Country profile: Somalia

The Somali Republic gained independence on July 1, 1960. Somalia was formed by the union of British Somaliland and Italian Somaliland. A socialist state was established following a coup led by Major General Muhammad Siad Barre. Rebel forces ousted the Barre regime in 1991, but turmoil, factional fighting, and anarchy ensued. The Somali National Movement (SNM) gained control of the north, while in the capital of Mogadishu and most of southern Somalia the United Somali Congress achieved control. In 1992, responding to the political chaos and humanitarian disaster in Somalia, the United States and other nations launched peacekeeping operations to create an environment in which assistance could be delivered to the Somali people. By March 1993, the potential for mass starvation in Somalia had been overcome, but the security situation remained fragile. On October 3, 1993 U.S. troops received significant causalities (19 dead over 80 others wounded) in a battle with Somali gunmen.

When the United States (in 1994) and the UN withdrew (in 1995) their forces from Somalia, after suffering significant casualties, order still had not been restored. The United States has no formal relations with Somalia. Somalia has not had a functioning national government since 1991 and presently has no constitution in force. In February 2004, a Transitional Federal Charter was established which could serve as the basis for a future constitution. In August 2004, the Somali Transitional Federal Authority (TFA) was established as part of the Somalia National Reconciliation Conference. The Somalia National Reconciliation Conference concluded after it elected a Transitional President in October 2004. The current attempt to form a national government follows another structure which was tried in 2000. The Transitional National Government (TNG) was created in October 2000 with the three-year mandate of creating a permanent national Somali government. Although they declared their independence, the TNG did not recognize Somaliland and Puntland as independent republics and was unable to reunite the country. Somaliland refused to participate in peace talks with TNG, saying that while it would welcome peace in former Italian Somalia, Somaliland is an independent country awaiting international recognition.

Somalia's economy, one of the world's least developed, has been further hampered by the country's ongoing internal strife. Reliable economic data is scarce, and the current Somali structure cannot manage the national economy. Livestock production (cattle, goats & sheep) is the mainstay and the largest foreign exchange earner of the Somali economy. An outbreak of Rift Valley Fever (RVF) in southern Saudi Arabia and Yemen (the first reported outside Africa) in 2000 led six Gulf States - Saudi Arabia, Bahrain, Oman, Qatar, Yemen and the United Arab Emirates - to ban livestock imports from the Horn of Africa at that time. Another significant portion of the Somali economy, foreign remittances, have fallen significantly following the US government's closure of the Al-Barakat transfer company, which has been accused of transferring funds on behalf of Osama bin Laden and the Al-Qaida terrorist network.

Remittances from abroad are estimated to be $200-$500 million annually. Somalia is unable to receive IMF, and other multilateral aid due to the lack of institutions or financial infrastructure in place. In 2005, Somalia had an estimated GDP growth of 5.7 percent. A GDP increase of 2.6 percent is the forecast for 2006. Oil and Natural Gas Somalia has no proven oil reserves, and only 200 billion cubic feet of proven natural gas reserves.

Somalia currently has no hydrocarbon production. Oil seeps were first identified by Italian and British geologists during the colonial era. Exploration activities were focused in northern Somalia, and several foreign firms, including Agip, Amoco, Chevron, Conoco and Phillips, held concessions in the area. The firms all declared force majeure following the collapse of the central government. Exploration activity remains hindered by the internal security situation, and the multiple sovereignty issues. In February 2001 Total signed an exploration agreement with the TNG. The twelve-month agreement granted Total the rights to explore in the Indian Ocean off southern Somalia. Hassan Farah, TNG's Minister for Water and Mineral Resources, stated that the government would provide security during the exploration activities. Several factional leaders denounced the agreement, and stated that the TNG did not have the authority to sanction the agreement, nor the power to guarantee the safety and security of the exploration operations. In May 2001, Somaliland signed an agreement with U.K.-registered Rovagold and two Chinese firms, CPEC and CPC, for the right to explore for oil. Dubai-based Zarara Energy also signed an exploration agreement with Somaliland.

The Somaliland government has said it will honor, until they expire, the existing contracts foreign companies signed with the Barre regime that are in their territory. None of the firms have resumed operations in Somaliland. Somalia's petroleum consumption was an estimated 6,000 bbl/d in 2005. The organization officially responsible for all petroleum product distribution and retailing is the cooperative Iskash. The state-owned Iraqsoma Refinery Corporation had operated a 10,000-bbl/d refinery outside of Mogadishu, but it has been inoperative since 1991. Total is involved in the downstream sector in Somaliland. It rehabilitated and manages the operations of the oil terminal in Berbera, Somaliland's primary port. Total also supplies fuel to airports located in Berbera and Somaliland's capital of Hargeisa.