By Randall Mikkelsen

WASHINGTON, Sept 18 (Reuters) - This week's attack on the U.S. embassy in Yemen shows al Qaeda's ability to regroup in a strategically important country and further underscores a shift in the group's focus from Iraq, analysts said.

It is a reminder that the United States will have to keep fighting al Qaeda on multiple fronts even if Iraq -- cast by the Bush administration as the central front in its war on terrorism -- calms down.

"Al Qaeda's most senior leaders have called for attacks in Yemen and elsewhere in the region, and extremist groups in Yemen have made it known in words and terrible misdeeds that they are willing to murder innocent civilians," a U.S. counterterrorism official said.

"The attacks in Yemen are an example of their ability to strike anywhere on the battlefield at any time," said John Arquilla, a professor at the Naval Postgraduate School.

Al Qaeda has for years targeted U.S. interests in and near the Arabian peninsula, the U.S. official said.

But the embassy attack, which the United States says bears "all the hallmarks" of al Qaeda, was the biggest against a U.S. government target in Yemen since the 2000 bombing of the Navy destroyer Cole, which killed 17 sailors at the port of Aden.

The embassy strike in Sanaa killed 17 people, including an American woman and six attackers. The attackers used two suicide car bombs that triggered a series of blasts outside the embassy -- signs, analysts said, of a sophisticated attack.

Al Qaeda in Yemen was weakened after the Sept. 11 attacks in 2001, as President Ali Abdallah Saleh stepped up counterterrorism cooperation with the United States.

Attacks focused mainly on foreign tourists and private companies, said Michael Scheuer, former head of the CIA's bin Laden tracking unit.

"Al Qaeda's had a rough fall in Yemen, but they're an improving organization. American embassies are a pretty tough nut to crack, but they did a pretty good job yesterday," Scheuer said.

"This is a hard target. To me it would say that they have more confidence and that they've rebuilt to the extent that they can do something like this."

The U.S. counterterrorism official said: "Al Qaeda in Iraq is certainly struggling badly, so it's entirely likely that al Qaeda's senior leaders are looking to mount operations in other places."

YEMEN ROOTS

Al Qaeda has deep roots in Yemen. It is the ancestral home of al Qaeda leader Osama bin Laden and was a key source of fighters for the anti-Soviet Islamist brigades in Afghanistan in the 1980s that spawned al Qaeda. About one third of the roughly 250 detainees at the U.S. Guantanamo Bay prison for foreign terrorism suspects are from Yemen.

Yemen, on the southern tip of the Arabian peninsula, is an important link to al Qaeda strongholds in eastern Africa and an infiltration route into Saudi Arabia, whose government al Qaeda wants to bring down.

Although the United States considers Yemen an antiterrorism ally, officials have long been frustrated with the level of Saleh's cooperation, Scheuer said. Saleh has also faced domestic pressure to go easy on al Qaeda, which has given him support.

"He owes al Qaeda in some ways, and so his willingness to actually try to kill the organization in Yemen is pretty limited," Scheuer said. Al Qaeda convicts were among 20 detainees who escaped prison in 2006, an incident that troubled Washington.

Yemen has arrested 30 al Qaeda suspects since the embassy attack, a security source in Sanaa said. But Scheuer dismissed this as a showy rounding up of "the usual suspects."

A U.S. Predator missile strike in 2002 killed six al Qaeda operatives including a Cole bombing suspect, but it has not been repeated.

Defeating al Qaeda in Yemen and elsewhere will require nimble networks of local allies and focused U.S. military and intelligence assistance, said Arquilla, who advocates a "global countertenor network."

"You build the networks and you take the offensive," he said. (Editing by David Storey)

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