By Abdi Sheikh and Richard Lough

MOGADISHU/NAIROBI (Reuters) – Western powers are in early talks on writing off Somalia’s debt, a big shift for a country that was long branded a failed state and has with help scored successes against al Qaeda-linked rebels and piracy.

Just two years ago, Islamist militants and African peacekeepers fought daily street battles in Mogadishu.

Now the city is rid of insurgents, though still vulnerable to attack, and the government’s focus is on bolstering security, rooting out corruption and imposing the rule of law.

Foreign diplomats point to a determination to re-enter the international fold under President Hassan Sheikh Mohamud, elected last year in the country’s first vote for decades.

This is welcome progress for regional states whose economies have been rattled by their neighbor’s instability and for Western capitals which long worried Somalia provides a base for militant Islam to flourish unchecked.

“A couple of years ago all the talk was about humanitarian disasters, piracy and terrorism,” said a Somalia-focused senior Western diplomat based in the Kenyan capital, Nairobi. “Now we’re talking about an arrears process.”

Mohamud had made it clear Somalia should not be seen as a basket case and wants to change donors’ attitudes, envoys said.

Discussion about debts suggest that change is happening. Somalia’s arrears stood at around $2.2 billion in 2010, World Bank data showed, peanuts in international terms but daunting when domestic revenues are forecast at $54 million in 2013.

Washington, London and Brussels are among those which have formally recognized the government for the first time since civil war erupted in 1991. Diplomats say it is high in ambition but hamstrung by a lack of funds, manpower and expertise.

“This is a better government on every level,” said a U.N. diplomat in Nairobi. “They’re more responsive, more interested in what they’re doing and they’re not feathering their own nests.”


Security worries persist. Britain warned this week of imminent attacks in Mogadishu and al Shabaab militants have claimed several suicide bombings in past months, more than two years after they were driven out of the capital.

Their fighters still control swathes of the countryside, but an African Union force has forced them out of most cities and the Islamist group is now at its weakest ebb in the six years since it emerged amid anarchy as a fighting force.

The 17,600-strong African force includes troops from Uganda, Burundi and Kenya. Nairobi is worried by a surge in bombings, kidnappings and grenade attacks on its soil that it blames on the Somali militants and their sympathizers.

Mogadishu’s mortar-blasted facades and refugee camps tell of chaos inflicted by clan warlords and then Islamists after dictator Mohammed Siad Barre’s overthrow set off civil war.

But now its rubble-strewn streets are choked with traffic and constructions sites point to a new confidence. Well-dressed Somali men from the diaspora hold their girlfriends’ hands in public – impossible when the strict Islamists were in charge.

“Mogadishu is now like other cities in the world,” said Hassan Hashi, an elder from Dusamareb in central Somalia.

But he said the government still struggled to exert influence in the provinces. In a country divided along clan faultlines, the government’s relationship with the regions is delicate and often uneasy under a fledgling federal system.

Strips of Somalia’s coast remain infested with pirates, even if they stage fewer successful attacks now due to the greater use of armed guards, increasingly aggressive naval action and slight improvements in law and order onshore.

“The other parts of the country are dark,” said Hashi. “Mogadishu, which is the heart of Somalia, has recovered but the other regions, the limbs, are still paralyzed.”

A political newcomer, Mohamud’s election was hailed by many as a vote for change, but seven months on some grumble.

“He promised to improve security but it has not yet happened,” said shopkeeper Halima Bile from Baidoa, which relies on foreign rather than local forces for protection from the rebels. “I don’t know when Somalia will become a real country.”


But Western powers are no longer dealing with Somalia as a failed state. Humanitarian aid is still essential, but now they have an interlocutor in the government which increasingly pushes visitors to meet in Villa Somalia, the presidential palace, instead of behind the fortified fences of Mogadishu’s airport.

“By treating them as a normal state we’re signaling things are really beginning to change,” said the European Union’s envoy Michele Cervone d’Urso, who is still based in Nairobi but spends more time in Somalia. “Of course, it is step by step.”

Some U.N. officials and aid workers are also slowly moving out of Kenya to Somalia, and diplomats will not be far behind.

Britain plans to open an embassy in Mogadishu by the end of July, and other Western powers who left in the early 1990s may follow. It will join others such as Turkey, Sudan and Yemen.

Recognizing Mohamud’s government may open the way for more Western aid and funds from World Bank and International Monetary Fund, vital for services like health, education and security.

But Somalia still has a way to go to build foreign confidence. Asked whether direct budgetary support was a possibility, the Western diplomat said: “Not for a long time.”

“I wouldn’t say it is a functioning government. It lacks capacity at all levels,” he added.

