Yemen Conflict Seems to Be Settling Into War of Attrition, U.S. Aides Say : Mideast: Prolonged fighting could destabilize region, an American diplomat warns. Scud missile kills 25 in capital.

One week after the outbreak of fighting, Yemen’s civil war now appears to be settling into a nasty, potentially costly war of attrition that is unlikely to be resolved by military means, U.S. officials say.

At least 25 men, women and children were killed Wednesday in the deadliest single attack of the conflict, when a Scud missile landed in a residential area of the capital, Sana. The Yemen conflict marks the first time Scuds have been fired in the Middle East since the 1991 Gulf War.

Yet the rival northern and southern sectors, united in a tenuous way in 1990, have resisted outside mediation by the United States, the Arab League and others.

“Now . . . the fighting has gone on for several days, and I believe it is becoming clearer to all parties of all sides that there is not a military solution to this crisis,” Robert Pelletreau, assistant secretary of state for Near East affairs, said Wednesday at a news conference in Bahrain.

He visited Sana last week to urge reconciliation and offer U.S. mediation but was rebuffed.

A full-scale civil war in the Arab world’s poorest but one of its most enchanting countries--which gave the world the Queen of Sheba and a unique Moorish gingerbread style of architecture--could have wider political and economic repercussions for the oil-rich Arabian Peninsula. Pelletreau warned that prolonged conflict could destabilize the entire region.

The main focus of the combat so far has been a two-pronged thrust into the south by northern forces loyal to President Ali Abdullah Saleh, whose headquarters are in the unified capital of Sana.

The forces’ target is Aden, a financial center and the former southern capital, and troops loyal to Vice President Ali Salim Bidh. Bidh is former president of South Yemen.

The fighting initially erupted between rival tank brigades in the northern city of Amran, although it is still unclear which side was the aggressor, U.S. officials said. Since then, the fighting has become more sophisticated, with the south firing several rounds of Scuds and the north launching repeated air strikes.

But neither side has a decisive edge in equipment or training, despite millions of dollars spent by both in recent months on low-level war materiel. The northern army is larger, while southern troops are qualitatively better.

“The fighting is stalled. As anticipated, northern forces were able to make gains for four or five days, then they ran into supply problems. Now the southerners have had a chance to regroup,” a senior Administration official said. “So militarily it’s going no place, at least for now.”

Diplomatic scrambling throughout the Persian Gulf also has failed to sway the parties. “We . . want to make it clear that there is no longer any reason for mediation,” Radio Sana announced last weekend.

But the world’s newest conflict does not necessarily mean the end of a single state.

North and south were divided for most of the 20th Century as a result of rival domination by Ottoman and British forces. Unity of the conservative, tribal north and its 10.2 million people with the larger, formerly Marxist south, and its 2.4 million citizens, is still widely popular among the populace--although the armies, intelligence services, police and bureaucracies never were able to agree on terms for merging their functions.

Together, the two sectors have a population approaching 13 million and an area more than twice the size of Wyoming--thereby raising Yemen’s clout and status from a backwater to a serious player in regional politics. Oil discoveries since the mid-1980s on the old border and recently in the south offer the first hope of economic progress since Yemen was a global shipping center centuries ago.

“No one wants to be the one to split Yemen, as the idea of one Yemen is still popular,” said F. Gregory Gause, a Council on Foreign Relations fellow who was recently in Yemen.

American officials believe that the north is now intent on absorbing the south. “The northerners have every intention of keeping the territory united. They just want to be the only political actors in a single state,” the senior official said.

Unified Yemen faces the same problems as former Soviet republics that adopted democracy but are still led by figures from the old regime. Yemen has the added disadvantage of two previous regimes, whose long rivalry continued after democratic elections in June, 1993, led to a power-sharing arrangement.

But the stakes are potentially higher than just the future of Yemen. The conflict on the region’s southern tier could endanger the stability of the area, particularly with regard to aggressive and volatile Iraq.

The dangers range from refugees flooding neighboring Saudi Arabia or Oman to foreign manipulation of Yemen’s political chaos for wider regional gains, according to Michael Hudson, a Georgetown University professor who was evacuated from Sana on Saturday.

Because it shares a long border with Yemen, Saudi Arabia feels particularly vulnerable, especially since it expelled more than 1 million Yemeni laborers after Iraq’s 1990 invasion of Kuwait when Yemen supported Baghdad. Most remain unemployed.

In terms of intervention, Iraq, Iran and Sudan all have shown signs of growing interest, U.S. officials said. A protracted conflict also could encourage foreign exploitation, in much the way Lebanon became a battlefield for regional rivalries.

Also, as the Arab world’s youngest democracy, Yemen’s failed political experiment may not bode well for pluralism in the broader 22-nation Arab bloc. Yemen’s unrest is likely to reinforce biases of leftist totalitarian regimes and right-wing monarchies about the dangers of empowerment. Yemen will be used as the example to avoid rather than the precedent to follow, Middle East experts said.

Ironically, the failure by both sides to fully establish democracy is responsible for the strife, said Thomas Melia of the National Democratic Institute for International Affairs, who monitored the 1993 election and has written a book about it.

“It does not mean that democracy is incompatible with Arab culture. It instead points out that elections alone don’t make a democracy,” he said. But he conceded that Yemen’s problems may set back movement toward democracy in the Middle East.

Finally, Yemen’s Bab al Mandab straits are the entry or exit point for all Red Sea and Suez Canal traffic, giving Yemen strategic value.

In the short term, neither side is likely either to want or to have the requisite forces to affect shipping. And the absence of Yemen’s oil exports--roughly two-thirds of the daily production of 350,000 barrels--is not likely to reverse the slump in oil prices. But prolonged Yemeni strife or instability could spawn anxiety among international finance, shipping and oil circles that could affect costs or patterns of trade.