for an assault on a cluster of tents believed to be a terrorist camp. Tufts of colored smoke mark the position of a ground assault team as the disciplined marksmen fire deeper into the camp. This time, the assault is an exercise, but Yemen's elite Counterterrorism Unit has successfully carried out several high-risk operations against suspected terrorists and kidnappers. Portraits of six fallen soldiers, the unit's "martyrs," hang on the walls of their barracks. "They are without a doubt the bravest guys I have ever worked with," says Ed, a U.S. Army trainer on his second tour in Yemen. U.S. News was granted rare access to the CTU, a four-year-old quick-reaction unit in the Interior Ministry that has gained skills ranging from close-quarters combat and descending from helicopters on ropes to mountaineering. "With American training, they have gone from basic levels to become professionals," says Lt. Col. Abdul Rahman al-Mahweeti, the commander of the 140-man force. This elite unit is at the vanguard of Yemen's efforts to take on terrorism. As the ancestral homeland of Osama bin Laden, this desperately poor and deeply Islamic nation nestled at the tip of the Arabian peninsula has become one of America's most unexpected allies in counterterrorism. A land of gun-toting tribal factions, age-old smuggling routes, and desert villages perched in centuries-old defensive positions on high buttes, Yemen feels like a place frozen in time. The earthen houses in this ancient walled city date back to before the 11th century, and most Yemeni men still wear a jambiya, the traditional curved dagger, strapped to their waists. Today, Yemen itself is on a dagger's edge, precariously balanced between forces of modernization and the pull of powerful traditionalists. In the West, Yemen may be best known for its recent history of tribal kidnappings of tourists, the 2000 al Qaeda attack on the USS Cole, and the ubiquitous chewing of khat, a mildly narcotic leaf. But the government has helped roll up several al Qaeda cells and, at least until a recent prison break, generally allayed western fears that terrorists would find sanctuary in the large tracts of lawless, tribal lands. In deep denial. These days, though, Yemen is facing its own crisis, the result of deepening poverty and a government in denial about the depth of reforms needed to survive. In the past year, the United States and the World Bank have slashed their modest aid programs to Yemen, increasingly fed up with a bureaucracy that is one of the most corrupt in the world. "Yemen is teetering on the edge of failed statehood," warns one U.S. official. "It will either become a Somalia or get serious about transforming." For a nation awash in guns and crisscrossed by well-worn smuggling routes, the threat is grave. So far, the worst has not materialized, perhaps because Yemen has been motivated by its own suffering. The country was probably al Qaeda's first victim, when militants bombed two hotels in Aden being used by U.S. soldiers on their way to Somalia in 1992. The bombing of the USS Cole, which killed 17 U.S. sailors, sent Yemen's fragile economy even deeper into free fall. "The terrorists dealt blows to us before anyone else," says Rashid Muhammad al-Alami, the minister of interior. "When we fight terrorism, we fight it in pure self-defense." President Ali Abdullah Saleh echoed a similar sentiment in an interview (box, Page 42). "There is no backing away from the fight against terrorism," he said. "There is no halt."