Somaliland wants to be a trading hub. Here are the problems

..and the potential.

Somaliland, a semi-desert territory on the coast of the Gulf of Aden, has set its sights on becoming a regional trading hub for the Horn of Africa. Though not internationally recognised, Somaliland’s "autonomous" status has insulated it from the turmoil that has subsumed Somali for the past two decades. It has a functioning political system, government institutions, its own currency and relatively low levels of political violence.

At the heart of its economic potential is the port of Berbera, used as an import and export hub by landlocked Ethiopia. Its two airports have undergone a USD 10 million Kuwaiti funded makeover which Somaliland hopes will be the start of efforts to develop its infrastructure, creating the potential for it to augment its position as an alternative trade corridor to Djibouti for Ethiopia.

Ethiopia’s USD 43bn economy, while largely closed to the outside world, is growing by 7 per cent a year and the country is keen to develop coffee and leather manufacturing exports.

The need for enhanced infrastructure in the region is demonstrated by persistent bottlenecks at ports in Mombasa, Dar es Salaam and Djibouti. The appalling condition of the Mombasa road linking the port with the rest of Kenya and the countries of the interior exacerbates the backlog.

Ethiopia’s over reliance on one trade corridor through Djibouti leaves the country vulnerable to fluctuations in its relationship with its trade partner, thereby compromising its ability to effectively manage the political economy of trade logistics. The World Bank has encouraged Addis Ababa to develop transport routes through Somaliland to diversify its options and improve its negotiating position with transit corridors.

Infrastructure development will provide a boost to Somaliland’s fledgling natural resources sector. Sharing the similar geology to the oil rich Gulf states, Somaliland and neighbouring Puntland, offer attractive prospecting opportunities for oil & gas companies. Canadian-listed Africa Oil Corp and Anglo-Turkish oil company Genel Energy, have signed contracts with the semi-autonomous governments and are exploring in the region.

In a situation similar to the standoff between Baghdad and Kirkuk, the activities of international oil companies have sparked controversy over which authorities have the right to issue exploration licences. Following the presidential election in Somalia in 2012, Somalia authorities are reasserting their claim that the issuing of such licences falls solely within the remit of the federal government.

The Somali constitution gives considerable autonomy to regional governments to enter into commercial contracts for oil deals, while a petroleum law, not yet adopted by parliament is being invoked by federal officials in Mogadishu to claim that the central government can distribute natural resources contracts.

The seeds of this controversy dates back to the 1991 overthrow of a dictator that plunged Somalia into two decades of violent turmoil, first at the hands of clan warlords and then Islamist militants, creating a political vacuum in which two semi-autonomous regions - Puntland and Somaliland – emerged in northern Somalia.

Multinational oil companies with licences to explore Somalia prior to 1991 have since seen Somaliland and Puntland grant their own licences for the same blocks. At present the federal government is too weak to press its claim and is unlikely to remain so into the medium term. Any concerted effort to force Somaliland and Puntland to rescind contracts has the potential to provoke violent clashes between armed groups and the security forces in the territories.

Activity by a range of investors in infrastructure development and oil & gas exploration is indicative of the potential to be unlocked in even the most challenging territories. With appropriate insurance coverages providing balance sheet protection against the challenges posed by unpredictable government action and the threat of political violence, opportunities abound for the intrepid investor.

Photograph: Getty Images

JLT Head of Credit & Political Risk Advisory

Getty
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The "people" have spoken on Brexit - listening to them is another matter

The Athenians had another word for them. 

Commentators are right to point to the fury and frustration of the "left behind", who are, everywhere it seems, rebelling against establishments they believe have betrayed them. 

But they may understate the threat we now face. Many of those who voted for Brexit or Donald Trump were not just rejecting economic injustice or "broken politics" but also perhaps the very principles of our system of government. For them, democracy itself may have lost its appeal.

If that is the case, we can’t blame the elites alone. We, "the people", are complicit. In associating democracy almost exclusively with economic advancement, we have begun to forget that it is also, and principally, about shared values, rights and responsibilities. In the UK and the US, voters in their millions have traded one against the other. The citizens of the Netherlands and France may soon do the same.

It's too early to panic. Perhaps we’ll come to see that Brexit was not the calamity some of us predict; perhaps President Trump will turn out to be better than we fear he may be.  

But we would be foolish to ignore the precedents. 

The great democracy of ancient Greece lasted two hundred years. But then, subverted by demagogues and oligarchs, and overwhelmed at last by autocrats, it disappeared from the world for 2,000 years. For all that time, the citizens of today’s democracies were the subjects of tyrants, elites and ideologues but never of themselves.

Modern history provides no greater reassurance. Even when democracy has apparently been secured, it has consumed itself at the ballot box with awful consequences. We are not in that place. But in the UK and the US we have taken a step in its direction.

Rights and responsibilities

The dilemmas we face are as old as democracy itself.

Almost 2,500 years ago, the Athenian statesman Pericles set out for his fellow citizens the precepts of their remarkable democracy. He spoke of the equality of their rights before the law. But he laid particular emphasis on their duties to each other. The word he used for the "socially useless" individuals who placed self above public interest provides the origin of our own word – idiot. 

