RIYADH (Reuters) - Saudi funding of Yemeni tribes for help against al Qaeda risks undermining central authority in the kingdom's poor neighbour at a moment when the government there needs all its clout to fight security threats.
The West relies heavily on the top oil exporter to help stabilise Yemen: Saudi Arabia is the largest financial donor, bankrolling the government of ally President Ali Saleh Abdullah, helping supplying Yemeni forces and building hospitals.
But analysts and diplomats say Saudi Arabia is at the same time sidelining Sanaa by directly supporting tribes who dominate much of the unruly country located strategically on the southwestern tip of the Arabian Peninsula.
"Saudi support of the tribes has a clear negative impact on state-building and by extension, its ability to fight AQAP," said Abdul-Ghani al-Iryani, a Yemeni political analyst in Sanaa.
"The Saudis have refused flat out all Yemeni requests to desist from paying Yemeni tribes," he said.
Saudi counter-terrorism efforts are currently riding high.
Last month, Saudi arrested 149 militants mainly linked to Yemen-based Al Qaeda in the Peninsula (AQAP) who had planned to stage attacks inside the kingdom and to send Saudis for training camps in Yemen and Somalia.
This was the latest success of Saudi intelligence after tipping off the United States about a parcel bomb plot from Yemen, where AQAP has been both fighting the government as well as using remote areas as havens to plot attacks in the West.
Saudi Arabia has stepped up financial support for various Yemeni tribes in the past two years to improve its own security, diplomats and analysts say, due to worries about Shi'ite rebels in northern Yemen who briefly fought a border war with Riyadh.
SUPPORT FOR TRIBES
While gaining some intelligence from tribal sources on the whereabouts of al Qaeda militants on their territory, the cash help has proved an obstacle to boosting Yemeni state authority - a vital ingredient in tackling economic problems, analysts say.
Another complication is that Islamic charities close to the Saudi austere brand of Sunni Islam have long funded religious schools or mosques seen as recruiting grounds for al Qaeda.
"Saudi support on tribes is undermining government authority," said Barak Barfi, a former Visiting Fellow at the Brookings Doha Centre in Qatar.
"Saudi Arabia does not want Yemen to be strong," he said.
He said Riyadh, an absolute monarchy with strict curbs on domestic politics, feared a spread of liberal political freedoms in Yemen, whose native population is larger than Saudi Arabia's.
A Western diplomat in Riyadh said some members of tribes on the Saudi payroll might also engage in cross-border smuggling which is undermining efforts to seal off the 1,500 kilometer joint border Riyadh fears al Qaeda militants use to infiltrate.
Saudi officials say the kingdom has backed aid projects in tribal areas to wean Yemenis away from joining al Qaeda because Saleh's authority was dwindling outside the capital Sanaa.
"The idea was that when Yemenis saw the concrete benefits of these projects they would push their leaders to eject the extremists," a U.S. diplomatic cable said in May 2009, citing the Saudi counter-terrorism chief Prince Mohammed bin Nayef.
A Saudi analyst who declined to be named said the payment of tribes had not helped much over many years, apart from gaining some intelligence. "It's not very useful. You end up paying more and more and don't get much out of it," the analyst said.
Diplomats acknowledge that Saudi Arabia has tried to fight charities funding militants in Yemen for almost two years but they remained sceptical whether all money flows had been cut.
"They're trying to help stabilise Yemen but the legacy of past is still there," said another Western diplomat, referring to religious schools in Yemen backed by Wahhabi clerics.
Other U.S. cables issued by WikiLeaks show individual Saudis are still among the main donors of militants like al Qaeda.
Saudi-Yemeni relations have never been easy. Parts of southern Saudi territory belonged to Yemen until they were conquered by state founder Abdul-Aziz Ibn Saud in a 1934 war.
Saudi Arabia employed hundreds of thousands of Yemeni workers once an oil boom began in the 1970s, but expelled most of them during the 1990-91 Gulf crisis when Saleh failed to support a U.S.-led campaign to drive Iraqi forces from Kuwait.
While Washington and Riyadh may now share a common enemy in al Qaeda, their approaches in Yemen are not always identical.
While the West sends aid through institutions such as the World Bank, Riyadh's dollars -- put by some analysts at up to $2 billion (1.2 billion pounds) annually -- do not all pass through official channels.
Diplomats say a long absence of Crown Prince Sultan, the pointman on Yemen for decades, has complicated relations.
Saudi officials say Sultan, who has spent over a year abroad due to illness, is back on duty but diplomats say others such as Interior Minister Prince Nayef bin Abdulaziz or Intelligence Chief Prince Mugrin bin Abdulaziz are now also involved.
"It's hard to say who is now in charge of the Yemen file. There are several princes involved," said another western diplomat, echoing comments by others.
(Reporting by Ulf Laessing; Editing by William Maclean)