SANAA, Yemen (AP) - Yemen’s embattled President Abed Rabbo Mansour Hadi has fled his palace in the southern city of Aden as Shiite rebels are closing in on the country’s third-largest city.

The rebels, known as Houthis and reportedly supported by Iran, offered a bounty for Hadi’s capture on Wednesday and arrested his defense minister. They have been tightening their grip on the country since they captured the capital Sanaa, last September, and several key northern provinces.

The rebels’ advance could plunge the Arab world’s poorest country into a civil war that could draw in its Gulf neighbors. Hadi, a close U.S. ally, has appealed to Gulf Arab allies and the United Nations to intervene militarily to stop the rebels’ advance.

Meanwhile, al-Qaida’s branch in Yemen has taken advantage of the power struggle, moving in the country’s lawless hinterlands. And a new group of militants inspired by the Islamic State group has claimed major attacks, adding another layer to the turmoil.

Here’s a look at what’s happening in Yemen and why it is important globally:

THE LATEST

Hadi fled his palace in Aden for an undisclosed location Wednesday as the Houthis offered some $100,000 for his capture and arrested Defense Minister Maj.-Gen. Mahmoud al-Subaihi.

Presidential officials said Hadi was in an operations room overseeing his forces’ response to the rebel push on Aden, which Hadi had declared a temporary capital. They declined to say where the facility was located and spoke on condition of anonymity because they were not authorized to talk to reporters.

Just hours earlier, the Houthis seized an air base where U.S. troops and Europeans advised the country in its fight against al-Qaida militants. The base is only 60 kilometers (35 miles) from Aden. A rebel TV station aired images of rebels and soldiers roaming around the base.

Hadi still enjoys international legitimacy, and the U.N. Security Council has sanctioned two top leaders of the Houthis and their ally, Hadi’s predecessor and former President Ali Abdullah Saleh.

As a southerner, Hadi enjoys widespread support in the south, which could help him to repel the Houthis, but also raises the specter of a repeat of the 1994 north-south civil war.

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WHO ARE THE HOUTHIS?

The Houthis are followers of the Shiite Zaydi sect, the faith of around a third of Yemen’s population. They waged a six-year insurgency against Saleh from their strongholds in the north along the Saudi border that ended in 2010, but now they have joined forces with Saleh, the country’s former longtime autocrat.

Their opponents view them as a proxy of Shiite Iran, charges they deny. The group is hostile to the United States but has also vowed to eradicate al-Qaida. The Houthis now control nine of Yemen’s 21 provinces, but it’s unlikely they will be able to seize control of the whole country, much less govern it.

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SALEH’S HIDDEN HAND

Saleh, who dominated the country for more than three decades, agreed to step down in 2012 following an Arab Spring-inspired uprising and handed over power to Hadi. But Hadi says his predecessor has undermined him at every turn through loyalists in the government and the security forces. The U.N. Security Council has also charged Saleh with hindering the country’s democratic transition.

Saleh has vowed to chase Hadi out of the country, and his supporters tried but failed to take over the airport in Aden last week and dropped bombs near the city’s presidential palace.

Saleh is a Zaydi and thus far his alliance with the Houthis has held, but that could change if they no longer face a shared enemy in Hadi.

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AL-QAIDA EXPLOITS CHAOS

Hadi was a strong U.S. ally in the campaign against al-Qaida in the Arabian Peninsula, which claimed the January attack on the French satirical weekly Charlie Hebdo and has been linked to some of the most serious attempted attacks on the U.S. homeland since 9/11.

Yemen’s latest turmoil has helped the group to rally Sunni tribes against the Houthis. Yemen’s splintered army, which had received considerable U.S. aid and assistance, is now embroiled in the Houthi conflict and torn between competing commanders rather than focused on counterterrorism.

U.S. drones have continued to target the top al-Qaida leaders, but the campaign has suffered from Hadi’s absence and the closure of the U.S. Embassy. Last week, U.S. military advisers were withdrawn from a southern base as al-Qaida militants seized a nearby city.

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ISLAMIC STATE SUPPORTERS SOW SECTARIANISM

Although Yemen’s conflict pits Shiite rebels against a Sunni-led government it has until now had more to do with power politics than sectarianism, with Sunnis and Shiites fighting alongside one another on some fronts.

That could change with the emergence of a new group inspired by the Islamic State, which views Shiites as apostates and has vowed to carry out more mass killings of civilians.

It’s not clear how closely linked the Yemeni militants are to the IS group’s central leadership. But attacks targeting Zaydis risk igniting a full-blown sectarian conflict like the one underway in Syria and Iraq, and could further complicate the already daunting task of trying to stitch Yemen back together.

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US COUNTERRORISM STRATEGY IN YEMEN COLLAPSES?

The U.S. counterterrorism strategy in Yemen has all but collapsed as the country once hailed by President Barack Obama as a model for fighting extremism descends into chaos.

Operations were scaled back dramatically amid the fall of Hadi’s American-backed government and the evacuation of some 100 U.S. personnel, including Special Forces commandos, from the base in the south. Britain also evacuated soldiers.

Now, virtually all of the Yemeni troops that had worked with the U.S. are engaged on one side or another in the turmoil.

CIA drone strikes will continue, U.S. officials have said, but there will be fewer of them.

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