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September 02, 2014 AT 4:31 PM
Yemen's president dismissed his government on Tuesday, proposed a national unity administration and suggested reinstating fuel subsidies, government sources said, in moves to quell weeks of unrest by a rebel movement. But the Houthis, a Shi'ite Muslim group that had massed tens of thousands of supporters in the capital Sanaa with camps set up near the Interior Ministry, rejected the compromise proposals by President Abd-Rabbu Mansour Hadi. The impasse raises fears of worsening instability in Yemen, an impoverished Arabian Peninsula state bordering oil exporting power Saudi Arabia, and which is also struggling with a stubborn al Qaeda insurgency and southern secessionists.