Overzealous Western banks threaten to choke off Somalia’s struggling recovery by targeting the Hawala transfer system.

Columbus, Ohio – Every month I visit a small grocery store in a non-descript building in Columbus, Ohio, where I live, to use a service that keeps Somalia alive: “Hawala”, the traditional money transfer system used throughout the Middle-East, Africa and South Asia. Similar to Western Union, Hawalas present a way to easily transfer money from one country to another, using a wide network of agents and central clearinghouses that make such transfers quick, cheap and reliable.

Like many other members of the Somali diaspora, I use Hawalas to transfer badly-needed funds to friends and family at home. But the system is threatened by a new wariness among international banks used to clear the cash, which could sever an essential financial lifeline to Somalia just as it emerges from decades of civil war.

In Britain, Barclays bank has given hundreds of Hawalas until August 12 to shut down – a step which could halt the flow of as much as $12m a month sent to Somalia from Britain. The decision by Barclays, the seventh largest bank in the world and one of the most influential globally, signals to other Western financial institutions, already suspicious of the Hawala system, not to do business with these organizations altogether.

Here in the United States, scrutiny of the Hawala system over fears of money-laundering has seen banks threaten similar shutdowns. Oxfam, in a recent study with the humanitarian organisation Adeso and the Inter-American Dialogue, found that US banks are closing the accounts of Somali money transfer operators at twice the rate of their counterparts in Latin America.

For those who have kept Hawala accounts open, the relationship can be described as antagonistic at best. Many banks have instituted draconian due diligence requirements for Hawala business accounts, often preemptively shutting down accounts they deem suspicious. The Barclays decision could be a tipping point, leading other banks in Europe and North America to follow suit, potentially cutting off the flow of billions of dollars from Diaspora communities to Somalia.

While often depicted in the West as the financial tool of terrorist groups, Hawalas are in fact part of a sophisticated international money transfer system to speed foreign exchange inflows and investment capital. Instead of attempting to shut down Hawalas, Western banks and regulators should work to understand the Hawala system and work with remittance companies to help strengthen security within that framework.

After 22 years of a civil war that saw the destruction of financial infrastructure in Somalia, Hawalas like the one I use have filled large gaps left by government institutions, banks, charities, and development agencies. Losing them would mean disaster – both for my family, and for the country at large.

More than total international aid

As much as $2bn is sent annually to Somalia by diaspora communities around the world – that’s more than a third of the country’s GDP. Ninety percent of Somali foreign currency earnings come from remittances, and 80 percent of businesses in the country are launched with start-up capital sent from abroad.  By contrast, total humanitarian aid to Somalia in 2011 was just $1.3bn, making remittances  the single largest source of currency entering the country. 

A previous effort to shut down Hawalas in 2001 was followed by a significant spike in malnutrition rates among children living in remote regions of Somalia. UN officials attributed this partly to the sudden cut off of remittance funds. During the 2011 famine NGOs and international aid organizations used Hawalas to send food vouchers to families at risk of starvation, to pay employees, and to finance emergency aid programs.

In late 2010, I received a call from an uncle who lives in a small town near the Somali-Ethiopian border – drought had killed off all his livestock and food stores were running low. With five children to feed he was desperate and running out of options. I sent him money through a Hawala to feed his family – part of a wave of international assistance that poured in through the Hawala system.

While most Hawala transactions are legitimate, there have been times when the system’s informality and relative anonymity have been exploited to fund illegal activities including terrorism.  Hawala transfers have been linked to the 1998 bombing of the US embassy in Nairobi, and to the Somali extremist organisation Al-Shabaab.

Of course, Hawalas are not alone in being misused: Al-Qaeda used formal banking transactions and currency exchanges to finance the September 11, 2001 attacks, and last year UK-based HSBC agreed to pay a record   $1.92bn fine to resolve money-laundering charges by US regulators.

US government authorities did not criminally indict HSBC for fear the bank’s possible failure would threaten the financial system and the livelihoods of millions. Barclays’ move against Hawalas could have a similar effect in Somalia, and illustrates how banks in both Britain and the United States have become the de facto regulators of remittance companies.

Work within the framework, don’t destroy it

Several important steps can be taken to fix the situation. Regulators should educate banks about the actual regulatory risks of Hawalas, which are often not as high as banks make them out to be. For example, following recent threats from US-based banks to shut down Hawala accounts, the US Treasury Department sent reassurances that as long banks maintained appropriate anti-money laundering programmes they would not face government sanctions. British regulators and government officials need to step in with the same reassurance to Barclays and other banks.

The regulatory burden for monitoring Hawalas should be placed on the government and not banks, with clear guidelines that limit bank obligations and government officials in charge of due diligence and risk evaluation of remittance agencies. Banks, regulators and Hawala operators also need to work together to develop due diligence and monitoring strategies that work within the Hawala framework, which has its own system of checks.

I spoke with my uncle last month – he had just come back from Kenya after successfully selling his cattle at the Nairobi livestock market. Following the end of the drought my family had put together some funds to rebuild his business and it was now flourishing. This would not have been possible without the Hawala system. Attempting to shut down Hawalas will have disastrous social and economic costs and will wreak havoc on Somalia’s fragile economy as it seeks to rebuild.

Author Note: Mohamed Ali, J.D., is the founder of the Iftiin Foundation which aims to encourage youth entrepreneurship in Somalia, and in 2013 was named as one of the Aspen Institute’s New Voices Fellows.  

Follow him on Twitter at  @mohamedaali

By Goth Mohamed Goth

The former Prime minister of the federal government of Somalia Prof. Abdi Weli Gaas has announced his intentions to run as the next President of the Somalia’s semi-autonomous Puntland region which are due to be held in 2014 during a Press Briefing in the Addis Abba, Ethiopian capital.

