One proposal backed by Yemen's president in the dialogue is to decentralize rule in the country by dividing it up into six new regions, each with considerable autonomy, under a federal system, high-ranking government official say.
The dialogue, which brings together politicians, religious figures and social groups from across Yemen's political spectrum, is a key step in a power-transfer plan for the impoverished, conflict-torn nation at the tip of the Arabian Peninsula, brokered by neighboring Gulf nations and backed by the United States.
The deal helped bring to an end in early 2012 the 33-year-old rule of autocratic President Ali Abdullah Saleh, after nearly a yearlong mass uprising against him in which millions of Yemenis rallied in the streets and held months-long sit-ins in city squares. The deal gave Saleh immunity from prosecution in return for relinquishing power and elevated his then-vice president Abed Rabbo Mansour Hadi as his successor. Hadi was confirmed as president in a one-candidate election in Feb. 2012.
Since taking over, Hadi has worked on several fronts, shaking-up a divided military, pushing many of Saleh's relatives and loyalists from senior positions and leading a U.S.-backed campaign against al-Qaida militants.
The national dialogue aims to bring Yemen's rival forces together to seek consensus over the country's thorniest issues, including demands by many southerners for independence, the role of Islamic law, and how to address terrorism and poverty. Yemen is the Arab world's poorest nation.
In his opening remarks, Hadi told the 500 participants that after the uprising, the new Yemen must no longer be ruled by "one family, tribe, region, or sect." Instead, he said, "justice and equality must prevail."
"Over the past decades, we have failed because of our inability to reach a wise political governing system ... the tribe and the family were in control," he said. During Saleh's rule, his family dominated most positions of power and wealth, and he appointed his sons, relatives and clan members to key government, military and security positions.
The question of unity poses the most pressing questions in Yemen today. For decades the country has been torn by wars, particularly with the south, which was once independent and still has a powerful secessionist movement.
"The centralized state and unity have both failed," Yassin Noaman, an adviser to the president, told The Associated Press. "Through dialogue, we have to reach a consensus on the new political system which gets Yemenis together, not tear them apart."
"The title of this new system is: sharing wealth and power, social justice, citizenship rights, and equality," he said. "Separation is not the solution and insisting on centralization is not a solution."
Under a proposal backed by Hadi, Yemen would be divided into six regions, each with its own parliament, court and police forces, under a central government with separate powers. The south's main city, Aden, one of the world's most strategically important ports, in the Gulf of Aden near the mouth of the Red Sea, will be a region in its own, officials said, speaking on condition of anonymity because they were not authorized to speak to the press.
The proposal aims to address complaints that centralization concentrated wealth in the capital, Sanaa, and marginalized other regions, particularly the south, fueling its separatist movement.
Southerners are divided over the dialogue. Some of boycotted the gathering, saying they won't negotiate with the government until it recognizes the right of the south to declare independence. Other joined but gave no indication that they are willing to give up their dream of independence.
"Our demand is to return to the State of the South," said Mohammed Ali Ahmed, one of the key southern leaders who joined the meeting. "The north will be always ruling through the tribe, the military and religion and it is impossible to co-exist with it."
A second leader of the south is former vice president Ali Salim al-Beidh who leads a more militant wing in the south and who lives in exile, is boycotting the meeting. Al-Beidh fled Yemen after a 1994 attempt to regain independence in the south was crushed in a civil war.
The U.N. Security Council last month warned al-Beidh of sanctions if he continued to interfere in Yemen's democratic transition. The warning came after al-Beidh was accused of receiving funds from Iran and integrating former al-Qaida members into his movement.
Also refusing to join the dialogue are some hardline and ultraconservative Islamic leaders, including Sheik Abdul-Majid al-Zindani. He had demanded that the conference not touch on the issue of Shariah, which he and other hardliners see as required and not up for debate. Yemen's outgoing constitution states that Islamic law is the sole source of legislation. Secular sentiment, however, is stronger in the south.
Failure to reach a consensus, participants say, would risk plunging Yemen into more lawlessness and chaos.
"The worst-case scenario is that we fail to reach a consensus on a federated state and each camp returns to their cave," said Omar Abdel-Aziz, a political writer said. "Then troubles would brew not only in the south but elsewhere."