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* Humanitarian crisis may make development irrelevant -ICRC
* Yemen security problems hampering aid
* Recent fighting has dramatically worsened situation
(Adds details, background)
By Jonathan Lynn
GENEVA, Jan 25 (Reuters) - Yemen's deepening humanitarian problems are in danger of being overlooked as the West seeks political reform to tackle a security threat, the International Committee of the Red Cross (ICRC) said on Monday.
With conditions in the Arab world's poorest country worse than ever, there is a risk that development aid will become irrelevant in a basic struggle for food, water and medicine, said a senior official of the neutral humanitarian agency.
Renewed fighting that broke out five months ago and recently spread to the border with Saudi Arabia has dramatically worsened the situation of civilians, said ICRC Deputy Director of Operations Dominik Stillhart.
"If no immediate action is being taken to counter this trend, the north of Yemen could slide into a long-term humanitarian crisis that would also hamper development efforts," he told a news conference.
Yemen suffers from poverty, weak central government and a series of internal conflicts including with Shi'ite tribesmen in the north which has killed thousands since 2004, analysts say.
The Shi'ite rebels' leader offered a ceasefire to Saudi Arabia on Monday and said his fighters would withdraw from the kingdom's territory to avoid more civilian casualties. [ID:nLDE60O1GR] However, the conflict with the Yemeni government continues.
Stillhart said the situation could deteriorate to a point where development aid no longer made sense if more attention were not paid to the conflict in the north of the country.
At least 150,000 civilians -- one in five of the population of the north of the country -- had been directly affected by the crisis, with tens of thousands of people fleeing their homes.
The Swiss-based Red Cross does not know exactly how many people have been affected as many are inaccessible because of the fighting. Neither does it have an overview of casualties.
People's needs in the country -- where even without fighting nearly half children aged under five suffer from malnutrition -- far outstrip the capacity of humanitarian groups, he said.
The priorities are food aid, clean water and medical supplies, but the lack of security makes it difficult to deliver aid and requires endless negotiations for safe passage with the central government and local tribes, he said.
About 42 percent of Yemen's 23 million people live on less than $2 a day, the World Bank says. The population is set to double in 20 years, but jobs are already scarce and water resources are collapsing.
Stillhart said the Red Cross, which does not operate in Saudi Arabia, is in contact with the Saudi authorities and has reminded them of their obligations under international law.
The West and Saudi Arabia fear Yemen may become a failed state that al Qaeda could use as a base for international attacks. Sanaa is trying to crush al Qaeda after the group's Yemen-based wing said it was behind a Dec. 25 attempt to blow up a U.S. airliner. (Additional reporting by Laura MacInnis; Editing by Janet Lawrence/David Stamp)