Since the spring of 2007, a series of protests have gripped Southern Yemen. The intensity of the recent protests, their grassroots origins, and their connection with similar grievances and potential instability in the North make the situation particularly dangerous for the Salih regime. The regime has three main policy options for solving the growing crisis: increased repression, a combination of co-option and divide and rule tactics, or an aggressive package of political and economic reform that has as its cornerstone meaningful decentralization. Of the three options, decentralization is the most likely to preserve unity, encourage economic development, and strengthen Salih’s grip on power in the long term. Unfortunately, fear, greed, and old habits will likely guide the President’s decision, and he will choose a combination of targeted repression, co-option, and divide and rule tactics. This choice will aggravate the conflict and most likely result in a prolonged period of instability in the South, which may destabilize a tenuous political balance in the North.