Western governments and Middle East states must work together to help Yemen develop because instability in the poverty-stricken country could create a zone of lawlessness from Kenya to Saudi Arabia, a prominent think-tank warned Wednesday.

It comes amid an increase in piracy from nearby Somalia, where acts of maritime banditry have reached record levels, which Chatham House, the London-based international affairs think-tank, also highlighted in its briefing paper as being part of the lawless zone.

Chatham House noted that with declining oil reserves, Yemen`s chance to `shape its own future and create a post-oil economy is narrowing.

`Future instability in Yemen could expand a lawless zone stretching from northern Kenya... to Saudi Arabia,` it said in the report.

`Piracy, organised crime and violent jihad would escalate, with implications for the security of shipping routes, the transit of oil through the Suez Canal and the internal security of Yemen`s neighbours.`

The impoverished Arabian Peninsula country of around 20 million people is experiencing dwindling oil production, according to Chatham House, which said that the country will struggle to maintain its already modest annual economic growth rate of three to four percent as oil exports decline.

It also highlighted that in five years, voters in the country are expected to attempt a peaceful transition of power away from current President Ali Abdullah Saleh, who will be 70 years old in 2013.

`Yemen faces several complex and intertwined challenges in the coming decade: an economic crisis forced by declining oil reserves, the strain on political stability posed by the impending transition of power and multiple threats to security,` Chatham House said.

It called for Western governments to `work towards an effective regional approach` to help Yemen develop before oil production fell off.