Earlier today, Yemeni President Abed Rabbo Mansour Hadi and his government resigned under pressure from Houthi rebels who gained control over the Presidential palace and residence this week.

According to Presidential adviser Sultan al-Atawani, contrary to what previous sources touted as the beginnings of a compromise, Houthi rebels refused to withdraw from key parts of the city—including the presidential palace, and the presidential and prime minister’s palaces—and refused to release government officials taken hostage during the attack.

Via the AP:

“We reached a deadlock,” Hadi said, according to a copy of his letter of resignation obtained by The Associated Press.

“We found out that we are unable to achieve the goal, for which we bear a lot of pain and disappointment,” he said.

Military officials close to the president said Hadi resigned after the Houthis pressured him to give a televised speech to calm the streets. They said the Houthis also requested appointments in his own office, the Defense Ministry and provincial capitals, demands Hadi rejected.

The fallout from this could go in one of two directions—although in this region, unrest and faction splits don’t generally lead to either peace, or collaboration against growing terror operations. On one hand, some analysts believe that the resignations will lead to backlash and popular uprising, further isolating the Houthi (and diminishing Iranian influence.)

On the other hand, this could derail efforts on behalf of the U.S. government to combat terrorism in the region by both training Yemeni troops in counterterrorism tactics, and using Yemen as a staging area for drone strikes targeting al-Qaeda operatives. President Hadi was an ally in these efforts; with him out of the picture, and Houthi rebels gaining ground against what was once a functioning government, it’s unclear whether or not those efforts will continue, especially since Parliament Speaker and next-in-line to take power Yahia al-Rai is rumored to be allied with the rebels.

The officials who resigned don’t appear to be optimistic about the near future. In a Facebook update announcing his resignation, Prime Minister Khaled Bahah had dark words for the Houthi coup:

“We don’t want to be a party to what is happening or will happen.”