What would Pericles make of us? Certainly, we remain jealous of our rights, especially when we feel that they are threatened by others. But our preoccupation with personal aspiration has long since eroded our sense of common cause, whether measured by our engagement in civic affairs, our contribution to community life or the civility of our relations with others.

On these grounds, we are doubtless idiots.

A reasonable principle

But for the Athenians, democracy was founded on a third key principle. Alongside rights and responsibilities, they regarded the exercise of reason as indispensable to good politics. As Pericles put it:

“We reach decisions on public policy only after full discussion, believing that sound judgement, far from being impeded by debate, is arrived at only when full information is considered before a decision is made."

Can we honestly claim that in the EU referendum or the US Presidential elections, voters collectively exercised sound judgment based on reliable evidence, rational deliberation and open-minded debate? 

More likely, we recognise that what passed for public discourse throughout both campaigns was poisoned by deceit. The goal of the politicians who set out to mislead was clear. But instead of punishing them for their cynicism, millions suspended their disbelief and voted for them, often quite consciously choosing not to test their instincts against the evidence or their own opinions against other views. As much as they were misled, they also misled themselves. 

This was precisely the concern of democracy’s earliest critics, Plato and Aristotle among them. They worried that the system was inherently unstable not least because the people could be too easily swayed by their emotions and too readily seduced by shallow populists into decisions which were neither reasonable nor just - nor sensible. 

Representation

But if democracy is in danger, where are its defenders? When the people have been so badly misled and when the potential consequences are so serious, who should protect them if not their elected representatives? Isn’t that why in both UK and US we favour a representative system?

At least until now, we have accepted that our elected politicians have a duty not just to check the power of government but also to mitigate public opinion when it undermines sound or just policy. Our legislators should be the servants but not the slaves of their electorates.

The 18th century statesman Edmund Burke went further than most in believing that he would be betraying his constituents were he to sacrifice his judgement to their opinion. When in 1778 he defied them on the issue of free trade, he expressed the hope that if he forfeited their votes:

“It will stand on record an example to future representatives of the Commons of England, that one man at least had dared to resist the desires of his constituents when his judgment assured him they were wrong."

He lost his seat but perhaps retained his integrity.

As the democratic franchise was extended, other thinkers worried about the potential for conflict between public opinion and sound policy. In the 1830s, the French philosopher Alexis de Tocqueville, a close observer of the developing American democracy, warned against any decision "which bases its claim to rule upon numbers, not upon rightness or excellence". John Stuart Mill, in his great essay On Liberty, feared for the rights of minorities when government is mandated by majority opinion.

All these critics favoured government by elites, be they philosopher kings or aristocrats. Our societies are considerably more liberal than those they envisaged, and that is to our credit. But even if we reject their politics, we should acknowledge that recent events have given their concerns new currency.

Whose people?

Indeed, the EU referendum was everything they dreaded - a triumph for unreason, a basis for unsound policy, a threat to democratic principle and, potentially at least, a suppression of the rights of minorities. 

But at the very moment when our tradition of representative democracy should be protecting us, it seems that Parliament’s responsibilities have been radically reinterpreted. The Prime Minister has repeatedly asserted that “the British people have spoken” and that, even though she herself doubts its wisdom, their decision cannot be challenged. It has taken the intervention of the High Court to remind her of the role of a sovereign Parliament in the making of public policy.

We know, if only because right-wing newspapers have identified them for us, who are the enemies of the people. But who are those "people” whose judgement the PM regards as sacrosanct? 

Are they “the whole nation” for which she has publicly pledged to govern – or the 37 per cent of the electorate which voted for Brexit? Must the overwhelming majority which did not now remain silent and unrepresented? And in such circumstances is democracy served or subverted?

Too many politicians, cowed by campaigners whose objectives they fear, bullied by press barons they despise and apparently indifferent to their own constitutional responsibilities, have set aside their own judgement of the public good and fooled themselves into believing that when the people speak, their will must be done whatever it is and whatever its consequences.

But ultimately there is no such thing as "the people", only an aggregation of groups and individuals with a plurality of beliefs, opinions and interests. Talking about them in the definite article obliterates those differences. Precisely because it is so definite, it is intolerant, oppressive and undemocratic.

Back from the brink

Now, more than ever, we need parties and politicians with the courage not just to listen to but also to lead public opinion, and to stand against it when they believe it wrong. 

More than ever, we need a media which acknowledges its responsibility to inform as well as to influence, and show a far greater commitment to the truth.

More than ever, we the people should recognise that a strong and healthy democracy demands more of us than we seem prepared to give.

Democracies have come and gone – in ancient Greece and modern Europe. If ours is to prevail, we must both individually and collectively acknowledge our responsibilities as well as our rights and, critically, we must restore the importance of reason – and reasonableness – to the ways in which we deliberate, debate and decide.

As it is, we have already entered an age of unreason. Unless we come to our senses, it’s impossible to predict when or where it will end. 

Peter Bradley is director of Speakers’ Corner Trust and a former Labour MP.