The former Prime minister said his decision to run for President in the next Puntland Presidential elections had being influenced by the people of Puntland who feel betrayed by the government of President Abdi Rahman Faroole.

“The people of Puntland are suffering due to blunders of the current government not to mention political and economic decline of the country,’ stated Mr. Abdi Weli Gaas.

President Faroole accused the Mogadishu government of refusing to share power and foreign aid with the regions in line with the country’s federal structure, as well as taking its eye off the fight against al Qaeda-linked Islamist militant.

SomalilandPress.Com

MOGADISHU (Reuters) – Somalia’s semi-autonomous Puntland region said on Monday it had cut all ties with the central government in a likely setback to efforts to pacify the Horn of Africa Country as it emerges from two decades of conflict.

Puntland accused the Mogadishu government of refusing to share power and foreign aid with the regions in line with the country’s federal structure, as well as taking its eye off the fight against al Qaeda-linked Islamist militants.

“The fragmented country has been plunged back into a vicious cycle of violence, displacement, clan animosities and a complete disregard for the country’s genuine Provisional Federal Constitution,” Puntland’s administration said in an official statement.

“Puntland hereby suspends all cooperation and relations with (the) Federal Government of Somalia.”

The election in September of President Hassan Sheikh Mohamud, a political newcomer with a background in reconciling clan feuds, was seen as a vote for change.

But he has struggled to overcome acrimonious clan politics, corruption and a stubborn Islamist insurgency. Somalia’s neighbors and foreign powers fear a return to civil war in a country long seen as a launchpad for militant Islam.

Mohamud’s cash-strapped federal government exerts little authority beyond the capital. How to divvy up power between the center and regions is a thorny issue that the provisional constitution failed to address.

In a country where clan loyalties rather than ideology determine political support and access to resources, analysts say Mogadishu is reluctant to hand power to the provinces fearing a breakup of the state. Meanwhile the regions are demanding more autonomy.

Puntland’s move raises the prospect of other regions following suit, in particular Jubaland in the far south where dozens of civilians have been killed in recent fighting between two rival warlords who claim control.

Puntland said it would only resume normal relations with Mogadishu when the central government respected the country’s federal structure. There was no immediate response from the federal government.

Puntland has largely avoided being caught up in successive Islamist insurgencies although its shores have been a haven for pirates. But al Shabaab rebels, squeezed out of their redoubts in southern and central Somalia by African peacekeepers, have slowly infiltrated Puntland, regional officials say.

Somaliland, on Somalia’s northwestern tip, declared itself independent in 1991 shortly after civil war erupted, but it is not an internationally recognized as a sovereign state.

Source: Reuters

Al–Shabaab has claimed responsibility for many bombings—including various types of suicide attacks—in Mogadishu and in central and SomalilandFor example, in October 2008, the group carried out a series of five coordinated explosions that struck government offices, the Ethiopian consulate, and the United Nations Development Programme compound. Al-Shabab had used a combination of small arms attacks and suicide bombings, at least, 95 deadly attack since 2006. It had managed to strike the TFG ministers of Interior, Health, Education and Sports, at least, six members of the Somali Parliament and had caused serious damage to Mogadishu airport, port and presidential palace.

Al shabab also attempt to radicalise Somali youth who are unemployed due lack of opportunity within the region. For example the story of Shirwa Ahmed, an ethnic Somali graduate from a high school in Minneapolis, USA in 2003, who was radicalised, travelled to Somalia in 2007 and in the October 2008 attacks drove a truck loaded with explosives toward a government compound in Somaliland killing himself and 20 other people, including UN office in Somaliland and Ethiopian Ambassador to Somaliland s and humanitarian assistance workers.

To highlight the international aspect of Al-Shabab’s tactics, the groups’ first cross border attack was in Uganda and it was by suicide bombers in a rugby club where there was an international crowd watching. These attacks were retaliation for the Uganda sending troops to the African Union Mission in Somalia (AMISOM) . Al-Shabab continues to conduct guerrilla attacks against the Federal Government alongside its use of suicide bombers. In effect, Al-Shabab combines a tactic of suicide bombing (internationally) and guerrilla warfare (domestically) in its spread of terror. Another element to Al-Shabab’s tactics has been in its creating training camps for suicide bombers.

This terrorist activity arose out of Al-Shabab’s increased involvement with Al-Qaeda and describes the tragic incident where a car bomb went off prematurely killing the foreign fighters and Al-Shabab Somali students involved. More foreign fighters have become more involved in Al-Shabab’s terror activities as a result of its tactics to spread terror domestically and internationally. Another tactic employed by Al-Shabab is in its use of information and technology communication (ICT) for propaganda purposes and communicating its ideology. Al-Shabab uses the internet as a key tool in recruiting and interacting with its recruits all over the world. Since 2008, the organisation’s media arm, Kata’ib Foundation, has released media productions like “Ambush at Bardale”, “At Your Service, Oh Osama” and “No Peace Without Islam” all released online .These productions have targeted a foreign audience and potential recruits communicating its link with Al-Qaeda playing up its influence and effectiveness in fighting its ideological enemies. In recruiting members from Western countries the group has used English speaking leader, Oman Hammami, in the production of these videos who, speaking in English, encourages more people in the West to join the organisation. The use of ICT is a key a part of its re-framing of the organisation as being part of an international fight against the West. It enables it to recruit members who otherwise may not have been interested in its nationalist aims and also raise funds from a broad audience. Without its ICT tactics it will not be able to benefit from its alliance with Al-Qaeda whose global recognition allows it to raise funds for its activities.

