Hiiraan Online

London Somali Conference - Feb. 23, 2012

There is no need to rehash the history of Somalia and how we have come to the predicament that the country is in today. There are hundreds of very well educated Somalis, both men and women, more erudite than I, who have already written well researched and cogent articles on Somalia in the past. There are also great Somali intellectuals and professors who are more competent to delve into those issues. What I present here is essentially my reflections as a lawyer and a Somali.

In my humble opinion, the London Somali Conference (LSC) was a failure for the Somali people and a success for the international community, especially the international business community. When I mention the International business community, my intent is to make a distinction between interested parties and uninterested parties, say for example countries like Great Britain, and Papua New Guinea. One has a vested interest in all things Somali, and one does not care one hoot.

The Transitional Federal Government (TFG) has failed. I salute the members of the TFG, but there are no two ways about it folks. The TFG is a dead duck and has been one for quite a while. I suspect that the TFG was mandated to accomplish goals for which it was not equipped structurally or by ability. In the end the TFG also delved in to areas for which it was not mandated. The most egregious is the attempted agreement with Kenya on maritime resources, and Somalia’s continental sea shelf.  It was a good thing that the TFG parliament scuttled the deal.

In London, the Prime Minister gave an interview in which he requested between $6 and $10 billion dollars to rebuild Somalia.  The request was laudable and probably well intentioned. The reality is the TFG cannot handle such an endeavor.  The TFG has been accused in the past of stealing 95 cents of every dollar given in aid, so from foreigners point of view, it is understandable that no one is rushing to give a few billion dollars more to end up in private foreign accounts. So at the end of the LSC, the TFG got zilch. Somaliland got zilch too. Somaliland delegation was seeking state recognition, and it was clear that this was not part of the UK’s intent all along.

What the Conference was successful on was the message to the TFG that it is time was up. The message was unequivocal. Come August 2012, you all are out of a job. To drive the point home, The U.S. Secretary of State, Hillary Clinton, followed up with a direct threat to “all inside and outside the TFG” not to oppose the expiration of the TFG, and the transition to a successive governmental entity.

But it was not all bad. The Somalis were dined, and entertained. They were put in tony 5 star hotels with room service and complimentary bath robes, and then sent on their way.

Now we should talk about what the London Conference was really about.  Before the conference, British Foreign Secretary William Hague visited Somalia and also UK Development Minister Andrew Mitchell  Puntland oil fields in the north.  And, in my opinion, this is what the conference was all about in the end… Oil.  Sure the international world cared about piracy and Al-Shabaab, but it was and is oil that is causing the west to care about Somalia. 

Here are the facts; the prospect of 110 billion barrels of oil being located in Somalia is astounding.  If this figure is correct this would give Somalia the sevenths largest oil reserve in the world and 8% of the world’s proven oil reserves. All that in a nation of only 8 million people. 

The world wants this oil and trust me, one way or another, the world will get access to this oil.  The question is will Somalia benefit from the vast oil riches under our sands, or will we watch that wealth stolen, squandered, and wasted while a very few dine in Paris and London off its riches.

Somalia can end up in everlasting poverty like countries such as Chad or Equatorial Guinea or can become a nation with prosperity and growth like the United Arab Emirates or Qatar.  The choice is ours.

Chad is a nation that squandered its tremendous oil wealth.  It has vast oil revenues and an impoverished population.  Chad’s oil revenue is over a billion dollars per year with a population of almost 10 million people.  However, despite this oil wealth, the country’s population lives in poverty.  The Think Tank called “Fund for Peace” listed Chad as number two on its “Failed State Index” (second only to Somalia).  The original idea of directing the majority of the oil wealth to the people and capping the government share to 12.5% didn’t last long.  This short thinking has crippled this country despite its relatively vast oil wealth.

Another example of a nation whose oil wealth has not bettered its population is Equatorial Guinea.  In 2010 Equatorial Guinea’s government’s revenue was approximately 6.7 billion dollars.  Oil accounted for more than 81% of the government’s revenue.  However, 70% of the nation lived in crippling poverty.

Equatorial Guinea has a population of only 500,000.  To put this in perspective; this is the equivalent of giving ONLY the city of Mogadishu 24 billion dollars a year AND having 70% of the population living in poverty.  The oil wealth was so mismanaged that in 2006 it was reported that the president’s son spent more on his own lavish lifestyle than the nation spent in three years on education. 

On the other hand, there are countries that are examples of nations that have used their oil wealth to better its people and create a diverse and affluent society.

Theses countries include the United Arab Emirates and Qatar.  In particular, the United Arab Emirates (UAE).  This nation is an example what a nation can do with its oil revenue to create a diverse and sustainable economy and, most importantly, provide for its people. 

Dubai (a city state that is part of the United Arab Emirates) had oil revenue in the past and reinvested this money so that its economy is thriving and not reliant on its (now limited) oil reserves.  Oil was discovered in Dubai in 1966.  Until then pearl diving and gold smuggling had been the biggest industries. 

Today only 6% of Dubai’s revenue comes from oil and natural gas.  In 2008 the total revenue for Dubai was above 80 billion dollars and with a population of 2.2 million people.  How was this possible?  Because Dubai has not squandered its natural resources.  The government of Dubai positioned itself to become “the Singapore of the middle east.”  Dubai has incredible infrastructure, has set up and attracted businesses from all over the world.  Dubai also invested into the global economy including owning a 20% stake in the NASDAQ stock exchange in the United States. 

Qatar is another example of a nation that has used its vast oil and natural gas wealth to better its society and diversify its economy.  Qatar’s population enjoys one of the highest GDP’s in the world and a third of its revenue is not petroleum based and a substantial percentage of its GDP is not based on oil and gas.  Its infrastructure investments are substantial and it reinvests in education and construction and its unemployment rate is was less than one percent in 2010.

Somalia has several advantages over Middle Eastern Countries.  It has vast agricultural land, the largest coastline in Africa, a low population, and vast animal resources.  Somalia has the potential to be a hub of fishing, agriculture, and commerce.  Southern Somalia has the potential to grow enough crops to feed 50 million people and become a leading exporter of food.  Somalia is positioned geographically in a way that makes commerce to the Middle East, South Asia, and Africa in reach.  Somalia’s potential for incredible wealth, prosperity, and greatness cannot be overstated.  The ease of which our vast oil wealth can be used to build up non-petroleum based industry is awe inspiring.