DUBAI (Reuters) - A U.N. peace plan for Yemen seeks to deprive the country’s armed Houthi movement of its missile arsenal which Yemeni security sources say includes scores and maybe even hundreds of Soviet-era ballistic missiles pointed at their foes in Saudi Arabia.

But whether the Iran-allied group will abandon the missiles hidden in mountainous ravines which have given them regional clout despite 20 months of punishing war is an open question.

The group possesses Scud missiles, shorter-range Tochka and anti-ship missiles, and unguided Grad and Katyusha rockets, the security sources told Reuters. It has even manufactured smaller home-made rockets with names like “Volcano” and “Steadfast”.

Retaining them could fortify the Houthis in a permanently armed enclave like fellow Iran-allied groups Hamas and Hezbollah - deepening the regional power struggle between Saudi Arabia and Iran and unnerving key shipping lanes such as the Gulf of Aden through which most of the world’s oil is transported.

Western and regional powers have long worried that complex internal rivalries and an active al Qaeda branch could push Yemen toward chaos - fears which largely materialized last year.

A Saudi-led military coalition has staged thousands of air strikes on the Houthis since the group toppled the internationally recognized government of President Abd-Rabbu Mansour Hadi and fanned out across the country in March 2015.

While Iran has strongly denied aiding the Houthis, Saudi concerns that the Houthis are the proxies of their regional arch-rival sparked their intervention.

FATE OF PLAN IN DOUBT

The conflict has now killed 10,000 people while hunger and disease stalk the country which even before the war was awash with guns and plagued by poverty.

But the Houthis may feel ceding Yemen’s most powerful weapons to neutral officers and becoming a political party as envisioned by the U.N. plan may leave them vulnerable to attack.

“When the Houthis seized (the capital) Sanaa, they assumed total control of state institutions, key posts in the army and all the missiles,” a senior Yemeni security official said, speaking to Reuters on condition of anonymity.

“Relinquishing the security apparatus will be the most important step toward what the country needs most - putting the state back together,” the official added.

A 48-hour ceasefire aimed at paving the way for peace talks and a unity government expired on Monday, the latest in a series of failed truces which leave the fate of the U.N. plan in doubt.

Saudi-led bombings have repeatedly struck underground missile silos, sending mushroom clouds exploding over Sanaa.

Early in the war, the coalition said it had destroyed 80 percent of the country’s stockpile of 300 ballistic missiles.

Yet the Houthis have managed to launch dozens of them at pro-government forces inside Yemen and at Saudi Arabia throughout the war, including just outside the holy city of Mecca some 600km (370 miles) north of the country.

While Scuds are notoriously inaccurate and most appear to have been shot down by Saudi Patriot missiles acquired from the United States, the projectiles have unnerved Gulf Arab states.

SEIZED FROM ARMY STORES

Seized by the Houthis from army stores after their takeover, Yemen’s missiles were amassed over the course of decades in legal acquisitions from the Soviet Union and North Korea.

The Houthis have upgraded some missiles to maximize their range, and their technical savvy in local manufacture of smaller rockets and several deadly launches may suggest foreign help, military analysts say.

A Tochka ballistic missile attack last September killed more than 60 Emirati, Saudi and Bahraini troops outside the central city of Marib and another killed the Saudi intelligence chief for Yemen and a senior Emirati officer in the southwest.

Speaking to Reuters, an anti-Houthi tribal commander said his scouts spotted what they said were members of the Iranian-backed Lebanese armed group Hezbollah aiding the Marib strike.

“My men reported spotting the missile launcher accompanied by several cars carrying Hezbollah advisers - we referred the information to the coalition but we got no response,” the commander said, speaking on condition of anonymity.

The spokesman for the Saudi-led coalition, Brigadier General Ahmed Asseri, said it lacked evidence of a Hezbollah link to those attacks but believed the Houthis receive their help.

“We have information that there are Lebanese working with the (Houthi) militias belonging to Hezbollah ... We know they are there, we know they help them renew and maintain the missiles,” Asseri told Reuters.

Yemeni, Western and Iranian officials told Reuters that Iran has stepped up transfers of missiles and other weapons to the group in recent months.

Brigadier General Sharaf Luqman, a spokesman for Yemen’s pro-Houthi military, denied in a statement this month that their forces had ever received Iranian aid.

Iran and Hezbollah have also strongly denied aiding them.

GATE OF TEARS

Houthi missiles have also rattled shipping passing through the Bab al-Mandeb strait, Arabic for “Gate of Tears”, on the Red Sea. The group fired a conventional ship missile at an Emirati military craft on Oct. 1 and a ballistic missile a week later at pro-government forces on tiny Mayun Island sitting astride the 25.6-km-wide (16-mile) waterway’s narrowest point.

The United States bombed radar stations along the Houthi-controlled coast after it said a U.S. warship in the strait was unsuccessfully attacked by several land-to-sea missiles - an accusation the Houthis denied.

“It’s an extremely worrying sign, and the technology used from small speed boats to the missiles shows imitation, at the very least, of naval patterns Iran has used in the Gulf,” said one diplomat, who declined to be identified.

But expanding of the conflict seaward may seek to convince Saudi Arabia and its ally the United States that the Houthis refuse to cede their still-dominant political position inside Yemen despite the drawn-out and bloody conflict.

“It appears to be their way of saying, ‘look over here, we’re capable of internationalizing this conflict - take our position seriously,’” another diplomat said.

POWER STRUGGLE

A peace plan hammered out by the United Nations has exiled Hadi effectively resigning in exchange for the Houthis quitting main cities and handing over arms to neutral army units.

While Hadi fiercely opposes the scheme, diplomats and Yemeni officials say his coalition backers have tired of the stalemated conflict and could accept his exit, if it removed the Houthi military threat to their borders.

The Houthis have accepted the U.N. deal, which would allow its seasoned fighters to retain their light weapons, something that could allow them to retain power in national politics.

“The Houthis have sought out guarantees that they won’t face a sudden attack from within Yemen and that they will retain a major political role,” a Yemeni diplomatic source told Reuters.

A Houthi official suggested its refusal to demobilize was a patriotic resistance to foreign plots and guaranteed order.

“It is important to note here the conspiracy against the missile forces in Yemen,” Hamid Rizq wrote on the group’s news website al-Masira last month. “(There has been) an American conspiracy to dismantle the Yemeni army through so-called ‘restructuring’ ... to pave the way for the spread of chaos.”