Official authorities have tried to stop Al-Shabab’s terrorist activities with force. Occasionally, it is reported that a terrorist has been killed by official forces. The most prominent of these announcements was the death of Osama bin Laden. Apart from killing those identified as dangerous terrorists there are other measures aimed at combating terrorism perpetuated by Al-Shabab and similar organisations. Following the September 2001 terror attacks the maxim ‘War on Terror’ was adopted characterising attempts at countering terrorist attacks perpetuated by groups like Al-Shabab. Although this term has now been dropped several of the measures adopted in countering terror remain in use. Some of these measures include the use of counter-terrorism legislations, military assaults on those identified as terrorists, detention and interrogation of suspects, raids, surveillance, diplomacy and so on. As a neighbouring country and often times the victims of Al-Shabab’s acts of terrorism .

AMISON and Kenya plays a major role in the counter-terrorist measures against the organisation as it has millions of Somalians living in Kenya some of whom help raise funds for Al-Shabab. Kenya’s need to intervene is precipitated by the absence of a strong central government in Somalia. In the last three years Kenya has adopted a more assertive and interventionist approach to combating the problem of Al-Shabab conducting a military campaign in its border town of Bulo Hawa . Kenya’s measures in countering Al-Shabab’s acts of terrorism goes beyond military assaults, it has since included the cultivation of alliances with Somali with a disparate groups of Somali fighters along its borders

Kenya, backed by the international community, supports these groups who fight Al-Shabab. Since 2012 Kenyan troops operating in Somalia have been incorporated into the larger AMISOM force of approximately 18,000 troops (Africa Research Bulletin, 2012). AMISOM is backed by Western countries like the US, the UK, UN and several other countries, and were mandated in recent conference to go on the offensive against Al-Shabab (Africa Research Bulletin, 2012). In essence, most of the measures rely on the use of force.

With the controversies brought about in the use of rendition, Guatanomo Bay and waterboarding, rightfully, questions have been asked to the legitimacy and effectiveness of various counter-terrism measures. In terms of effectiveness, the decision for the Kenyan army to directly intervene in the war against Al-Shabab has led to reprisal attacks in the form of threats, bombings and a greater feeling of insecurity in Kenya Still, the Al-Shabab organisation remains. Another effect of the counter terrorism measure on Al-Shabab is that it has acted as a means of rallying Somalis into joining the group and gaining sympathisers who might donate to the group as they are seen as fighters defending the country against foreign invaders. The invasion by Ethiopia was held to have has a similar impact and the present intervention Kenyan and other African troops may trigger the same response from Somalis. As Menkaus (2012) argues the announcement that Israel was supporting Kenya’s counter terrorism activities played into Al-Shabab’s propaganda. Whilst not many Somalis joined Al-Shabab as a consequence, it may yet have had a positive influence on its recruitment of foreign fighters. Since the launch of ‘War on Terror’ in 2001 many countries have followed suit in introducing their own variant of this war.

Al-Shabab forms a part of what is a global Jihadiust movement perched on the opposite side of this war and on the receiving end of measures of counter-terrorism. The introduction of measures of counter terrorism accompanied with the polarising discourses led to a re-arrangement of international relations and a re-styling of the governmental and institutions set to tackle perceived threat from terrorism.

The way in which the dangers posed of terrorism is often presented and the uniqueness of the threat posed often clouds what should be a broad debate on the legitimacy of the measures being taken in combating terrorism. Legitimate questions can be raised on key counter terrorism issues like “extended periods of detention without trial, sanctioned under new anti-terrorism laws; the use of torture to extract evidence; unfair trials and the abuse of anti-terror laws to detain and bring charges against democracy activists and opposition leaders; the application of counter-terrorist legislation and policies for unrelated domestic political purposes; extra-ordinary rendition processes; and bungled anti-terrorism police raids” (Howell and Lind, 2010: 281).

These issues can constitute breaches of individuals’ rights and the failure to properly discuss counter terrorism measures in civil society before adopting those casts doubts as to the legitimacy of these measures. As seen in the cases of rendition and the unfair incarceration of inmates at Guantanamo Bay over long period these matters raises grieve concerns within civil society bringing into doubt how legitimate the measures are in the first place. The killing of suspected terrorists without a fair trial like other criminals also raises concerns. Often without consultation with civil society in the formulation of counter terrorism measures these measures lack the due diligence required for them to be considered safe for use within civil society opening the door to their misuse. In adopting counter terrorism measures it does appear that the due process is bypassed under the smoke of hyperbole and official attempts at creating awareness of a unique terrorist problem.

In its bid to survive and find relevance Al-Shabab underwent a reconfiguration, one that saw it change from a nationalist Islamist organisation to an international Jihadist one. With this change it lost many sympathisers but gaining new ones. Its ideology of imposing a dated interpretation of the teaching of Islam is one it now shares with Al-Qaeda. But with this new ideology has come new enemies, international enemies that may yet bring about its demise quicker than it feared. As the international community continues to forcefully counteract the terrorist activities of Al-Shabab, questions remain as to the legitimacy of the methods used in their doing so. Counter terrorism may be taken as a euphemism, in some instances, for state sponsored terror as the measures taken are mostly not consistent with the ideals of civil society. They, essentially, mirror the disregard terrorists show the public. Without any major outcry in the case Al-Shabab, it would appear that two wrongs make a right!

1. Both Somaliland and Somalia must compact terrorism treat through:

2. Somaliland must Safeguarding its borders for any potently treat pose by al–shabab. Both must share security intelligence and information gathering.

3. Somalia must form, or build its police military forces capability for long term to compact terrorism as AMISON are only short term solution.

4. Identify Relationships – uncover interactions and relationships between terrorist groups and their members.

3.  Link Group Members – understand formal and informal organizational structures.

4. Connect Networks – expose connections between group members, outside individuals, other organizations, locations, facilities and communication networks.