But the West is providing more support. Britain says it plans to use its presidency of G8 nations to urge the World Bank and others to re-engage with Somalia.

Almost half Somalia’s $2.2 billion of external debt is owed to the IMF, World Bank and African Development Bank. Those debts must be clear before further support is offered.

The World Bank’s lead economist on Somalia, Paolo Zacchia, said there was no quick fix but that the bank was looking at acting as swiftly as possible to “stabilize the government”.

Others also want to avoid missing an opportunity to prevent a slip back into anarchy. “We have to bank these opportunities otherwise they will slide backwards,” the Western diplomat said. “The gains made are incredibly fragile.”

(Writing by Richard Lough; Editing by Jason Webb)



  1. Interestingly very constructive and informative masterpiece. Essentially a failed Sovereignty state
    Somalia since from 1991 becoming defunct and henceforth became an IC major world powers and
    the UNSC sponsored administrated Authorities concerns with IC Military missions invasions involvements, and basically in the absence of strong Govts representing any independent Somalia Sovereignty Statehood, where billions of donor aid money being unwisely spent on warlord warfares only, the mounted IMF/WB/AB debits should have already become either paid through the donors budgets and/or become writeoffs. In any case, all contracts committed by the failed Somalia should be
    considered as null and void since the SFG are bankcrupt with zero revenues. The other thing that
    boggles my mind is that…Are there any Somalia failed Regime money known to be lying in overseas banks and/or with foreign Govts banks etc. Finally, I would caution the SFG not to commit further
    big IMF/WB/AB or else more unnecessary debits into the new Somalia.

  2. Somalia is a basket case and it always will be. It will be very hard to plant a rule of law in a country that's so corrupted beyond any imaginable scenario possible. The international lenders are contemplating on swallowing their losses as they realized Somalia will try to leverage it's astronomical debts against it as legal grounds to hold Somaliland for hostage.

    Hint, the debt itself had accrued during the failed marriage of Somaliland and Somalia. That's when the chicken or the egg? (which one came first) comes in play. We know scientifically speaking which came first. but that isn't the topic here.

    Somaliland''s argues that the debt was used to purchase heavy military arsenal to kill our citizen and destroy our cities but Somalia doesn't want to accept that, if it doesn't the world audience will count it as a very final second slum dunk of the game for Somaliland, bear in mind, Somalia is already lagging by double digit on the scoreboard.

  3. I'm critical of this government, but at least we have something to criticize.It's been a long time coming. And god willing we will make incremental improvement but remember we won't get there in day.Because destroying our country took a sometime and delivery act to harm our-self from all of us. So what's going take or require is patience from every corner of our-land .Which we're not knowing for it and some how and somewhere we must learn the wisdom to patience with each other. because failure is not an option…..

    • Sahra@ so called ic are creating the sort of government they have created in iraq, libya and many other places .It won't work in Somalia. You could say this probably the worst time in Somalia conflict because more power house countries are now showing a lot of interest in Somalia and only fool wouldnt understand what their agenda is.

  4. Very good news from the home front!.

    It is understandable that any improvement in the situation of Somalia will sadden our traditional enemies and traitors who were trading on the misery of our people for the last 21 years. Thanks to Almighty Allah, we can at last see the light at the end of this long dark chapter of our recent history. Peace and milk to all of our people from Liboi to Lowya Ado.

  5. Da fug….I would not want to be that guys timo right now, I mean damn cant he find a damn cart? Smelling like swordfish in the African heat smdh

  6. President Mahamud "elected"! What a scam! Since when West started to call election the likes of the couple hundred of appointed parliaments' selection that happened in Mogadishu an election? Who is fact checking the true lies and double standard claims of the International Community? If the government on the live support by the African Union troops that is confined in Mogadishu is called permanently elected government, isn't North Korea qualify a democracy? What a sham and UN scam. The government that is allegedly elected doesn't have constitution that is ratified by referendum of any kind or shape.

    Ahmed Dhegaweyne

  7. The problem here is the west tells what ever they want, people are not deaf and damp. it was few month's ago when they use to say somalia is "most failed state", and now telling us 360 degree change over night go and figure out yourself. in fact somalis are facing more uncertainty then ever before for so many reasons and unsolved issues such s/land, jubbaland, lower shebbele.

    It looks the west wants to install another dictatorship leadership in somalia, what ever the reason it looks and it feels like that. ask this question yourself.

    -Why the west all over sudden recognize somali government without fixing somalis regional problem?
    -Why out of the blue the west tells rest of the world somalia is no longer failed when there is disputes in all fronts?
    – Why the west never start ( full somali reconciliation) before recognizing somali government.