The Yemeni-Saudi border dispute took a new turn last week when the United States offered to mediate. "We would be happy to help ... we would like to see this problem solved," Assistant Secretary of State Edward Walker announced in Sana’a after talks with President Ali Abdullah Salih.

Walker then flew on to Riyadh where the Saudi interior minister, Prince Nayef, appeared to rebuff the offer, saying: "The kingdom is not asking for any mediation and does not need it." But the prince’s careful phrasing may have been intended to salvage Saudi pride - it did not actually rule out the possibility of accepting mediation.

The US has almost certainly recognised that the border negotiations have reached a crucial stage where, with some nudging from a third party, they can be brought to a successful conclusion but, if left to their own devices, may well meander on for years. The last American intervention, five years ago, brought the two sides together in a Memorandum of Understanding which has been the basis for border discussions ever since.

The Americans, of course, have their own interests in the region and have hinted that they would like to move beyond mere border demarcation towards a wide-ranging settlement which would, as Walker put it, help to maintain stability and boost economic development.

Interestingly for Yemen, there are also suggestions that the US envisages a reconciliation between the Yemeni government and the proscribed opposition group, Mowj, as part of an overall settlement. Shortly before the American initiative was announced, Mowj representatives visited the State Department and met Diana Shelby, head of the Yemen and Oman section, for talks which they described as "positive and useful".

Mowj comprises various southern elements who fought and lost a brief war of secession in 1994, with backing from the Saudis and a few other countries. Although the southerners had their own motives for fighting, northern leaders have long maintained that the Saudis supported the southern cause as a way of furthering the border dispute by other means.

After the war, Mowj set up headquarters in London, where - despite retreating from its separatist line - it has waged a propaganda campaign against the Sana’a government. In 1998 the separatist leaders were tried in their absence on treason charges. Five were sentenced to death but the Mowj leader, Abd al-Rahman al-Jifri, was merely given a suspended sentence which left open the possibility of his eventual return.

Rehabilitation of Mowj would certainly cause a major shift in the delicate political balance within Yemen and, at first sight there is no pressing reason why President Salih would agree to it.

One view is that long-term changes - particularly democratisation and reforms demanded by outside agencies such as the World Bank - are forcing the president to re-structure his power base. Until now, the president’s power (and also the stability of the country) has been based on a system of alliances and patronage, often involving subsidies for tribes and government jobs for their members.

That is still the case, but the system is becoming more difficult to maintain. The World Bank is calling for a streamlined civil service where people not only collect salaries but actually work. And as government finances become more transparent, payment of informal subsidies to tribes becomes more difficult.

The president’s new power base, nominally but not yet in reality, is the people who elected him with a 96% majority last October. But their continuing support is not guaranteed, and they will expect something more tangible than promises before the parliamentary elections next year - which will mean diverting money from tribal supporters to the general public.

Already there are signs of deteriorating relations between the president and some of the most powerful sheikhs, particularly in the north. On the principle that it is dangerous to have too many enemies at the same time, trouble in the north is usually a signal for better relations with the south - so this might, conceivably, be the moment that Mowj and al-Jifri have been waiting for.