* Separatists want Islamists, northerners out of power in Aden
* Southern separatists' takeover of Aden exposes UAE-Saudi rifts
* Separatists in Saudi-led coalition but want independent south
* Crisis diverts focus from battle against Iran-aligned Houthis
* Fracture in Saudi-led coalition complicates UN peace efforts (Adds comment by Yemeni government official, Gulf source)
By Guy Faulconbridge
LONDON, Aug 14 (Reuters) - Yemen's southern separatists vowed on Wednesday to keep control over Aden, warning the only way out of the impasse that has fractured a Saudi-led military alliance was for Islamists and northerners to be removed from positions of power in the south.
The separatists, supported by coalition member the United Arab Emirates, effectively took over Aden, the temporary seat of the Saudi-backed Yemeni government, over the weekend by seizing government military bases.
The Western-backed, Sunni Muslim alliance intervened in Yemen in March 2015 against the Iran-aligned Houthi movement that ousted President Abd-Rabbu Mansour Hadi from power in the capital Sanaa in late 2014. His government relocated to Aden.
Southern fighters are a major component in the coalition's battle against the Houthis. But the war has revived old strains between north and south Yemen - formerly separate countries that united into a single state in 1990 under then-President Ali Abdullah Saleh.
The crisis has exposed a rift between Saudi Arabia and the UAE as Abu Dhabi places national interests over their strategic alliance, distancing itself from Yemen and leaving Riyadh to deal with a messy war in the fractious Arabian Peninsula nation.
Abu Dhabi has echoed Riyadh's call for dialogue among Aden's warring parties but stopped short of asking the southern forces that it funds and arms to cede control.
"Giving up control of Aden is not on the table at the moment," Saleh Alnoud, British-based spokesman for the Southern Transitional Council (STC), told Reuters in an interview.
"We are there to remain - but to remain for a positive reason: to maintain stability," Alnoud said.
He said that to end the stand-off, all elements of the Islamist Islah party - a backbone of Hadi’s government that the UAE sees as an offshoot of the Muslim Brotherhood - should be ousted from posts of influence along with any northern politicians.
The STC accuses Islah of being complicit in a deadly Houthi missile strike on southern forces earlier this month, a charge the party rejects. The coalition has promised military action against the separatists if they do not vacate government sites.
"Islah has been at the heart of this," Alnoud said.
"That would be a very good start if Islah was removed from the whole of the south and allow southerners to govern themselves," he said. "We consider the government was infiltrated or controlled by the Islah."
One possible way out, Alnoud said, would be to hand over responsibility for security of barracks to the STC's Security Belt or Aden Police.sonos sonos One (Gen 2) - Voice Controlled Smart Speaker with Amazon Alexa Built-in - Black read more
The Yemen war has been in military stalemate for years and Saudi Arabia and the UAE have come under pressure from Western allies, including those that supply them with arms, to end a conflict that has pushed Yemen to the brink of famine.
The UAE in June scaled down its presence in Yemen, leaving behind thousands of southern forces it has built and trained.
A Yemeni official told Reuters the separatist takeover was approved by the UAE and aimed at removing Islah forces, which Saudi Arabia tolerates despite UAE concerns because the party props up Hadi's government.
The UAE foreign ministry and the government media office did not immediately respond to a Reuters' request for comment.
“Abu Dhabi now seems to be reconsidering the wisdom of Saudi foreign policy under MBS (Crown Prince Mohammed bin Salman), which has produced few tangible victories of note,” the New York-based Soufan Center said in a briefing on Wednesday.
A MESSAGE FOR MBS?
While the UAE can exit Yemen while maintaining influence through southern forces, Saudi Arabia cannot walk away without neutralising the armed Houthi movement on its borders.
“Now that the Saudis are left alone...I don’t think they know how to get out," said a Gulf source familiar with Yemen policy. "The Saudis must accept that five years of Hadi government is a failure.”
Alnoud said southerners would no longer accept being sidelined. "The Saudis need to make a decision: do they want to win the war against the Houthis? If they do, then they need to recognise us - STC - to govern and manage the south even in the transition period," he said.
Riyadh called for an emergency summit over Aden without setting a date. Hadi's vice foreign minister, Mohammed al-Hadhrami, told Reuters on Monday they would not attend unless the UAE stops backing separatist fighters following the "coup".
Alnoud had a message for Prince Mohammed, Saudi Arabia's de factor ruler.
"I would say to MBS: if you really want to win the war, the southerners have been credible partners, have shown they can engage constructively... but in return they need to keep the south clean from these corrupt Islah-affiliated officials."
Alnoud said U.N. peace efforts needed to catch up with events. The United Nations is already struggling to implement a stalled peace deal in the main port city of Hodeidah and ease tensions between Saudi Arabia and the Houthis to enable political talks on a transitional governing body to end the war.
"Southerners need to be given the power to govern themselves and southerners need to be engaged as an equal partner in the peace process," Alnoud said. "We can still be part of Yemen, Hadi can still be president but the south is to be ruled and governed by southerners."
So will the south break away?
"I am not trying to avoid saying we will break away because that is a real possibility now," Alnoud said, adding one option was for two governments: one in the north and one in the south.
(Reporting and writing by Guy Faulconbridge with additional reporting by Stephen Kalin in Riyadh and Lisa Barrington in Dubai; Editing by Ghaida Ghantous and Mark Heinrich)
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