Yemen government troops advance; donors pledge $4 billion aid

ADEN/RIYADH (Reuters) - Yemeni government troops battled Islamist militants in two southern cities on Wednesday as international donors met in Saudi Arabia to pledge $4 billion to help stabilize a state that has become a base for al Qaeda.

Government forces recaptured parts of the strategically important city of Zinjibar and fought militants in the city of Jaar, leaving 33 militants and nine soldiers dead, officials and residents said.

The militants, who seized large swathes of southern Yemen last year, have given shelter and support to al Qaeda's local wing, which on Monday killed 100 soldiers in a suicide bombing at a military parade in the capital Sanaa.

Western and Gulf Arab countries have watched with mounting alarm as political crisis in the impoverished Arabian Peninsula state gave al Qaeda the opportunity to develop a base from which to launch attacks around the world.

"I assert one more time our support to Yemen to back all the phases of the political initiative to help achieve security, stability and prosperity in facing the threats of extremism and terrorism," Saudi Foreign Minister Prince Saud al-Faisal said in Riyadh.

The meeting in Riyadh was the first to be held by the Friends of Yemen donor group since Ali Abdullah Saleh was forced to step down as president after 33 years in February, allowing the election of a new transitional head of state.

Saudi Arabia, the world's top oil exporter, pledged $3.25 billion of the total of more than $4 billion promised in aid.

In nearly a year of protests and instability, the army split into rival factions, Islamists established military sway in the south and the economy collapsed.

"This (aid) shows the Yemeni-Saudi relationship is quite strong and Saudi Arabia is cognizant that the stability of Saudi Arabia depends on that of Yemen," Yemeni Foreign Minister Abubakr al-Qirbi said.

Almost half of Yemenis do not have enough to eat and urgent aid is needed to avert a catastrophe, a group of seven aid agencies said on Wednesday ahead of the Riyadh meeting.

GOVERNMENT ADVANCE

The advance of Yemeni troops into the centre and northern neighborhoods of Zinjibar, the capital of Abyan province, represents a new front in a U.S.-backed offensive to reclaim areas seized by al Qaeda-linked insurgents in the south.

"The army is holding key parts of the centre and north of the city, including the stadium and government buildings, but there are still pockets of resistance," a military official told Reuters.

At least seven militants were killed and a soldier wounded in gun battles in the town, a major prize for the insurgents when they took it last year.

Twenty-six militants and nine soldiers were killed in fighting in the insurgent-held town of Jaar, officials said.

Residents said warplanes bombed a checkpoint set up by the Islamist fighters in Abyan province's Mudiyah district. No casualties were reported. In Shaqra, two militants were killed when warplanes bombed their checkpoints, an official said.

In Sanaa, a pro-Saleh protester was killed when riot police attempted to disperse a demonstration in the capital.

The loss of Zinjibar would be a blow to the insurgents and bolster the morale of the army after the official al-Thawra newspaper said the death toll from Monday's attack on troops rehearsing for a parade to mark national day had risen to 100.

Yemeni officials say U.S. military personnel have been helping to coordinate the offensive and dozens of U.S. trainers are in the country. The United States frequently carries out drone attacks on militants.

The United States and Saudi Arabia have come to regard Yemen's al Qaeda in the Arabian Peninsula, known as AQAP, as the group's most dangerous wing. Early in May Washington said Western and Arab intelligence agencies had foiled an AQAP plot to bring down an international airliner with a bomb.

$4 BILLION AID

Riyadh, which already provides oil and military aid to its impoverished neighbor, convened Western and Arab Gulf nations in a lavish new hotel hung with crystal chandeliers and adorned with bronze equine statues on tall marble pedestals.

Another meeting, specifically on aid pledges, will be held in Riyadh in late June, with a ministerial meeting to follow on the sidelines of the U.N. General Assembly in September.

"The future for Yemen is not about one-off donations. The future for Yemen is about the process that's already been set in train for the transition of that country," British Foreign Office Minister Alistair Burt said after the meeting.

Burt said Britain had pledged an additional $44 million on top of its existing aid to Yemen.

The meeting was aimed at strengthening the Yemeni state and returning a semblance of economic stability to a country where 40 percent of the population lives on less than $2 a day.

Yemen's modest oil exports were hit by repeated attacks on pipelines last year. The planning and international cooperation minister told the conference his country needed an initial $2.17 billion to help stabilize the country, fight militant attacks and ease a humanitarian crisis.

It required a further $5.8 billion in future to develop the economy and national infrastructure, with $3.7 billion needed by 2014, he added. Yemen is rapidly depleting its aquifers, and the capital Sanaa may run out of water in the coming decade.

Countries from the Gulf Cooperation Council, which includes Saudi Arabia, Kuwait, Qatar, Bahrain, the United Arab Emirates and Oman, attended the meeting, as did the United States, the European Union, France, Egypt and Russia, the International Monetary Fund and the World Bank.

In April the IMF resumed lending to Yemen, approving the payment of a $93.7 million loan to help it address a balance of payments deficit that worsened during the political turmoil.

(Additional reporting by Tom Finn in Sanaa and Amena Bakr and Layla Maghrebi in Dubai; Editing by Sami Aboudi and Michael Roddy)

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