BEIRUT (Reuters) - The United States must tread warily in Yemen if it is to avoid inadvertently broadening al Qaeda’s appeal in a country plagued by poverty, corruption and conflict.

The botched bombing of a U.S. airliner on December 25, claimed by al Qaeda’s Yemen-based wing, has spurred Washington to step up aid to President Ali Abdullah Saleh’s government, even though diplomats say it is tainted by graft and short on legitimacy.

Such support may temporarily help sustain autocratic rule in Yemen, where militancy is only one of many woes. The population of 23 million is set to double in 20 years, even as gas exports fail to offset falling oil earnings and water supplies run dry.

“Deeper U.S. security involvement will cause a spike of al Qaeda recruitment,” said Yemeni analyst Abdul-Ghani al-Iryani.

“So much could go wrong,” he said, citing anti-U.S. fervor generated by images from the Iraq war of an American soldier putting his boot on the neck of an Iraqi civilian.

Yemeni officials acknowledge the need for U.S. help with counter-terrorism, but say the government also lacks resources to tackle the poverty that widens al Qaeda’s recruiting pool.

The United States has quietly been supplying military equipment, intelligence and training to Yemeni forces to root out suspected al Qaeda militants, including several released Guantanamo detainees who have rejoined their cause.

“Propping up the Saleh government is an inevitable by-product of this (U.S.) campaign,” said Iryani.

“This will lead to continuation of the same bad habits that got us into this mess in the first place.”

The United States has faced similar dilemmas in Afghanistan, Pakistan and elsewhere, often opting to work with flawed leaders on overriding security goals rather than pressing for reform.

A U.S. official, who asked not to be named, took a pragmatic view of Saleh, 67, who has kept power for three turbulent decades by balancing tribal and military factions with a network of patronage that is now handicapped by plunging oil income.

“We have to do the best we can, hold him to his commitments, make sure we have oversight and ensure everything is going in the right direction. Not a small problem,” the official said.

U.S. Secretary of State Hillary Clinton also hinted at Yemen’s governance deficits, when she said the West should tie strings on aid to Sanaa, which is also fighting “Houthi” Shi’ite rebels in the north and secessionist unrest in the south.

“CONDITIONS ON SUPPORT”

“It’s time for the international community to make it clear to Yemen that there are expectations and conditions on our continuing support for the government so that they can take actions which will have a better chance to provide that peace and stability,” Clinton declared on Monday.

The United States has little appetite for a new war in Yemen, which, argued Ginny Hill of London’s Chatham House, is a much more sensitive environment than Iraq or Afghanistan due to its proximity to Saudi Arabia and the holy city of Mecca.

“The Yemeni government would be placed in a very difficult position if the West were to push for troops on the ground in any kind of visible numbers,” she added.

Alternatives, such as U.S. drone strikes and use of special forces units to disrupt al Qaeda, could also prove politically sensitive, especially if civilian casualties ensued.

For now the Pentagon has proposed increasing the $67 million provided in overt counter-terrorism assistance last year, a figure that does not include covert programs run by U.S. special forces and the CIA, U.S. officials have said.

U.S.-backed Yemeni air strikes against suspected al Qaeda targets last month killed more than 60 people.

“The risk is increasing hostility in Yemen toward both the U.S. and the Saleh regime,” said Robert Burrowes, an American scholar and author of the Historical Dictionary of Yemen.

“A main theme of the Houthis and al Qaeda -- and maybe the Southern Movement as well -- is the damning relationship between the Saleh regime and the United States,” he said.

Saleh may view the northern revolt and southern secessionism as deadlier threats to his rule than al Qaeda, although a new breed of militants has proved more radical and harder to co-opt than veterans of the U.S.-backed Afghan “jihad” in the 1980s.

Yet he may also spy an opportunity to use the fight against al Qaeda to garner more financial aid from the West to offset the dwindling resources available for patronage.

“Terrorist networks stand to benefit if the state gets weaker but it’s not terrorism that will undermine the government, it’s the economic crisis forced by declining oil revenues,” said Hill, the Chatham House analyst.

Mounting U.S. worries about Yemen’s viability as a state focus mainly on how instability there might affect oil superpower Saudi Arabia or nearby international shipping lanes.

For Yemenis, the stakes are even higher and some see U.S. commitment as transient and unreliable.

“The window of opportunity is closing fast,” said Iryani.

“When all is said and done, and when the United States has walked away, Yemen will have passed the point of no return on non-renewable resources such as water and oil, and will be left with a generation who are trained only to fight.”