People have been setting up shacks in the area known as Yemen for more than 3000 years. Ancient kingdoms earned their cash by selling scented tree resins known as myrrh and frankincense to the Egyptians, Greeks and Romans. Various states rose and fell along the trade routes; mightiest among them was Saba, which hung around for 14 centuries from 1000BC, and based its huge agricultural wealth around the famous dam of Ma'rib. When, in the 1st century AD, the Greeks and Romans discovered they could travel to and from India by boat, Yemen's ports made a killing, eclipsing the towns which had grown up along land trade routes. In 395 the Holy Roman Emperor Theodisius made Christianity the new state religion, effectively putting an end to the demand for frankincense and sending the Sabean kingdom into an irreversable decline. By 575 the Persians had waltzed in and were lords of all they surveyed.
In the 7th century the Persian governor of Yemen converted to Islam - like good subjects, the rest of the population soon followed, and by mid-century the Yemenis had knocked up a mosque or three. As the centre of Islamic power moved from the Arabian Peninsula to the Persian Gulf, Yemen was left more or less to its own devices, and a number of short-lived dynastic kingdoms sprang up. The Zaydi dynasty, a strict Islamic state founded in 897 in the north of the country, survived until Yemen's 1962 revolution. The Kathirids, who took power in the south in the 15th century, lasted until 1967.
Europe's feisty colonial powers first started grabbing at the peninsula in 1513, when Portugal set its sights on Aden. Egypt's Mamluks and Turkey's Ottomans were none to keen on this Iberian invasion, and after a four-year tussle Yemen fell to the Ottomans. In 1636 they Zaydi dynasty threw the Turks out, but in 1839 the British took Aden and made it a protectorate, extending their rule over most of the south by the 1950s. The Ottomans returned in 1849, taking over the north-west of the country. The local sheiks refused to buckle under this foreign authority, and after decades of insurrection the Ottomans, already destroyed by WWI, left Yemen to its new king, Imam Yahya (although Britain still held on to its protectorate states).
Although the Imam had control of the Tihama, Yemen's northern tribes were determined to have their own leader in power, and allied with the newly-formed state of Saudi Arabia. The 1934 Saudi-Yemeni war resulted in Saudi Arabia taking over Yemen's 'Asir region. Over the next 30 years Yemen remained isolated and underdeveloped - by the 1960s there were no paved roads in the country, almost no doctors and very low literacy levels.
Throughout the 50s, Yemen indulged in several border scuffles with the Aden protectorate, eventually turning to Cairo for help. As part of its pact with Egypt, Yemen joined the United Arab States, made up of Egypt and Syria. In 1962, when the Imam died, a group of army officers held a coup and founded the Yemen Arab Republic. Forces loyal to the Imam's son fled to the northern mountains, where they attained the support of Britain and Saudi Arabia and waged war on the Republicans, supported by Egypt and the USSR. In 1967 the Egyptians pulled out, but the Royalists were unable to defeat the Republicans. In 1970 the Imam-in-waiting was exiled to Britain and the Yemen Arab Republic was recognised by Saudi Arabia.
All the trouble up north got a few southern Yemenis stirred up enough to start a revolution of their own. The National Liberation Front - a Marxist, nationalist guerilla group - began a war against the British in 1963. In 1967 the British abandoned Aden and the People's Republic of South Yemen was born. Without British cash, and with the recent closure of the Suez Canal, the new Republic was in dire economic straits. In order to get economic support from Communist countries it nationalised much of the economy and declared itself a Marxist state, changing its name in 1969 to the People's Democratic Republic of Yemen.
Of course, nothing spells trouble like two countries with the same name. Throughout the 70s, the two Yemens had border spats aplenty, as well as plenty of internal instability. In 1978 Lietenant Colonel Ali Abdullah Saleh became president of the YAR, introducing a period of non-democratic stability that lasted through the 80s, while in the PDRY things got so bad that they ended up fighting a civil war with themselves in 1986. When the Soviet Union collased at the end of the 80s, the PDRY lost its source of cash and gave up on the struggle, choosing to unite with the YAR.
The Unified Republic of Yemen was declared on 22 May 1990, and in 1991 the people of Yemen ratified a constitution which provided for free elections, a multi-party system and recognition of human rights. But the problems couldn't be signed away - power struggles between the two factions led to full-scale civil war in 1994. Although the southerners tried to, once again, found their own state, the northerners were too powerful and the country was eventually reunified under the leadership of President Saleh.
Reconciliation between north and south Yemen has been slow going. A widely publicised 1998 kidnapping that left four tourists dead was apparently masterminded from abroad (several of the perpetrators were British and Algerian nationals), but southern guerrilla groups have tried to take responsibility for that and other actions. Rioting in mid-1999 followed an IMF-madated increase in prices on staple goods. Border disputes with Saudi Arabia and Eritria haven't heaped on any warm fuzzies, either. In general, however, security has improved and the government is commited to keeping the country safe for tourists. The peninsula's poorest nation also slashed its international debt in half by the end of 1999, an impressive feat given the depressed oil prices that have plagued the region recently. Democracy remains very much in the cards, but has yet to be dealt.