5.  Expose Group Operations – show shared assets, materials and supplies for carrying out terrorist missions.

6. Track Technologies – track different types of technologies used as components for manufacturing terrorist weapons.

7. Understand Behaviors – track and analyze group behaviors for early detection of potential threats.

8. Assess Vulnerabilities – evaluate funding resources, recruiting methods, communication networks, storage facilities and other resources to uncover potential vulnerabilities.

By: Liban Mohamud Hussein

Criminologist, criminalist and security advisor

Bsc criminology & forensic science

Liibaan2005_9@hotmail.com

Sunday, August 04, 2013

Barclays bank is under growing pressure to reverse a “kneejerk” decision to pull the plug on UK companies that allow people to send money home to support families in some of the world’s most desperately poor countries.

Olympic and world champion runner Mo Farah has thrown his weight behind a campaign to stop the bank closing the accounts of 250 UK money-transfer companies operating what Farah called a “lifeline” into poor countries.

Farah’s native Somalia has no regulated banking system and gets 50% of its income through remittances. Last week Farah wrote to the PM and this weekend added his name to a petition calling on the bank to extend its deadline of 12 August, asking his 800,000 Twitter followers to do the same.

“The Mo Farah Foundation, along with some of the world’s biggest charities and organisations, including the UN, relies on these businesses to channel funds and pay local staff,” he said. “This decision could mean life or death to millions of Somalis.”

On Wednesday, a delegation led by shadow international development minister Rushanara Ali will deliver the petition to Downing Street, asking David Cameron to intervene. The prime minister hosted a major conference on Somalia in May when he said failure to support the country would increase the global terror threat. A diplomatic storm is also gathering, with Pakistan, Bangladesh, Ghana and other states expressing concern.

Barclays is the major player operating in the £2bn sector, which supports some 3,500 British jobs. But the UK and US governments have been tightening bank regulation. US authorities fined MoneyGram $100m andslapped a $1.9bn fine on HSBC last year over poor money-laundering controls.

Ali, MP for Bethnal Green and Bow, said: “Countries across Africa and Asia will be badly affected and none more so than Somalia, a population reliant on what their friends and families send. Barclays’s decision will indeed cost lives – quite apart from potentially triggering a new crisis in the region.

“Shutting this vital lifeline risks giving people no other choice but to send money through dangerous and alternative methods out of desperation.

“We’ve not heard a whisper from the foreign secretary on this issue. He ought to step in. Barclays’s decision risks undoing the fragile progress that has been made after decades of conflict, not to mention humanitarian emergencies, piracy and terrorism,” said Ali.

Oxfam is also pressing the government to act. “It seems an extraordinary move of risk aversion by the bank. A rather kneejerk reaction when we are talking about people sending small amounts, usually £200 to £300 at a time,” said Emma Fanning, its humanitarian and conflict policy adviser. “Vital to the people receiving it but very unlikely to be the kind of funds that terror organisations would be dealing in.

“The impact of this will be felt by ordinary people, families and communities who are already in poverty and are now finding an essential lifeline being cut off. There will be suffering as a result. Not only that but aid agencies and charities will be left to plug that gap when people in countries like Somalia are cut off from financial support coming from families abroad.

If the bank isn’t willing to find a solution then the government has to come up with one. They have to find a way round this and quickly.”

Barclays said it would give extra time to money transfer companies who asked. “As a global bank, we must comply with the rules and regulations in all the jurisdictions in which we operate. The risk of financial crime is an important regulatory concern and we take our responsibilities in relation to this very seriously.

“Some money-service businesses don’t have the necessary checks in place to spot criminal activity with the degree of confidence required by the regulatory environment under which Barclays operates. Abuse of their services can have significant negative consequences for society and for us as their bank. We remain happy to serve companies who, in our opinion, have sufficiently strong anti-financial crime controls and who meet our amended eligibility criteria.

“We have been engaging with the UK Government, remittance industry bodies and other stakeholders to discuss the issues.”

A government spokesman said: “The Government is committed to supporting a healthy and legitimate remittance sector, allowing UK residents to remit funds abroad whilst also ensuring a robust anti-money laundering regime.

“Ministers have met industry to discuss the issues facing the sector. The Department for International Development is also urgently reviewing the impact of changes on developing countries and examining what can be done to support those affected.”

Source: The Guaridan

MEETING OF THE HEADS OF STATE AND GOVERNMENT OF THE TROOP CONTRIBUTING COUNTRIES OF THE AFRICAN UNION MISSION IN SOMALIA (AMISOM), ETHIOPIA AND SOMALIA: KAMPALA, UGANDA; 4TH AUGUST 2013

COMMUNIQUÉ

A meeting of the Heads of State and Government of the Troop Contributing Countries (TCCs) to the African Union Mission in Somalia (AMISOM), Ethiopia and Somalia took place in Kampala, Uganda on Sunday, 4th August 2013 under the theme “Towards a harmonized Approach by the Stakeholders in Building a Peaceful Somalia”. The Summit, chaired by His Excellency, Yoweri Kaguta Museveni, President of the Republic of Uganda, was preceded by the meeting of the Ministers of Foreign Affairs and Ministers of Defence on 3rd August 2013.

The Summit was attended by His Excellency Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia; His Excellency Uhuru Kenyatta, President of the Republic of Kenya; His Excellency Hassan Sheikh Mohamud, President of the Federal Republic of Somalia. His Excellency Hassan Darar Houfaneh, Minister of Defence represented the Government of the Republic of Djibouti and His Excellency Gabriel Nizigama, Minister of Public Security represented the Republic of Burundi. His Excellency, Andrew Gbebay Bangali Permanent Representative of the Republic of Sierra Leone to the African Union, represented the Government of Sierra Leone while Ambassador Mahamat Saleh Annadif, Special Representative of the Chairperson of the Commission (SRCC) and Head of Mission, AMISOM represented the Africa Union (AU).

