* Saudis: Yemen unable to control territories outside Sanaa
* Yemen govt's new advisers lack needed tribal links-Saudis
* Yemen questions accuracy of cables released by WikiLeaks
(adds Yemen ministry comments on WikiLeaks)
By Ulf Laessing
RIYADH, Dec 1 (Reuters) - Saudi Arabia regards neighbouring Yemen as a failed state where President Ali Abdullah Saleh is losing control, the Saudi counter-terrorism chief said, according to a leaked U.S. diplomatic cable.
The Gulf Arab kingdom is worried that al Qaeda's Yemen-based wing is exploiting instability in its impoverished neighbour to stage more attacks inside Saudi Arabia, after Riyadh halted a militant campaign with the help of foreign experts in 2006.
A Yemeni foreign ministry official rejected the comments about Yemen in the leaked documents, calling them inaccurate.
The 250,000 diplomatic cables released by the whistle-blowing website WikiLeaks describe the candid views of a range of foreign leaders and include blunt assessments of security threats. [ID:nN28176154]
"We have a problem called Yemen," said Prince Mohammed bin Nayef, the son of powerful Interior Minister Prince Nayef bin Abdulaziz, according to a cable written by the U.S. embassy in Riyadh in May 2009.
The prince described Yemen as failed state that is "very, very, extremely dangerous", according to the cable reporting on a meeting of the prince with Richard Holbrooke, senior U.S. envoy for Afghanistan and Pakistan, in Riyadh in May last year.
The Saudi and Yemeni wings of al Qaeda merged last year to form a regional group based in Yemen that has claimed responsibility for a parcel bomb plot from Yemen.
Yemen's cash-strapped government is not only struggling to curb a resurgent al Qaeda wing, it is also trying to cement a shaky ceasefire with rebels in the north and suppress a separatist rebellion in the south.
Saudi Arabia is bankrolling the government of Saleh, a veteran ally, and gives a great deal of security assistance to Sanaa, but both sides decline to say how much.
"The Saudis would like Saleh to be a strong leader ... but his vision of Yemen has shrunk to (the capital) Sanaa, and he is losing control over the rest of the country," said the cable, which was cleared by Holbrooke himself.
Saudi Arabia also felt that with Saleh's long-time advisers gone, he was relying on his son and other younger officials who lack good contacts with the tribes that dominate much of Yemen, according to the cable.
YEMEN QUESTIONS LEAKS
In one of the first reactions from a Yemen official on the leaks, a foreign ministry source who asked not to be named told Reuters that the documents released did not clearly reflect Yemen's position.
"What was passed on is not accurate to what actually happened in those meetings," he said, apparently referring to a diplomatic cable posted by WikiLeaks that indicated Yemen was helping cover up the American role in missile strikes on AQAP.
According to the leaked documents, Saleh told General David H. Petraeus, then the American commander in the Middle East, "We'll continue saying the bombs are ours, not yours."
This prompted the Yemeni deputy prime minister to joke that he had just "lied" by telling parliament that Yemen's forces carried out the strike.
The Yemeni foreign ministry source said Yemen was acting transparently. "Yemen's positions are clear and widely known and not ambiguous."
(Additional reporting by Mohamed Sudam; editing by Mark Heinrich)
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