President Saleh is refusing to leave office and apparently seeking to wait out the various rebel groups, knowing that eventually the protestors will wear out and disperse. The protestors, on the other hand, believe disruption of the economy will force more people to rise up and demand a new government. The anti-Saleh groups have declared they will stage larger and more aggressive demonstrations.
The demonstrators accuse Saleh of trying to change a mutually agreeable peace deal (that had him leaving power after 30 days) so that the protestors would disperse, and Saleh would be able to retain power. The protestors caught on to that angle pretty quick, and the GCC brokered peace deal is back to negotiations. There's not a lot of trust between Saleh and Yemenis at the moment. GCC (Gulf Cooperation Council) mediators continue trying to work out a peace deal, but Saleh and his opponents appear to have decided on settling matters in the streets. All the GCC states are monarchies, and have so far managed to control pro-democracy demonstrations. The GCC states have lots of oil, and rulers who were wise enough to spread the wealth around. This has undercut efforts to establish democratic rule. Yemen, however, is perpetually broke. While technically a democracy, it's actually a dictatorship using manipulated elections to keep one party in power for decades. The GCC states are not enthusiastic about having a real democracy in Yemen, fearing that the country might end up controlled by Islamic radicals, or democrats who will support like-minded groups in other GCC states. But because Yemen is the most populous state in the Arabia peninsula, and half the population has a firearm of some sort, the GCC is not eager to send troops or police in to help Saleh.
Large protests continue in the capital, the southern city (population 460,000) Taiz and some smaller places. Police and troops are regularly using tear gas, firing on the crowds and charging them with armored vehicles. Protestors are suffering a hundred or more casualties a day, including several deaths. Protestors are organizing their own violent gangs, to intimidate shopkeepers to stay closed and to disrupt daily life as much as possible. All this violence has caused some tension between the protest groups and the general population. Three months of demonstrations have left about 160 dead, and several thousand injured or arrested (or both). Saleh has allies, and there have been some demonstrations backing him. Saleh has held onto power for over three decades by playing the many factions against one another and carefully cultivating a coalition that is loyal to him. Yemen's economic and social (corruption) problems have not been addressed by Saleh, but none of those seeking to replace him have come up with a viable plan either. Yemen remains a place too many people want to leave, not reform.
May 10, 2011: Air force warplanes bombed tribal territory north of the capital, wounding four people. The main goal of this operation was apparently to intimidate the rebellious tribes.
After a week of escalating labor unrest, the state oil company has shut down operations. This includes refining, which provides vehicle, power generation and cooking fuel. Most of the government budget (about $12 billion a year) is from oil exports. That oil will only last another decade, but for now it's real important. Anti-Saleh tribesmen have been halting shipments of petroleum products, causing shortages in many parts of the country. This has led to longer electrical blackouts and long lines at gas (petrol) stations.
May 9, 2011: Police used violence against large demonstrations in Taiz and al Hudaydah, wounding 300 or more people and killing seven.
May 5, 2011: An American UAV missile attack on several cars killed two al Qaeda members, but missed Yemeni al Qaeda boss Anwar al Awlaki. This was the first such UAV attack in Yemen this year.
May 4, 2011: In southern Abyan province, al Qaeda gunmen attacked troops, leaving six soldiers and four civilians dead.