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Saudi-brokered deal to include Yemen's southern separatists in government -sources

Stephen Kalin

-sources@

* All armed forces to be folded under interior, defence ministries

* Nominal allies fell out in August as separatists seek self-rule

* Fighting opened new front in war, complicated U.N. peace efforts

RIYADH, Oct 26 (Reuters) - A preliminary deal between Yemen's Saudi-backed government and southern separatists to end a power struggle in Aden will see the separatists included in a new technocrat cabinet and both sides' forces placed under government control, sources said.

The Saudi-brokered arrangement, an advanced version of which was seen by Reuters, is expected to be announced in coming days at a Riyadh ceremony attended by Yemeni President Abd-Rabbu Mansour Hadi and Saudi Crown Prince Mohammed bin Salman.

While the UAE-backed Southern Transition Council (STC) has a rival agenda to Hadi's government demanding self-rule in the south they are both part of the Western-backed coalition that intervened in 2015 after the Iran-aligned Houthi movement ousted Hadi from the capital Sanaa.

The two sides fell out in August, with the separatists seizing Aden and trying to extend their reach in the south. The fighting opened a new front in Yemen's multi-faceted war and complicated U.N. peace efforts.

Under the deal, a new cabinet comprising 12 ministers each from the north and south should be formed within 30 days, according to the preliminary agreement and a Saudi official who briefed reporters late on Friday.

A source familiar with the agreement and a foreign diplomat said the STC would have some seats for the first time, but no specific portfolios have been reserved, indicating that key details remain to be worked out.

According to the arrangement, all troops that entered Aden, Abyan and Shabwa after Aug. 1 should leave within 15 days to locations determined by the coalition. Medium and heavy weapons are to be placed in a coalition-controlled military camp.

Security forces from all sides will come under the interior ministry and military troops under the defence ministry. Police and general security will take control of Aden.

The Saudi-led coalition will head a joint committee to monitor implementation.

"It's not easy to implement but we are serious about implementing it on the ground," said the Saudi official, speaking on condition of anonymity ahead of the formal announcement.

Yemen's information minister tweeted on Saturday that the agreement had been "initialled" and would be officially signed within two days.

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Resolving the power struggle in the south and easing Houthi-Saudi tensions would aid U.N. efforts to restart peace talks to end Yemen's five-year war, which has killed tens of thousands in one of the world's poorest countries.

The Saudi official said the deal would "send a strong message to the Houthis and the Yemenis that Saudi Arabia is in Yemen not to control territory or to take its gas and oil, but to support the state, its institutions, its unity and to target Al Qaeda and Daesh (Islamic State) and eliminate Iranian intervention in Yemen."

Saudi Arabia has been trying to refocus the coalition on fighting the Houthis on its southern border. The group has repeatedly launched missiles and drone strikes against Saudi cities during the conflict, widely seen as a proxy war with Iran.

Saudi forces took control of Aden after Emirati troops withdrew last week as the UAE, Riyadh's main coalition partner, scales down its presence in Yemen.

The Saudi official said Abu Dhabi had "supported" and "played a role" in recent mediation efforts, without providing details.

He said the power-sharing deal was "an opportunity for the Houthis to see that Saudi Arabia would like to be a peacemaker in Yemen... while Iran is trying to escalate the situation in the region."

Following the private signing, STC spokesman Nizar Haitham called the deal a strategic step towards independence. (Additional reporting by Aziz El Yaakoubi in Dubai; Writing by Stephen Kalin; Editing by Hugh Lawson)