By Jeremy Bowen
Middle East editor, BBC News, Yemen
To get an idea of the state of mind of the men here in Yemen who run al-Qaeda in the Arabia peninsula, just take a look at what they said about the failed attack on the US airliner on Christmas Day.
President Saleh's government has been accused of corruption
In a swaggering and ambitious statement, they claimed that they sent the Nigerian student onto the plane, and that he only failed because of a technical fault with the bomb.
For them, getting that close counts as the next best thing to a successful mission.
And take just one look at the terrain of this country to understand why al-Qaeda is feeling so comfortable here, relaxed enough for one of its leaders reportedly to have moved his wife and family down from Saudi Arabia.
Yemen's mountains are rugged, hard to reach, and best of all from a jihadi point of view, they are not controlled by the central government.
Al-Qaeda in the Arabian peninsula established itself in Yemen after it was forced out of Saudi Arabia, taking advantage of the fact that large swathes of Yemeni territory are controlled by powerful, well-armed tribes, not by a government that is getting closer to the US and its counter-terrorism advisers than ever.
Already there are claims and counter-claims of a kind that are familiar from Afghanistan, Pakistan and Iraq.
On 17 and 24 December al-Qaeda sites in Yemen were attacked. Reports based on American sources suggested that 60 "militants" had been killed.
It has been reported in the United States that American military forces carried out the attacks.
But local journalists here who say they have visited the sites in question tell a different story.
Abdulelah Hider Shaea, who has close connections with al-Qaeda, told me that people at the places that were attacked insist that dozens of women and children were among the dead.
It is the belief of at least one person there, he said, that the Yemeni government and US President Barack Obama were congratulating each other on killing their children.
Making deals with tribes that have lost large numbers of women and children in government attacks will be very difficult.
Mr Shaea said that al-Qaeda in Yemen believes that American actions will bring it recruits.
And he compared Yemen with Pakistan's tribal areas.
"The United States wants to fight al-Qaeda here. It won't work, they'll make this a new Waziristan, exporting fighters all over the world."
A diverse range of observers, in Yemen and abroad, agree that a heavy-handed counter-terrorism strategy will create more problems than it will solve.
But alternatives to military action move slowly and do not guarantee success either.
In Washington, President Obama is under pressure to take action. The Christmas Day attempted attack over Detroit may have failed, but it brought back instant memories of 9/11. Military action will continue.
Al-Qaeda is not Yemen's only problem.
Saudi Arabia has intervened in the long-running tribal war in the north. A separatist movement in the south wants Yemen to be divided back into two countries.
The poor are getting poorer. Levels of illiteracy are high. The birth rate is the highest in the Middle East.
Its main export, oil, will run out within the next 10 years and new gas fields do not appear to be lucrative enough to replace it.
Yemen's water supply is also running dry, not least because of the amount that is used to irrigate the fields of khat.
Yemen suffers from poverty and illiteracy
Chewing khat leaves, which are a mild stimulant, is the national pastime.
Yemen's President Ali Abdallah Saleh surrounds himself with members of his own clan and adroitly juggles all the other forces in Yemen to stay in power.
It is a strategy that has worked for 30 years. But his government is accused of being not just ineffective, but also riddled with corruption.
So the US, Britain and Saudi Arabia, are looking even more nervous about Yemen and its list of challenges.
They will have a chance to talk about what to do next in a meeting in London at the end of the month.
When I asked Dr Abdullah al-Faqih, professor of political science at Sanaa University about Yemen's position, he was succinct.
"The country's going to hell. The crises are converging with each other."
The risk, he said, was that Yemen would go the same way as Somalia, its neighbour across the Gulf of Aden, which descended into violent and bloody confusion a generation ago and has never emerged.
Yemen is not Somalia, nor Afghanistan. At least not yet. It is not a failed state, but it is failing.
Holding back chaos
It will be very hard to stabilise matters here, but it is not impossible.
Many Yemenis are devout, but that does not make them jihadis. The tribes are powerful and traditionally are open to making deals.
One strategy for al-Qaeda's enemies could be to pay them to ban al-Qaeda from their territory.
The Saudis and the Americans have plenty of money for that. They don't necessarily have the necessary time, luck and judgement that has to go along with cash.
Action is needed, because all the indications suggest that if matters are left as they are, Yemen will slide steadily into chaos.