Can Oil be the Source of Somalia’s Renewal?

Six months ago, during the spudding of Somalia’s first exploratory well in over twenty years, Al-Jazeera’s Kamahl Santamaria asked audiences around the world if oil would be a curse or perhaps the renewal of Somalia. Six months on, and with the results of Somalia’s second exploratory within weeks or possibly days of delivering the nation’s most crucial answer, we look back on Santamaria’s question and ask ourselves if Somalia is ready, and if it will reap any rewards from this potentially transformational program.

The resumption of exploration

Since the founding of Somalia’s current Transitional Federal Government in 2004, various Somali factions have launched initiatives to harness their resources as their nation looked to be getting back on track for the first time in two decades. The TFG’s lifeline at the time, Puntland, locked early on to Africa Oil and Range Resources for the exploration of the Bari, Nugaal, and Sool provinces while the TFG entered into an agreement with the Chinese National Offshore Oil Company (CNOOC) to explore Puntland’s southernmost region, Mudug.

Not long after those agreements, other factions, principally Galmudug and Somaliland, began to look for exploration partners of their own, though still not to the level of success of their aforementioned counterparts.

The bad

Oil, while having economic incentives that few underestimate, has become a tool of conflict. Competition over the disputed Somali province of Sool has escalated between various competing factions and neighboring Kenya has stepped up its challenge to Somalia’s territorial sovereignty in the pursuit of oil.

This is just in the first six months of exploration and nothing concrete about Somalia’s possible reserves has even been announced, making the potential for greater conflicts very real. There are also rumors that state the president of Puntland is using the leverage of his region’s potential oil wealth as a political bargaining chip.

The good

The possibility of the rebuilding of Somalia through the massive revenues that oil brings has been a source of optimism for Somalis at home and abroad, as have its ability to settle petty disputes. Some months ago, one of the longest-standing clan feuds in Somalia was effectively ended through the intervention of Puntland’s leadership. During an address to clan elders in the province of Bari, President Farole promised the region’s people monthly stipends from the oil wells. Such bold declarations have become common from Puntland leaders, including the finance minister and the petroleum and minerals minister, both of whom injected talk of oil dollars into their ministries’ roles since the spudding of the first well in January. The tactic has worked to amazing effect. Violence in the regions of exploration has become almost non-existent in the months proceeding the latest drilling programs.

Along with alleviating conflict through future incentives, the currently-explored regions have experienced small economic booms. Currencies have risen in value and new business opportunities have opened up across Puntland, to the credit of oil speculation and an influx of foreign investors. And since the world is constantly looking for ways to stop piracy through peaceful incentives, there can be no better way to do so than for the local economies to experience a miracle solution to poverty.

Net effects

While natural resources can no doubt turn a war-ridden country into a paradise and even erase the effects of war–much as it did for Angola in recent years, the results vary widely from place to place. You can either have a state akin to Australia or Qatar, who have used natural resources to vastly transform the landscapes of their nations, or you can end up like Nigeria, which cannot even provide discounted fuel for its citizens or provide for its poor, as we saw in the tragic events of this past week and as we’ve seen for the past century in the notoriously oil-cursed state.

When determining how Somalia will end up with a side of oil on its plate, one has to ask if Somalis are more like Australians or Nigerians when dealing with the resources available to them.

{DN Staff Writers}

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