Following the report on the prevailing situation in Somalia by Ambassador Mahamat Saleh Annadif, Special Representative of the Chairperson of the Commission (SRCC) and Head of Mission, AMISOM as well as statements made by Burundi, Djibouti, Ethiopia, Kenya, Sierra Leone, Somalia and Uganda, the Summit:-

1. Reaffirmed its commitment, under the auspices of the African Union (AU) and the Intergovernmental Authority on Development (IGAD), to the unity, territorial integrity and sovereignty of Somalia as well as its commitment to continue to assist the Federal Government of Somalia (FGS) in its stabilization efforts;

12. Commended the achievements made by AMISOM, Ethiopia and the Somalia National Security Forces in restoring security in Somalia and in particular in degrading the ability of Al Shabaab to carry out atrocities against the people of Somalia;

3. Recalled the pivotal role played by IGAD and AU in the deployment of AMISOM and welcomedthe deployment of additional troops from Djibouti, Kenya and Sierra Leone and encouraged other African countries to contribute to the stabilization effort in Somalia;

4. Further recalled the Communiqué of the 22nd Extra Ordinary Session of the IGAD Assembly of Heads of State and Government on the Situation on Somalia held in Addis Ababa on 3rd May, 2013 which recognizes the leadership role of the FGS in the reconciliation process as well as in the establishment of local administrations in the regions;

5. Expressed grave concern about the deteriorating security situation in some parts of Somalia, and also, condemned the recent Al Shabaab terrorist activities that have resulted in the loss of innocent civilian lives and destruction of property. In this regard, the Summit requested AMISOM to support the FGS in the realization of the FGS’ presence of government institutions, extend its authority and establish itself;

6. Recalled the concerns contained in paragraph 7 of the communiqué (PSC/PR/COMM(CCCLXXIX) of the meeting of AU Peace and Security Council adopted on 13 June, 2013 that AMISOM forces have reached their operational limits and are unable to conduct a expansion operations as envisaged in the AU-UN Strategic Concept for future operations in Somalia and supported the call to the United Nations (UN) Security Council to provide the necessary support to AMISOM and the Somalia National Security Forces to enable them reorganize, restructure, increase their forces and mobilize logistical support in order to undertake further stabilization operations and also consolidate their control over the recovered territories and to facilitate the FGS extend state authority across the country;

7. Noted that, given the evolution of the situation in Somalia, the AU Strategic Concept for future AMISOM operations in Somalia adopted by the AU Peace and Security Council and the UN Security Council in January 2012 is not in tandem with the current situation and has been over taken by other events and therefore requested the AU, in consultation with the TCCs to AMISOM, Ethiopia, Somalia as well as IGAD and the UN, in the context of the planned AU-UN Joint Review, to

2

revise the Strategic Concept in order to align it with the prevailing circumstances in the Mission Area;

8. Expressed concern about ongoing discussions aimed at partial re- hatting of AMISOM, which is considered premature and may cause a dysfunctional command and control, unequal and inequitable distribution of resources and negative consequences on the operational effectiveness of the Mission;

9. Welcomed the efforts deployed by the FGS including in establishing governance structures in the recovered areas and noted the challenges being encountered in some regions;

10. Welcomed and encouraged the ongoing talks between the FGS and Jubba Region stakeholders;

11.Expressed concerns with the emergence of private security companies noting that their activities negatively impact on efforts aimed at rebuilding the Somalia National Security Forces;

12.Welcomed also the commitment of the FGS to hold elections by 2016 and expressed its support to facilitate the creation of conducive environment for the conduct of credible elections and called on the AU, IGAD, UN, European Union (EU), and all Somalia’s friends and partners to support the FGS in this regard;

13.Expressed its appreciation to the African Union (AU), the Intergovernmental Authority on Development (IGAD), the UN Security Council, the European Union (EU) and bilateral partners for their continued support to the stabilization of Somalia;

14.Expressed concerns about the intermittent funding pattern of AMISOM and the Somalia National Security Forces.

Consequently, the Summit:

15. Decided, in accordance with the Provisional Federal Constitution of Somalia, that the control of the Kismayo seaport and airport should be handed over to the Federal Government of Somalia (FGS);

16. Stressed that in line with UN Security Council resolutions, the ban on the exportation of charcoal should be adhered to;

3

17.Decided that all militias should be integrated into the Somalia National Security Forces except those associated with Al Shabaab which should be isolated;

18. Emphasized the imperative of continued African leadership and the need for AMISOM to sustain and strengthen its efforts to stabilize Somalia and reduce the threat of Al Shabaab;

19.Decided that the FGS, AMISOM and other stakeholders should cooperate to protect AMISOM troops;

20.Decided that the FGS is to take lead in the process of producing local leaders from the regions which the FGS will then appoint but in doing so, there is the need to ensure balanced participation;

21.Decided that all parties should support the establishment of Somalia National Security Forces by training educated Somalis to form the officer corps and the training of NCOs should be carried out in Somalia;

22.Decided that all unfair, unfair accusations, deliberate distortion of facts and bad mouthing of AMISOM TCCs must stop forthwith;

23.Welcomed the Addis Ababa discussions between the FGS and the Jubba Regions and called for the discussions to be fast tracked and made inclusive;

24. Encouraged the UN to procure food and other essential material for AMISOM locally where practicable;

25.Underlined the fight against Al Shabaab as the major focus of the FGS, the TCCs as well as regional and international partners;

26. Resolved to maintain their commitment to the stabilization effort in Somalia and in this regarddecided to convene periodically to review the situation in Somalia;

