October 12, 2000: Al Qaeda in Yemen bombed the USS Cole. (17 killed, 35 wounded). 
October 20, 2008: A parcel bomb detonated in Sanaa City, San'a province of Yemen, killing Shaykh Mohammad bin Rabeesh Kaalan, security chief for Madghal district.
August 2, 2012
On October 12th, 2000 Al Qaeda in Yemen (AQY) emerged as a group hostile to American involvement in Yemen with the bombing of the USS Cole in the Aden harbor. Originally under the leadership of Abu Ali al-Harithi, AQY was the Yemeni branch of the Al Qaeda (AQ) franchise, although they were never recognized by AQ leadership publicly. After the initial attack on the USS Cole the United States responded with a drone strike that killed Harithi and five companions while they drove into the lawless tribal areas of Yemen. Originally attributed to the Yemeni government, the strike was later acknowledged by Washington as a CIA operation.
Following Harithi's death, Muhammad Hamdi Sadiq al-Ahdal took over as the leader only to be arrested at his wedding in late 2003.  After Ahdal's arrest, AQY seemed to fall apart. There was no apparent succession, no person publicly stepped forward as its leader, and many of its members were imprisoned. Many observers assumed that the group had been crushed and were ready to use the government's response to AQY as an example of how to conduct counter-insurgency operations.
However, in February 2006 AQY reemerged in the public eye when 23 of its members tunneled out of a Yemeni prison. This group included many high-ranking members of AQY, most notably Nasar al-Wahayshi, the soon-to-be leader of the organization.  Between 2003 and the prison break in 2006 very little is known about AQY's activities. Because most of AQY's leadership was jailed it was generally agreed that, although there was at least one major attack, day-to-day operations were limited.
Under the new leadership of Wahayshi, AQY began publishing an online newspaper entitled Sada al-Malahim ("Echoes of Epic Battles") in January 2008. The newspaper, published in Arabic, served as a mouthpiece and recruiting tool for the organization. Then, in September 2008, AQY undertook one of its largest operations, attacking the American Embassy in Sanaa, in which twelve people were killed. While this was one of AQY's biggest operations, it was still much smaller than attacks such as the Cole Bombing. The scale of the attack was in line with the reorientation of AQY, under Wahayshi's leadership, toward a more continuous armed rebellion. In the years leading up to AQY's merger to form Al Qaeda in the Arabian Peninsula (AQAP) AQY began smaller-scale operations intended to weaken the Yemeni state.
In January 2009 AQY merged with its Saudi Arabian counterpart AQAP and continued under that name. AQAP members had for many months been escaping over the border into Yemen as the Saudi government tightened its grip on the group.
AQY's original leader, Abu Ali al-Harithi, was killed in a widely publicized CIA Predator drone missile strike in Yemen during the first stages of the War on Terror. He and four other associates were struck while driving about 200 km east of the capital Sanaa in late 2002. Subsequently Muhammad Hamdi al-Ahdal came to lead AQY. Ahdal had many years of experience; he had received training in Afghanistan and fought in Bosnia and Chechnya.  He was also described as the chief of financing of AQY from 2000 to 2003.  The Yemeni government, however, was able to capture Ahdal. He was tried and convicted of forming an armed gang and collecting funds for Al Qaeda, but was released on time served after being in government custody for over three years. Ahdal is currently subject to UN sanctions on travel and finances. 
From late 2003 through 2007 little is known about AQY's leadership. Nasar al-Wahayshi came to lead AQY after breaking out of prison with 25 others in early 2006.  A former personal secretary of Osama bin Laden and veteran of the fighting in Tora Bora, Wahayshi commanded AQY until its merger with AQAP in 2009.
Qa'id Salim Talib Sinyan al-Harithi, also known as Abu Ali al-Harithi or simply Qa'id al-Harithi (2000 to November 5, 2002): Harithi was killed in CIA drone missile strike.
Muhammad Hamdi Sadiq al-Ahdal, alias "Abu-Asim" (2002 to November 25, 2003): Ahal was arrested by Yemeni government.
Nasar al-Wahayshi (2007 to 2009): Wahayshi led the organization until its merger with AQAP in 2009.
Ideology & Goals
AQY is a Sunni Islamist terrorist organization. In their literature and statements AQY makes it a goal to "infidels, Crusaders and Zionists" from the Holy Land.  The group's more immediate is to destabilize Yemen in order to secure a safe-haven for Al Qaeda militants. The majority of their attacks focused on Yemeni or Western political targets within Yemen, illustrating AQY's desire to destabilize the political structure in the country.
Much of AQY's support comes from the group's organizational and financial links to Al Qaeda leadership in Pakistan. Prior to his death, Osama bin Laden believed that the best chance for the establishment of a Muslim state lay in Yemen, indicating the probable presence of financial and logistical support.
