Concerns are mounting about terrorism in Yemen since the botched attempted bombing of a US airliner on Christmas Day. US President Barack Obama has said al-Qaeda's offshoot in Yemen was behind the failed attacks.

The issue was on the agenda when the German Foreign Minister, Guido Westerwelle, made a surprise visit to Yemen on Monday at the end of his Middle East Tour.

As Washington ramps up its counterterrorism role in Yemen and raises pressure on the government in Sanaa to crack down on Islamic extremists, some say that a single-minded focus on military force is deeply flawed.

"The United States and other Western powers need to provide long-term economic development to reduce poverty and raise educational standards," Yemen's Foreign Minister Abu Bakr al-Qirbi said in an interview with The Washington Post last week. That, he said, would help combat terrorism "in a more effective fashion than just using military force."

That view is echoed by international aid agencies working on the ground in Yemen, the Arab world's most impoverished nation.

"Poverty isn't the only explanation for terrorism. But it's true that Yemen's extensive social and economic pressures contribute to making the country unstable - and thus make it easier for terrorist organizations to exploit people's grievances and recruit them," Felix Eikenberg, head of Germany's Friedrich Ebert political foundation in the capital Sanaa, told Deutsche Welle.

Germany, whose aid involvement in Yemen dates back 40 years, is one of Europe's biggest donors to Yemen.

Massive social and economic pressures

Home to around 24 million people, Yemen is grappling with one of the world's highest population growth rates, rapidly depleting groundwater levels, and an unemployment rate of more than 20 percent.

The country's economy is in tatters as it runs out of its meager oil reserves.

"Some 70 percent of the state's revenues currently come from oil. But oil reserves are dwindling so rapidly that we estimate Yemen could become an oil importer in ten years," Eikenberg said.

Total oil production has slumped from about 440,000 barrels per day in 2001 to 300,000 last year, according to the US Energy Information Administration.

All that has contributed to widespread poverty in the country. Children suffer from a 50 percent malnutrition rate; more than 40 percent of Yemenis live below the poverty line, 18 percent on less than a dollar a day.

Germany a major donor

Given the magnitude of its problems, Yemen receives comparatively little per-capita international aid. The World Bank and the IMF play an important role in financing Yemen's fragile economy.

The handful of bilateral donors to Yemen include the Netherlands, the US, Japan and Britain, Germany remains one of the largest European players with annual aid amounting to about 37 million euros.

Aid for 2009 and 2010 has been budgeted at 79 million euros. Much of it is focused on easing Yemen's severe water shortage, boosting primary education in the country - Yemen had a literacy rate of 40 percent in 2007 - and helping diversify its oil-dominated economy.

Zoe Nautre, an expert at the Berlin-based German Council on Foreign Relations who spent a year in Yemen reviewing German government aid efforts, said Germany enjoyed excellent relations with the Yemeni government.

"Germany is often apolitical because it provides a lot of good technical assistance in Yemen, particularly in the water sector, and doesn't appear to be meddling in Yemen's affairs. So, Germany is well trusted in Sanaa," she told Deutsche Welle.

Failure of governance

But others point out that aid money is most needed to help tackle the failure of Yemen's corrupt government to maintain control over remote regions in the strife-torn country - which in turn is exacerbating Yemen's security woes.

"One of the major reasons al Qaeda is so strong in Yemen is because the government is so weak," Guido Steinberg, an expert on international terrorism and political developments in the Gulf region at the Berlin-based German Institute for International and Security Affairs told Deutsche Welle. "President Ali Abdullah Saleh's government is losing legitimacy - it's not just failing to provide its own citizens with basic things such as water and jobs but is also losing control over vast swathes of the country."

President Saleh is facing a rebellion in the north, a secessionist movement in the south and growing Islamic terrorism.

Expert urges caution

Experts say that in addition to equipping and training Yemen's security forces to combat terrorism, the country needs a long-term development strategy - that means not just aid in areas such as education, health and infrastructure, but an inclusive politics.

"Development policy in Yemen has no meaning if it isn't embedded in a political strategy," Steinberg said.

Eickenberg, whose organization is involved in democratization and reforming Yemen's political institutions, said western nations meeting at a Yemen conference in London later this month needed to focus on promoting better governance, fighting corruption and nudging Yemen to solve its northern conflict - with the help of its influential neighbor Saudi Arabia.

But Nautre urged caution in drafting any future Western strategy on Yemen.

"Western involvement in Yemen can easily backfire because the population is very wary and there's a strong anti-American sentiment there," Nautre said.

"The most important thing is for the West not to be seen as interfering in Yemen from outside so that the people don't turn against you and run into the arms of extremist groups."

Author: Sonia Phalnikar
Editor: Michael Lawton