27.Decided to support the FGS efforts to undertake political dialogue with various stakeholders andencouraged the convening of the reconciliation conference agreed upon at the 22nd Extra Ordinary Session of the IGAD Assembly of Heads of State and Government on the Situation on Somalia held in Addis Ababa on 3rd May, 2013;

4

28. Requested IGAD to continue to play its supportive role, in line with the five principles agreed upon as the basis of stabilization efforts in Somalia as contained in the communiqué of the 22nd Extra Ordinary Session of the IGAD Assembly of Heads of State and Government on the Situation in Somalia held in Addis Ababa on 3rd May, 2013. In this regard, the Summit appealed to the FGS and other stakeholders to work closely in the amicable resolution of any differences;

29.Requested the FGS to hasten the process of putting in place governance structures in recovered areas, if AMISOM in its current formulation, is to make further gains in the fight against Al Shabaab. The Summit further called on other stakeholders to support the FGS in this regard;

30. Encouraged the FGS to undertake the necessary political process to establish effective governance structures across Somalia;

31.Decided to support the FGS in establishing its authority in the Jubba Regions especially its control of state owned federal infrastructure including the seaport and airport;

32. Requested the FGS to prioritize the reintegration of various militias with a view to establish a cohesive Somalia National Security Force;

33.Agreed that AMISOM and the Chiefs of Defence Forces of Ethiopia and Somalia, within the framework of the AMISOM Military Operations Coordination Committee (MOCC), in line with the operational decision reached in 2012, to urgently work out the modalities and operationalization of an AMISOM multinational force to be deployed in Kismayo;

34.Directed Chiefs of Defence Forces to meet on a quarterly basis to review the security situation in Somalia and report to the Committee of Ministers of Defence accordingly for appropriate action;

35.Requested IGAD to meet on quarterly basis in order to track progress in developments in Somalia with particular reference to rebuilding the Somalia National Security Forces and political outreach and reconciliation;

36.Requested the AU, in consultations with the TCCs, Ethiopia and Somalia, to undertake in-depth review of recent UN Security Council resolutions, notably resolution 2093 (2013) and 2033 (2013) with a view

5

to unpacking their implications particularly with regards to the contemplated partial re-hatting of AMISOM, its mandate as well as its operational effectiveness;

37. Requested the AU Commission to intensify and expand its efforts in mobilizing the required support, including predictable funding, for an enhanced AMISOM with increased uniformed personnel strength and the Somalia National Security Forces;

38.Requested the AU Commission and the TCCs to fast track the ongoing troop rotation, including the Force Command elements;

39.Requested the Special Representative of the Chairperson of the Commission (SRCC) and Head of Mission – AMISOM to transmit this Communiqué to the AU Commission for the attention of the AU Peace and Security Council.

……………………………………………………………………………………………..

H.E. GABRIEL NIZIGAMA MINISTER OF PUBLIC SECURITY OF THE REPUBLIC OF BURUNDI

……………………………………………………………………………………………..

H.E. HASSAN DARAR HOUFANEH MINISTER OF DEFENCE OF THE REPUBLIC OF DJIBOUTI

………………………………………………………………………………………………………..

H. E. MR. HAILEMARIAM DESALEGN PRIME MINISTER, FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

6

………………………………………………………………………………………………………..

H. E. UHURU KENYATTA PRESIDENT OF THE REPUBLIC OF KENYA

………………………………………………………………………………………………………..

H.E. HASSAN SHEIKH MOHAMUD PRESIDENT OF THE FEDERAL REPUBLIC OF SOMALIA

………………………………………………………………………………………………………..

H.E. ANDREW GBEBAY BANGALI PERMANENT REPRESENTATING THE GOVERNMENT OF THE REPUBLIC OF SIERRA LEONE TO THE AFRICAN UNION REPRESENTING THE REPUBLIC OF SIERRA LOENE

………………………………………………………………………………………………………..

H.E. YOWERI KAGUTA MUSEVENI PRESIDENT OF THE REPUBLIC OF UGANDA

………………………………………………………………………………………………………..

H.E. AMBASSADOR MAHAMAT SALEH ANNADIF SPECIAL REPRESENTATIVE OF THE CHAIRPERSON OF THE COMMISSION (SRCC) AND HEAD OF MISSION, AMISOM

The Somali city of Kismayo “should be handed over” to the central government, regional leaders said at the end of a summit Sunday, a decision that puts pressure on Kenyan troops who face charges of backing a powerful militia in the disputed port city.

African leaders said in a statement at the end of a summit in Kampala, Uganda’s capital, that Kismayo’s airport and seaport should be under the control of Somalia’s central government, which has struggled to assert its authority there despite the exit of al-Shabab militants.

The statement said a “multinational force” should be urgently deployed in Kismayo. It also urged the central government in the capital, Mogadishu, to “reintegrate” into the national army all the militias that have no links with al-Shabab militants.

The Kampala summit was organized under the banner of the African Union peacekeeping force deployed in Somalia, known as AMISOM, and was for countries that have troops in Somalia. The prime minister of Ethiopia and the presidents of Uganda, Kenya and Somalia attended the summit.

The decision on Kismayo puts pressure on Kenya, whose troops in the strategic Somali city have been accused of backing one militia, the Raskamboni brigade, against others in deadly fighting there. The Raskamboni brigade —which helped Kenya to push al-Shabab militants out of Kismayo last year —is led by Ahmed Madobe, a Somali warlord who has established a local administration in Kismayo that is independent of the central government. Madobe is a key power broker around Kismayo, although he is not backed by the federal government in Mogadishu.

After the Raskamboni brigade took the upper hand in fighting for control of Kismayo, Somalia’s government said last month it wanted a “more neutral African Union force” there, an apparent indictment of the conduct of Kenyan troops in Somalia.

