By Angus McDowall

ADEN, Sept 29 (Reuters) - To outsiders, Yemen's civil war looks like a battle pitting Gulf-backed President Abd-Rabbu Mansour Hadi against the Iran-allied Houthi militia with ex-president Ali Abdullah Saleh, but there is another important dynamic at play - south versus north.

Even before the shooting started this spring, many southern Yemenis were demanding separation from the north after 25 years of sharing a state, but the destruction inflicted by the northern-based Houthis during their occupation of the port city of Aden has given a big boost to the secessionists.

The roads around Aden's al-Badr military base, which was home to army units loyal to the northerner Saleh, suffered some of the worst damage during the four months of street-to-street fighting that ended in July.

"There was a lot of up-close killing. Men, women, all humans. From all districts around here. They killed everyone. All the north is responsible. We don't want unification," said Ahmed Mohsen al-Awlaki, a laboratory technician turned fighter near al-Badr.

The Gulf-backed forces recaptured Aden in July before pushing north, allowing Hadi to return to his country last week after six months of exile in Saudi Arabia. They are now preparing for a thrust against the Houthi-held capital Sanaa.

For Hadi and his Gulf backers, managing southern ambitions and grievances will prove crucial as they continue to battle the northern Houthis and Saleh's forces in other provinces with the ultimate goal of re-establishing Hadi as ruler of all Yemen.

At stake are not only Hadi's own hopes of regaining control of Sanaa but also a wider struggle being waged against al Qaeda, which has used its strong presence in remote southern areas of the country to plot attacks against international targets.

South Yemen, a former British colony and the only Communist Arab state, united with the north in 1990 after a brief 1986 war between rival factions that wiped out its political leadership.

The collapse of South Yemen's financial patron, the Soviet Union, around the same time also encouraged the unification process.

SOUTHERN DISCOMFORT

It was never a happy marriage: Saleh's north Yemen dominated from the start and when the south tried to break away four years after unification, the president's army quickly won, cementing Sanaa's rule and Aden's decline, feeding southern resentment.

Although most of Yemen's modest oil and gas reserves - an important source of revenue for the impoverished state - are in the south, it is the north that has prospered and many southerners blame Sanaa for widespread poverty and joblessness.

"The north took all the work. Ali Abdullah Saleh took all the work," said Ihab Khamees, 43, a resistance fighter who said he had not worked for years and whose own son was killed in the fighting in July.

Before the latest conflict in Yemen erupted, the southern movement, known as Herak, was a chaotic mess, its leaders disunited and its various factions unsure of whether to push for immediate secession or to seek autonomy within a federal Yemen.

The war, while raising the emotional temperature and giving military experience to thousands of young men who now call themselves the Southern Resistance, has still not managed to unite the movement's leadership or to define its goals.

Still, pass any of Aden's many checkpoints and the sarong-wearing fighters levelling their guns at traffic say they are members of the Southern Resistance. They fly the flag of pre-unification South Yemen and declare enmity with the north.

At one such checkpoint, leading to the Jazirat al-Omal district near the airport where intense fighting left almost every building a wreck, the three scrawny armed men in torn clothes who manned it came from Abyan, another southern region.

Saleh Mohammed Awadh, who sported an afro-like shock of tangled, dusty hair and swung his rifle around at waist-height as he spoke, said many people from his district had come to Aden to fight the Houthis.

"We came to Aden individually. But now we will stay here until the situation is better. So many of us were injured, so many killed. Thousands came," he said.

Abyan is known in Yemen as a particularly wild region where tribal writ trumps central rule and in whose remote ravines and mountain caves al Qaeda has in recent years established a strong presence.

JIHADISTS

In the al-Saada neighbourhood, near to where Awlaki and his neighbours had fought Saleh's troops around the Badr military base, a mural on a house wall proclaimed: "The martyr Ahmed al-Darweesh is a Yemeni hero".

People in Aden describe Darweesh as a separatist leader they say Saleh unjustly imprisoned in 2010 on a false charge of being an al Qaeda militant and who was then murdered by his jailers in the security prison in the city's Tawahi district.

Many separatists dismiss suggestions that their movement harbours jihadist elements as a northern slur, and they often accuse Saleh of using al Qaeda as a cat's paw to stir unrest from which he himself benefits.

However, across the street from where Awlaki fought the Badr army units, a red scrawl of graffiti uses the sectarian term "rejectionist" employed by al Qaeda and other Sunni Muslim hardliners to describe Shi'ite Muslims.

"Aden is the graveyard of the rejectionists", it reads.

Al Qaeda has gained control of southern Yemen's other big city, Mukalla, and men with al Qaeda's black flags have staged displays of strength in Aden since it fell, leading to speculation it has followers within the Southern Resistance.

What all Yemeni leaders appear to acknowledge is the risk that if the south's anger is not addressed there is a risk that opposition will coalesce around al Qaeda.

That Yemen should stay as one country is something that both Hadi's government and his Gulf backers still insist upon.

Yemeni Vice President Khaled al-Bahah, himself a southerner, said the south's concerns needed to be addressed, but he also urged patience.

"Until now there is no (progress) visible for people, especially in the south. And that's why it's a kind of pressure until they see something moving towards unity," he said.

(Editing by Gareth Jones)