After nine months of mass protests calling for his resignation, Ali Abdullah Saleh has signed an agreement in Saudi Arabia transferring his powers to the vice president in return for immunity from prosecution.

With the economy on the verge of collapse and bloody clashes breaking out between armed factions of the military, Yemenis are hoping the agreement will offer a way out of the ten-month long turmoil that has left hundreds dead and the country teetering on the brink of civil war.

Saudi state television showed a smiling Saleh sitting next to Saudi King Abdullah in the Saudi capital, Riyadh, on Wednesday as he signed four copies of the proposal. He then clapped briefly before speaking for a few minutes to members of the Saudi royal families and international diplomats, promising to cooperate with the new Yemeni government.

“This disagreement for the last 10 months has had a big impact onYemen in the realms of culture, development, politics, which led to a threat to national unity and destroyed what has been built in past years,” he said.

The deal, drawn up by the gulf monarchies and supported by the US, allows Saleh to retain the honorary title of President while his deputy, ‘Abd al-Rabb Mansour al-Hadi, forms and presides over a government of national unity until early presidential elections in February. In return for signing Saleh and his family are to be guaranteed immunity from prosecution.

Saleh had clung to power despite months’ of street protests, defections by top generals, ambassadors and senior members of his government and a June bomb attack on his palace that left him bed-ridden for three months in a Saudi Arabian hospital. But the recent involvement of the UN along with the potential threat of sanctions and asset freezing seemed to have convince him to go.

Despite having backed out of signing on three previous occasions, the UN envoy Jamal Benomar, who has spent the past week shuttling back and forth between the president and his various opponents in Sana’a was able to get the two sides to reach a deal.

“The agreement can become an important milestone towards restoring peace and stability, maintaining national unity and territorial integrity, and laying the foundation for economic recovery,” Benomar, told reporters in the marble lobby of a hotel in Sana’a, shortly before boarding a plane to Riyadh along with opposition officials and foreign ambassadors for the official signing ceremony.

In a bizarre turn of events, the signing coincided with an announcement from the U.N. Secretary-General Ban Ki-moon that Saleh would be travelling to New York for medical treatment after signing the agreement. Ban told reporters Wednesday that he talked with Saleh by telephone, and would be happy to meet with him in New York but provided no information about when Saleh planned to arrive in America, nor what treatment he would be seeking.

The reaction to the signing in Sana’a was chaotic and confused, his supporters surrounded the presidential palace and let off rounds of machinegun fire in anger while his opponents flooded onto rooftops, letting off bangers and fireworks. Crowds descended on Change Square, the tented shantytown in the heart of the capital where thousands of young men and women have been camped out since February, cheering “goodbye ya Ali, the tyrant has fled!”

But despite the euphoria, the deal, which not only offers immunity to Saleh’s family but sees many of them retaining government and military positions is unlikely to appease the thousands of youthful protesters who say they will continue to camp out until Saleh and his family are prosecuted.

Earlier in the day a spontaneous march in protest to the GCC deal broke out in downtown Sana’a. Thousands of young men surged out of their tented encampment, dubbed Change Square, kicking up dust with their feet, banging car bonnets with their fists shouting, “No to immunity, no to Saudi, no to Ahmed Ali.”

“If Saleh comes back we’ll put him in the court,” said Mohammed Abdullah al ghafari, 24, medical student, holding up a poster of Saleh and Saudi Arabia’s King Abdullah engulfed in flames. “How can we accept immunity when the blood of our Martyrs still stains the ground?”

The youth activists claim the agreement is a deal between political elites, and does not address their more fundamental demands. A growing rift has emerged between the political opposition, headed by the Islamist Islah party, and the self-named “independent youth” who first took to the streets back in February.

Others are fearful that Saleh’s sudden departure will re-ignite hostilities between his supporters and his opponents. Two of Saleh’s key rivals, the renegade general Ali Mohsen al-Ahmar, and the tribal leader Hamid al-Ahmar, are not party to the accord, and may move to obstruct the deal.

Those fears seemed to be well-founded. On Wednesday night, the chants of pro-democracy demonstrators in Change Square were drowned out by the thud of explosions from the Republican Guard — an elite force which will continue to be headed by Saleh’s son Ahmed — as it bombarded the nearby mansion of Sheikh Sadeq Al-Ahmar, Hamid’s elder brother, and the head of the influential Hashed tribal confederation.

“We have finally entering a new political chapter, said Foad al-Salahi, a professor of Political Sociology of Sanaa University. “But as Egypt shows this is only the beginning of a long and painful process of reform, the formation of a government of national unity and the restructuring of Yemen’s family-run military should be the main priorities.”