Kismayo is important for Kenya, which seeks a friendly buffer zone near its border with Somalia — one of the main reasons it sent troops to Somalia in late 2011 to fight the rebels of al-Shabab, Islamic extremists linked to al-Qaida. But the rival militias now at war there appear to be interested in the economic engine of Kismayo. Its port generates large and reliable income, and has been the export point of Somali-made charcoal that the U.N. has deemed illegal.

In a letter to the African Union, Somalia’s government recently accused AMISOM Section Two — a contingent of African Union forces operating in Kismayo — of launching “a targeted offensive against civilians” and of arresting Col. Abbas Ibrahim Gure, a Somali army official sent to Kismayo by the central government.

Kenyan officials have repeatedly denied taking sides in the Kismayo conflict, saying they are in Kismayo to keep the peace.

Some analysts say fighting in Kismayo is distracting from the main goal of battling al-Shabab, who still stage lethal terrorist attacks even in Mogadishu.

Source: AP

Africa Research Institute (London)

By Edward Paice, 31 July 2013

Interview

In May 2013, Barclays informed three-quarters of its clients in the money services business that it was closing their bank accounts. These included many handling overseas money transfers from diaspora communities in the UK to destinations as diverse as Somalia, Bangladesh, Pakistan, Yemen, Sri Lanka and Poland.

The International Association of Money Transfer Networks (IAMTN) says that up to 250 companies have been affected by the decision. Notice periods of no more than two months were given. Barclays justified its actions as a move to reduce the risk of being implicated in money-laundering or terrorist financing.

Edward Paice, director of Africa Research Institute, talked to Abdirashid Duale, chief executive of Dahabshiil, the largest money transfer business in the Horn of Africa, about the crucial importance of remittances to the Somali region and the potential impact if money transfers are reduced.

What will be the impact on Somalia, Somaliland and Puntland if money transfers from the UK are curtailed because Dahabshiil and other money transfer agencies are denied access to UK banking facilities?

I can honestly say it would be a recipe for disaster. It is estimated that remittances from the diaspora provide essential support to 40% of the Somali territories. We have nearly 300 branches in the territories and thousands of agents servicing people in towns and rural areas. For them, money sent from relatives overseas is an economic lifeline. It is mainly spent on food, medicines and school fees – for the absolute basics, not for luxuries.

How substantial are these remittances?

More than US$1.2 billion is remitted to the Somali territories annually. This is over half of Somalia’s gross national income. So you can see the importance of remittances to the region. About US$500m is sent from the UK. At Dahabshiil’s branches in the UK, we process hundreds of thousands of transactions each year. The average transaction size is US$200-300.

Are people sending money to their relatives the only users of money transfer services to the Somali region?

Not at all. All the international aid agencies and NGOs use money transfer businesses (MTBs) to operate. They and their partners use us to pay staff, buy equipment and supplies, and make cash payments as part of social safety net programmes Oxfam, Save the Children, UNDP, CARE, BBC Media Action, Islamic humanitarian agencies – you name it, they use MTBs. Even Somali veterans who fought for the British in World War II, and their widows, are paid their grants through Dahabshiil.

A great many local charities and NGOs use MTBs to collect donations, pay salaries and buy things. At the weekend, when Olympic double gold medal winner Mo Farah protested about the imminent closure of the bank accounts of Somali MTBs, he highlighted the impact it would have on the activities of the Mo Farah Foundation.

Finally, I would mention the private sector. In Somaliland and Puntland, which have been relatively peaceful for many years, many people are investing in businesses and property. Now the same is happening in southern and central Somalia as well. Investors send their money through MTBs.

This investment is crucially important for economic development in the region. Factories are being built. If I am a local businessman, how do I pay for building materials or diesel from the Gulf or Ethiopia? I use an MTB. International oil and mining companies are also prospecting in the region now and they too use MTBs. No business can operate without them.

NO SOMALI BANKING SYSTEM

Will the impact on the Somali region be different to that on other countries affected by the Barclays decision?

It will be much more acute. You see, in Somalia there is really no alternative to using MTBs. The whole banking infrastructure collapsed in the civil war in the early 1990s and it has never been rebuilt. So MTBs are the banking system now. That’s the way things are. Under the circumstances, which have been as difficult as you can imagine, it’s a system that works very well. The larger firms are very professional and efficient.

We also provide a service for the people who might not use banks even if they could – for the unbanked in the UK, Somalia and elsewhere. Forget the Somalia end of things for a moment. We fill a gap for diaspora communities.

If you go to a Dahabshiil location or agent in the UK – where there are more than 100,000 people of Somali origin – most open early in the morning and work up to 10 o’clock at night, 7 days a week. You deal with people you know, the service is fast and friendly, it is easy to use, and it is half the cost of the big Western money transfer companies.

If you go to any bank in the world and say you want to send money to Somalia or Somaliland, they cannot do it. The big global money transfer companies like Western Union can’t do it either. They have one branch in Hargeisa, in Somaliland. Western financial institutions have no links to the Somali banking network because there isn’t one.

If the Somali MTBs are forced to pack up in the UK and elsewhere, how would money get to the Horn of Africa?

Well, a great many people would simply stop sending money altogether. That is a certainty. For some, it has to be said, remittances are an unpopular obligation. They can be quite a burden. Any excuse to stop sending money would be seized upon by these people.

If Somalis could no longer send remittances it is likely that the UK taxpayer and other foreign taxpayers would be asked for more aid. Will they willingly fill the gap caused by a drastic reduction of remittances? I don’t think so – not in the middle of a financial crisis in the West.

Others would resort to sending cash with unregulated couriers – which will be much more expensive and less reliable than the current system – and by illegal means. Lorries and planes of cash would come in from neighbouring countries. Lots of small informal operators would fill the gap left by Dahabshiil and the regulated firms whose transaction records can be inspected.

