But this onetime jewel of the British empire has fallen onto hard times -- and now seethes with sedition as Yemen lurches toward civil war and possible disintegration.

The return this weekend of ousted President Abdu Rabu Mansour Hadi, a southerner, after weeks of house arrest in the capital, Sana, has done little to quell separatist furor here in the south.

Blue-tinged flags of an erstwhile new independent nation are ubiquitous. Gaggles of pro-independence protesters march on the streets. Separatist slogans line the walls. Talk of rebellion is rampant.

"If there is no secession, then this area will become the biggest conflict in the Middle East -- bigger than Iraq or Syria," warned Mohammad Nasser Hattab, who heads a "popular committee" militia that has commandeered a police station across from the tattered park where a stolid and plump Victoria still observes the horizon.

"The situation has gotten to the point that it is us or them on this land," said Nasser, amid nods of agreement from fellow militiamen with Kalashnikovs and checkered head scarves gathered on the second floor of a dingy police precinct office in the portside Tawahi district, known as Steamer Point during British rule.

This fractured nation of 26 million, the poorest in the Arab world, has many hot spots in the aftermath of the fall of the capital, Sana, to the northern-based Houthi faction, a mostly Shiite Muslim group in a largely Sunni Muslim nation. The Houthis overran the capital in September and consolidated control in recent weeks, placing Hadi and others in his administration under house arrest and dissolving parliament.

The emergence of the Houthis, an ally of Iran, threatens to turn Yemen into yet another geopolitical battleground with profound implications for U.S. policy. The nation has until now been relatively free of the sectarian-fueled violence that has ravaged Iraq and Syria.

Fostering stability here has been a major goal of the Obama administration, which has touted Yemen as a success of its counter-terrorism strategy. The nation is home to Al Qaeda in the Arabian Peninsula, regarded as among the most potent of the global terrorist network's branches. U.S. drone strikes continue to hit Al Qaeda targets in Yemen, despite the Houthi takeover.

The port of Aden, still bustling but much depleted since its colonial-era days as one of the world's busiest harbors, was the site of a signature Al Qaeda attack: The 2000 strike on the U.S. destroyer Cole that left 17 U.S. service members dead and 39 wounded.

The Houthis have vowed to destroy Al Qaeda, a Sunni group that has repeatedly targeted them. But others argue that the Houthi advance has become an Al Qaeda recruiting bonanza, drawing in Sunni youth and tribesmen.

"Many tribes had abandoned Al Qaeda, but the arrival of the Houthis in Sana pushed the tribes back to Al Qaeda," Aden Gov. Abdul Aziz bin Habtoor said in an interview here.

To the east of Sana, Sunni Arab tribes, some allied with Al Qaeda, are arming against a possible Houthi thrust into resource-rich Marib province, source of much of the nation's oil and gas and its major energy infrastructure. Sunni tribal leaders, reportedly receiving aid from Saudi Arabia, Yemen's wary northern neighbor, have vowed to resist.

Meanwhile, the central government in Sana appears to have lost much of its control over the south.

Northern and southern Yemen were two countries until merging in 1990, but tensions between the two distinct regions never completely dissipated. Now, the nation's political turmoil has given a renewed boost to the secessionist agenda.

The Houthis have relatively little support in the south. There is widespread disdain for what southerners call a Houthi power grab -- though the Houthis insist that their goal is a democratic, united state in which all regions are represented.

Hadi, a former general, as well as a former vice president under longtime strongman Ali Abdullah Saleh, fled from house arrest and arrived in Aden on Saturday.

Many here were outraged that Hadi did not embrace secession upon his return. Instead, he pledged to work toward a political settlement to maintain a unified Yemen -- the goal of United Nations-brokered talks.

"The situation is very dangerous now," said Mohsen Mohammed bin Farid, who heads a coalition seeking to create "South Arabia" among eight southern provinces. "The people of the south were hoping that Hadi would be with us, be with independence."

Although Hadi has many supporters here, street protesters greeted his statement of unity with the chant: "Hadi, you are contemptible, the blood of the sons of the south is not cheap."

So-called popular committee militiamen, on the payroll of political factions and tribes, have set up checkpoints and usurped the security services in parts of the south, including Aden. They bristle with indignation at the idea of Houthi-led rule.

"They [the Houthis] do not represent a Yemeni point of view," said Nasser, the popular committee commander near the port, in an apparent reference to the Houthis' links to Iran. "They are influenced by external dictates."

The future role of Hadi, backed by the United States and its Persian Gulf allies, remains a question mark. Hadi appears to have rescinded his resignation from the presidency -- tendered Jan. 22 while he was under house arrest -- and signaled that he favors continued dialogue among all of Yemen's factions to keep the nation intact. His allies insist that most southerners prefer to remain part of Yemen.

"The great majority of people in the south support the idea of unity and adhere to the concept of a federal state," said Bin Habtoor, the Aden governor, who spoke Sunday after meeting with the president here.

But Hadi insists that all appointments and government actions made since Sept. 21, when the Houthis overran Sana, are null and void. The governor also said talks should be moved from Houthi-controlled Sana to Aden, where, despite the political turmoil, life in this coastal town proceeds at a leisurely pace: At a street market, fish mongers offer silver-colored, small sharks and thick red steaks cut from giant tuna, while young men play billiards on outdoor tables.

"The Houthi forcibly seized power with the gun and he must relinquish power whether he wants to or not," said Bin Habtoor.

In Sana, however, the Houthis have showed no sign of pulling back. With regional, sectarian and tribal tensions rising, the prospect for compromise appears to be narrowing.

"What we see in Yemen is a potential humanitarian crisis, the prospect of economic collapse, and possible areas of conflict," Jamal Benomar, the U.N. special envoy for Yemen, said in an interview in Sana. "The prospect for fragmentation is clearly there. We are saying that there is no other way but for all the political parties to come together and make a deal sometime soon."

Bulos is a special correspondent. Special correspondent Zaid al-Alayaa in Aden contributed to this report.