Unlike the Iraqi and central branches of Al Qaeda, AQY was by and large an organization made up of Yemenis.  There is also no tangible proof that AQY received funding, tactical support, or even advice from other branches of Al Qaeda. Some in intelligence circles have argued that rise of AQY can be attributed to fighters leaving Afghanistan to take refuge in Yemen. 
Due to the Yemeni government's limited control, AQY was able to operate relatively unchecked in much of the country. The towns of Sa'dah, al-Jawf and Ma'rib were particularly famous for being AQY safe havens. By the time of the merger with AQAP, AQY was also active in the lawless eastern province of Hadramawat. 
Targets & Tactics
Most often AQY targeted foreigners and foreign interests in Yemen, including tourist groups, western oil installations, and western embassies and staff.  AQY did, as they got closer to their merger with AQAP, begin targeting the Yemeni police and military.  While it originally focused on one-time specular attacks, it began to employ smaller, continuous attacks in 2008.  The group hoped, some argue, to demoralize and destabilize the Saleh regime to the point where it would collapse. The usual method of attack was either armed attack by Al Qaeda operatives or bombing, both suicide and conventional. 
AQY does not maintain a political wing and strictly opposes the Yemeni Government.
October 12, 2000: The USS Cole, a U.S. destroyer, was attacked by a boat filled with explosives while docked in Aden, Yemen. (17 killed, 35 wounded).
October 31, 2005: AQY gunmen ambushed and killed policemen in Sa'dah City, Yemen. (12 killed).
July 3, 2007: A suicide car bomb was driven into a tourist convoy in Marib. (9 killed).
May 30, 2008: AQY militants fired two rockets at oil pipelines and refineries. (0 killed).
September 17, 2008: AQY militants disguised as security forces attacked the U.S. Embassy in Sanaa. (16 killed, 6 wounded).
Relationships with Other Groups
AQY, due to its fragmented power structure, worked closely with other like-minded terrorist organizations operating in Yemen. AQY especially worked with another prominent group called the Aden-Abyan Islamic Army, an organization made famous by Abu Hamza al-Masri, the British cleric who campaigned on their behalf. The Aden-Abyan Islamic Army was called an Al Qaeda affiliate by experts though there is evidence that they worked with other elements of Al Qaeda before the foundation of AQY.  The Aden-Abyan Islamic Army was an ally of AQY.
AQY has close relationships with many of tribes in the rural areas of Yemen. The relationships between AQY and Yemeni tribesmen were most often based on monetary compensation on the part of AQY, not necessarily ideological similarities, although certain elements within the tribal system were sympathetic to AQY's goals.  The same Yemeni tribes took money from Marxists, Iraqis, and Saudis in the past, despite ideological differences. AQY also began marrying into tribes, a common tactic used by foreign organizations as a means of solidifying their presence in the country. 
AQY found little support in the northern Houthi regions. The Houthis are Zaidis, a small Shi'a sect. While AQY and the Houthis have similar goals with respect to the Saleh regime, mutual distrust and ideological differences prevented the two groups from working together. 
Other Key Characteristics & Events
It is important to note that AQY's presence in Yemen, and its support by certain elements of Yemeni society, is made possible in part by social conditions within Yemen. Widespread political corruption, abject poverty, low rates of literacy and rampant chewing of qat, a mild narcotic drug to which the vast majority of the male population is addicted, are only a few of the most visible social problems that aided AQY's cause and continue to destabilize the country.
^ Vick, Karl. "Yemen Pursuing Terror in Its Own Way; Tactics, Results Vary, but the Target is al-Qaeda." Washington Post. 17 October 2002. A14.
^ Schanzer, Jonathan. "Yemen's War on Terror." Orbis. Vol. 48, Summer, 525.
^ Schanzer, Jonathan. "Yemen's War on Terror." Orbis. Vol. 48, Summer, 522.
^ Schanzer, Jonathan. "Yemen's War on Terror." Orbis. Vol. 48, Summer, 522.
^ United States. Cong. Senate. Committee on Foreign Relations Report. Al-Qaeda in Yemen and Somalia: A Ticking Time Bomb. 111th Cong. 2nd Ses. Washington: GPO, 2010.
^ Al-Faqi, Abdullah. Quoted in Nicholas Blanford. "Are Iran and Al Qaeda Vying for Influence in Yemen?" The Christian Science Monitor. 13 July 2004. Pg 11. World.Also see Haykel, Bernard. "Inside Story: Yemen's 'War on Terror.'" Al-Jazeera. 27 Dec. 2009. Television. Retrieved on 14 Dec. 2010 from http://www.youtube.com/watch?v=KI8MtOKYb1Y