The word in Yemen as of Friday was that President Ali Abdullah Saleh’s 32-year rule was nearing its final days. He entered talks with the opposition to leave the office of the Presidency, if the country could be put into “safe hands.” Saleh had previously offered to step down within a year, but the protest movement rejected anything less than an immediate departure, generally through throwing their shoes at pictures of the President. Grinding poverty, a lack of jobs and corruption and repression from the government has driven the unrest in Sanaa. Hundreds of thousands of protesters filled the streets on Friday, including at least 100,000 in the capital. But Saleh himself was able to mass 100,000 supporters in Sanaa (many were reportedly bused in from the countryside).

But yesterday, talks broke down. Saleh apparently agreed to transfer powers to his Vice President, but then took back the offer.

Allies of Yemen’s president and his political opponents failed to make progress Saturday in talks on a possible exit for the man who has led the nation through 32 years of growing poverty and conflict and whose rule is now deeply imperiled by a popular uprising.

As the political turmoil deepened, there were signs that Islamic militants in the remote reaches of the country were seeking to make gains on the situation. Residents and witnesses in the small town of Jaar in the south said suspected al-Qaida militants moved down from an expanse of mountains on Saturday to seize control there a few weeks after police fled, setting up checkpoints and occupying vacant government buildings.

President Ali Abdullah Saleh argued in a TV interview that without him, the country would be at grave risk of breaking apart.

“Yemen is a ticking bomb and if the political system collapses and there’s no constructive dialogue there will be a long civil war that will be difficult to end,” he told the Al-Arabiya network.

In fact, fighters reported to be Islamic militants captured a weapons factory and a mountaintop in Abyan province. The south has been the site of unrest and a separatist movement. Yemen had been split into northern and southern countries, each previously controlled by different colonial powers, until unification in 1990. Police have largely disappeared in the province, and residents either have set up local militias or been overrun by the militants. Yemeni security forces battledwith members of Al Qaeda in the Arabian Peninsula throughout the past two days, with a number of casualties on both sides.

I don’t think there’s much question that the instability of the Saleh regime has led to exploitation by Islamic separatists in the south. This has been among the warnings of Western diplomats, but it speaks to the old conception that only a strongman can stabilize Arab nations. This may bring security to the West, but the brutalization of the population eventually becomes untenable. What’s more, Saleh is definitely trying to use the instability in the south to save his tenure in office, likening a post-Saleh Yemen to Somalia or worse. Finally, with all the US-led covert operations in Yemen occurring, you have to wonder how they could have so easily overrun towns in the south and taken over munitions factories.

Saleh has called for mediation from either Europe or the Gulf Cooperation council to end the crisis. The ruling party called for a new government to draft a new Constitution, with a Parliamentary instead of presidential system. The situation is very fluid, however.