Yemen's president said he is ready to talk to Al-Qaida members who renounce violence, suggesting he could show them the same kind of leniency he has granted militants in the past despite US pressure to crack down on the terror group.

Yemen is moving cautiously in the fight against Al-Qaida, worried over a potential backlash in a country where anger at the US and extremism are widespread. Thousands of Yemenis are battle-hardened veterans of past "holy wars" in Afghanistan, Bosnia, Chechnya and Iraq, and though most are not engaged in violence now they preserve a die-hard Al-Qaida ideology.

"Any movement against Al-Qaida will lead to the fall of the Yemeni regime," warned Ali Mohammed Omar, a Yemeni who fought in Afghanistan from 1990-1992 and says he met Osama bin Laden twice during that time.

If the US or its allies become directly involved, "the whole (Yemeni) people will become Al-Qaida. Instead of 30 or 40 people, it would become millions," he said.

Yemeni forces recently launched their heaviest strikes and raids against Al-Qaida in years, and Washington has praised Sana'a for showing a new determination against Al-Qaida's offshoot in the country.

The United States has increased money and training for Yemen's counterterror forces, calling Al-Qaida in Yemen a global threat after it allegedly plotted a failed attempt to bomb a US passenger jetliner on Christmas Day.

President Ali Abdullah Saleh's comments raised the possibility he could continue a policy that has frustrated US officials in the past - releasing Al-Qaida militants on promises they will not engage in terrorism again. Several are believed to have returned to Al-Qaida's ranks.

"Dialogue is the best way ... even with al-Qaida, if they set aside their weapons and return to reason," Saleh told Abu Dhabi TV on the weekend.

He said Yemen would pursue those who continued violence, but "we are ready to reach an understanding with anyone who renounces violence and terrorism."

Yemeni officials have defended the reconciliation policy as a necessity, saying force alone cannot stop Al-Qaida.

Saleh's government has been weakened by multiple wars and crises. It has little authority outside a region around the capital, and tribes dominate large areas of the impoverished mountainous nation - many of them bitter at the central government for failing to develop their regions.

Hundreds of Al-Qaida fighters, foreigners and Yemenis, are believed to be sheltered in mountainous areas. Al-Qaida Yemenis get help from relatives, sometimes out of tribal loyalty more than ideology - and when the government kills or arrests militants or their relatives, it risks angering the heavily armed tribes.

Another factor is the regime's alliances with hardline Islamists, such as Sheik Abdul-Majid al-Zindani, one of Yemen's most prominent clerics. The US has labeled him a terrorist for alleged links to Al-Qaida. But the government relies on his tacit support and denies he is a terrorist.

In a sermon Friday, al-Zindani railed against US pressure to fight Al-Qaida, accusing Washington and the UN of seeking to "impose an international occupation of Yemen."

In Yemen, "it is difficult to draw the line between who is a fundamentalist and who is Al-Qaida. It's a spectrum," said Ali Saif Hassan, who runs a Yemeni group that mediates between the government and opposition.

US President Barack Obama said he has "no intention of sending US boots on the ground" to Yemen and Somalia amid mounting concern about terrorist cells in those countries New York Times reported on Sunday.

Obama told People magazine that the "border region between Afghanistan and Pakistan remains the epicenter of Al-Qaida," though he acknowledged that the group's branch in Yemen has become "a more serious problem."

But his administration is seeking to emphasize international cooperation, rather than military action: "In countries like Yemen, in countries like Somalia, I think working with international partners is most effective at this point."

Obama's remarks echoed those of his top military commanders. In an interview with CNN earlier last week, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, said sending US troops to Yemen is "not a possibility." General David H. Petreaus told CNN he also does not want to send US forces. "We would always want a host nation to deal with a problem itself," he said.

Yemeni officials and foreign experts said the US and British strategy of fighting terrorism in Yemen by focusing mostly on security fails to deal with the poverty that is the root cause of extremism, Bloomberg reported yesterday.

Rebellions in the south and north are driving the economy deeper into crisis even as the government forecasts that in 10 years it will run out of the oil reserves that fund 70 percent of the budget.

"The hotbed for breeding terrorism is unemployment, poverty and lack of services," Abdul-Karim Al-Eryani, an adviser to Yemeni President Ali Abdullah Saleh, said Jan 4. The US and its allies should "be more focused on the future of Yemen rather than the present crisis we face with Al-Qaida."