We have seen this before – when al-Barakat’s money transfer business was closed down in the USA after 9/11. As far as aid agencies and businesses are concerned, I have no idea how they could carry on operating as usual.

Basically, the transfer business would be driven underground. It would be much smaller and it would be exploited. I understand the global concern about money-laundering and terrorist financing by a small minority of MTBs, but bashing the regulated and reputable firms like Dahabshiil is not the way to counter this. When law enforcement agencies come to us, we always help them.

THE BARCLAYS DECISION

When did you first receive notice from Barclays that they would be closing your banking facilities with them?

Well, this is a funny thing. Barclays wrote to the board of Dahabshiil on May 8th. That was exactly the same day that I had been asked by the Foreign Office to speak at their Somali “Trade and Investment Forum” during the UK-Somalia government conference. I was asked to speak about financing, and the role of the diaspora in development.

There were members of the Barclays senior management also present at these events. They met Hassan Sheikh Mohamud, President of Somalia, and they were talking about the importance of developing the private sector in Somalia, and the opportunities. So were people from the Department for International Development (DFID).

The special role of money transfers in Somalia, the diaspora, and their importance to the country’s reconstruction was recognised by everyone at the conference, including the Prime Minister, David Cameron. The recent World Bank and UK government-sponsored review of Somalia’s public financial management system even envisaged using Somali money service businesses to pay civil servants and the salaries of the security services.

Anyway, I gave my talk and the next day I received the termination letter from Barclays. They said that Dahabshiil did not meet their “amended eligibility criteria”. That was that.

We were given two months’ notice to find another bank and no opportunity to try and meet the new criteria – despite the fact that we had banked with them for 15 years and are an authorised payment institution (API) regulated by the Financial Conduct Authority (FCA).

It was all very sudden. The process was not at all transparent and it came out of the blue. We’ve never been given the chance to understand what the game was about. There are many companies in our position.

Did anyone at the FCA or at Barclays voice any concerns about the way you conduct your business in the months preceding the decision to close your accounts?

No. If they had, our response would have been to comply with their requests no matter what the cost. Barclays has regularly inspected and monitored our systems, as have the regulatory and tax authorities.

If any of them had demanded a special forensic audit, we would have done it gladly. If they had asked for changes in our “Know Your Customer” – or KYC – procedures, we would have made them. But we’ve never actually been reprimanded or accused of anything by Barclays or the regulators. Our business has been based on compliance.

It is ironic that a letter we received from Barclays on 20 June stated “please understand that the decision to exit our business relationship with you is not a negative reflection of your Anti-Money-Laundering standards, nor a belief that your business has unwittingly been a conduct for financial crime. It is, however, a commercial decision we have taken due to the risks of the sector in which we operate”.

Can’t Dahabshiil and others simply transfer their accounts to another bank?

Well, it is not so easy. Despite what was said at the UK-Somalia conference, Barclays has told us that the money transfer business is “at particular risk” of being used for money-laundering and financing terrorist activity.

Other leading banks share this concern and have already withdrawn from the sector or are not taking on new clients. HSBC pulled out of the sector in February.

I understand that the new management at Barclays have problems like the LIBOR fixing scandal and the mis-selling scandals to deal with and they want to put all that behind them. But I also share their determination to prevent money-laundering and terrorist financing.

SOMALI REACTIONS AND IMPACT ON UK GOVERNMENT FOREIGN POLICY, DEVELOPMENT AND HUMANITARIAN OBJECTIVES

What will be the reaction of Somalis towards the British government if money transfers from the UK diminish markedly because MTBs can’t get anyone in the UK to provide them with banking facilities?

The situation in the Horn of Africa remains very fragile at the moment and very sensitive. When the system is under stress bad things emerge – like piracy and violent extremism.

If money transfers stop, or are much less, there is a real danger that Somalis will start saying the West is against them. It may also increase sympathy for radicals who already fight and preach against the West and the people who say the West is in our country to destroy it, not to help.

If people become desperate as a result of economic hardship, they can become angry. Foreign governments need to understand the potential consequences of their banks effectively cutting off the money supply to Somalia at this crucial time.

The presidents of Somalia and Somaliland have written to the UK government to make this clear. People in the Somali region don’t distinguish between the UK government and British businesses.

As for Somalis in the UK, apart from job losses and closed businesses there would be a great sense of disillusionment. I know this for certain.

What is the solution? How can the transfer of remittances and investment to Somalia be maintained?

I can say one thing – shutting down the bank accounts of money transfer companies in two months, which was what we were told in May, is not the solution to anything.

In June, we asked Barclays for a 6 month extension to enable us to explore our options properly. We were given one month more – until 12 August. Today we received a second extension to the end of September.

The UK government needs to take the lead. It has significant foreign policy involvement in Somalia. It is pumping DFID money into Somalia and in the UK there are many Somali businesses and voters. I can’t speak for Bangladesh and other countries affected, but I am sure the UK government has interests and objectives in them as well.

The British government has often called on Somalis to help themselves. This is what we are determined to do. But we can’t rebuild everything if the key component of the region’s economic infrastructure is knocked out. That is a fact.

If everyone gets together – government, banks, money service businesses, lawyers and other experts – and there is real consultation, I am sure that a solution can be found.

This needs to happen quickly, or at least an interim solution must happen quickly, because if everyone just talks for 2 years it will be too late. Where will that leave the UK government and other foreign governments, let alone Somalis?

Edward Paice is director at Africa Research Institute. This interview was conducted on 29 July 2013. The views expressed by Abdirashid Duale are not necessarily those of Africa Research Institute.

Somalia

UK Minister Calls for ‘Market-Based Solution’ to Barclays’ Withdrawal of Services

UK Minister for Africa, Mark Simmonds, has stated that the government will not intervene directly in Barclays Bank’s … see more »