DUBAI (Reuters) - Yemen's Saudi-backed government and southern separatists are expected on Thursday to announce a deal to end a power struggle in the southern port of Aden that fractured an Arab coalition battling the Iran-aligned Houthi group, officials said.
The UAE-backed separatist Southern (NYSE:SO) Transition Council is nominally allied to the Saudi-backed government of President Abd-Rabbu Mansour Hadi, but the two sides fell out in August, with the separatists seizing control of Aden.
Saudi Arabia has hosted indirect talks between them to rebuild the coalition fighting against the Iran-aligned Houthi movement that expelled Hadi's government from the capital Sanaa five years ago.
Fighting between pro-Hadi forces and the separatists had opened a new front in the multi-faceted war and complicated United Nations peace efforts.
Riyadh has been trying to refocus the coalition on fighting the Houthis on its border. The Houthis have repeatedly launched missiles and drone strikes against Saudi cities during the conflict, widely seen as a proxy war between Saudi Arabia and Iran.
Two officials in Hadi's government told Reuters the pact to end the Aden standoff would be signed in Riyadh on Thursday.
STC leader Aidarous al-Zubaidi, who has been involved in the month-long talks in the Red Sea city of Jeddah, headed to Riyadh on Wednesday, according to a post on his Twitter account.
The deal calls for a government reshuffle to include STC, which seeks self-rule in the south, and the restructuring of armed forces under Saudi supervision, they said.
Saudi forces took control of Aden after Emirati troops withdrew last week. The move seemingly paved the way for ending the crisis that had exposed differences between Riyadh and Abu Dhabi over how to proceed in the wider war that has been in military stalemate for years.
The UAE already scaled down its presence in Yemen in June as Western pressure mounted to end the conflict that has pushed millions to the brink of famine. But Abu Dhabi retains influence through thousands of Yemeni troops it armed and trained.
Hadi's government has asked the UAE to stop supporting STC. Abu Dhabi criticized Hadi's government as ineffective and distrusts Islamists with whom he is allied.
Resolving the power struggle in the south and easing Houthi-Saudi tensions would aid U.N. efforts to restart peace talks to end the war that has killed tens of thousands.
The Houthis last month offered to stop missile and drone attacks on Saudi Arabia if the coalition ended air strikes on Yemen. Riyadh has said it views the offer "positively".
The group, which controls Sanaa and most big urban centers, extended the offer after claiming responsibility for a Sept. 14 assault on Saudi oil processing facilities. Riyadh rejected the Houthi claim of responsibility and blames Iran for the attacks, a charge Tehran rejects.
The Houthis deny being puppets of Iran and say they are fighting a corrupt system, pointing to the standoff in Aden as proof Hadi is unfit to rule.