ISTANBUL — Shiite rebels stormed the presidential palace in Yemen’s capital Sanaa on Tuesday, increasing chances the country will plunge into a broader sectarian conflict and hugely complicating American efforts to combat al Qaeda’s Yemeni affiliate, long considered the most dangerous branch of the terror network.

Four months ago President Obama cited Yemen as a drone-led model for counter-terrorism, saying the “strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have successfully pursued in Yemen and Somalia for years.”

That strategy looked shaky then, where Yemen was concerned, and it’s a disaster now.

The beleaguered U.S.-backed president of Yemen, Abed Rabbo Mansour Hadi, wasn’t in the palace when Shiite insurgents swept into it after days of violence. He had taken refuge in his family home in downtown Sanaa, but rebels soon went after him there, too. President Hadi has been the lynchpin in the Obama’s administration’s strategy of taking out senior and mid-ranking al Qaeda fighters in Yemen with drone strikes.

“This is a step toward a coup and it is targeting the state’s legitimacy,” Yemeni Information Minister Nadia Sakkaf told the Associated Press. She posted on her Twitter account that the president’s own home had been under “heavy shelling since 3:00 PM by armed forces positioned over rooftops facing his house.” Later she said the fighting is “the completion of a coup,” adding, “the President has no control.”

Col. Saleh al-Jamalani, the commander of the Presidential Protection Force, told news agencies the rebels started looting arms depots in palace the grounds as soon as they seized control.

The taking of the palace by rebels loyal to Abdulmalik al-Houthi marks a dramatic escalation in a four-month-long standoff between the government and Shiite rebels from the north, who seized control of most of the capital in September and who are angry with a draft constitution that would divide the country into six federal regions.

There have also been disputes over the implementation of a U.N.-brokered peace deal requiring Hadi to form a new national unity government and for the rebels to withdraw from the capital.

Earlier, before the palace was stormed, the embattled president and rebels held talks to try to restore calm after heavy street fighting killed at least nine people and wounded ten times that many. On Monday the rebels seized control of the state media buildings in Sanaa and clashed with guards near the presidential palace. A ceasefire was negotiated and in the talks Hadi and Houthi representatives discussed the makeup of a commission tasked with implementing plans to reform Yemen along federal lines.

In the last-minute talks the president was quoted as saying, “Today, we are at a crossroads, either to be or not to be.”

The rebels appeared to have chosen the latter for Yemen as a united country.

The eruption in Sanaa risks triggering a backlash from the country’s majority Sunni tribes, who are concentrated in the middle and south of the national territory, where Al Qaeda in the Arabian Peninsula (AQAP) has its strongholds. Yemeni Sunnis view the Houthis as proxies for Iran, something they deny, and are also seen as being linked to former President Ali Abdullah Saleh, whose 30-year rule was brought to an end in Arab Spring protests two years ago.

At the weekend, Sunni leaders from southern provinces reacted angrily to the seizing by Houthis of the president’s chief of staff, Ahmed Awad bin Mubarak, giving them 24 hours to free him and warning they would turn off oil pumps unless he was released. Instead, the fighting escalated.

Even before this de facto coup the sectarian power struggle was playing havoc with the government’s battle against AQAP, which is more in the spotlight than ever following the group’s claim of responsibility for the January 7 terror attack in Paris on the French satirical newspaper Charlie Hebdo. On Tuesday, as the presidential palace was being stormed, al Qaeda fighters came close to assassinating a top Yemen Army commander in the south, killing five of his guards in the attack, military officials said.

With the country plunging ever deeper into chaos, Republican Senator John McCain tartly tweeted Monday, “More problems in Pres Obama’s anti-terror ‘success story.’”

State Department officials say they are monitoring the situation on the ground, closely following reports that shots were fired on Monday night at a US embassy vehicle. No diplomatic staff were injured.

The U.N. Security Council was due to hold an emergency session Tuesday night to discuss the apparent collapse of negotiations, and U.N. Secretary General Ban Ki-moon’s spokesperson said Ban was “gravely concerned about the deteriorating situation” in Yemen.

“The secretary-general calls on all sides to immediately cease all hostilities, exercise maximum restraint, and take the necessary steps to restore full authority to the legitimate government institutions,” the spokesman said. “All sides must abide by their stated commitments to resolve differences through peaceful means.”

AQAP can be expected to exploit the turmoil in the capital. In December the group killed two hostages, American reporter Luke Somers and a South African aid worker, during a U.S. military raid to rescue the captives. And shortly after the failed rescue bid it fired six Grad rockets at a military base in the southern province of Lahj that is used by American Special Forces to coordinate drone strikes on AQAP.

The U.S. counter-terrorism efforts in Yemen were already facing an uphill battle. In September The Daily Beast reported that Yemeni intelligence memos indicated Obama’s Yemen model has been helpless to prevent recent waves of al Qaeda attacks despite being notified of their specifics days and weeks before.