Somaliland Update: State Visit To China Pays Immediate Dividends To Somaliland Infrastructure

Two weeks ago, Somaliland247 announced that Somaliland President Ahmed Silanyo was leading a high-level ministerial delegation on a trip to China [1]. Normally, a trip like this, which was promised to help Somaliland’s economic ties with China, is going to be big news, but I thought it unwise to speculate in advance on what kind of reasons China would have for investing in the infrastructure of Somaliland, though China’s insatiable appetite for natural resources hinted that the reasons might be mainly economic in nature.

The meeting was intended on focusing on trade, foreign investment, and development, and it appears to have been a stellar success as far as several nations are involved—notably China, Somaliland, Ethiopia, and South Sudan. Let us spend a little bit of time explaining why each of these nations is a winner (at least long-term) thanks to the closer economic ties between Somaliland and China, because it might not be evident at first glance how each nation stands to gain from Somaliland’s growth and the investments of China in this largely forgotten and neglected part of the world.

Somaliland went to China looking for Chinese help in funding the development of Somaliland’s infrastructure, especially its airports and roads, and what it got was not very far off from its goals. Somaliland247 also picked up a Reuters report from yesterday (August 19th) saying that the trip to China paid immediate dividends, as Chinese businessmen are investing in Somaliland to expand the port at Berbera (including adding a refinery there), build oil and natural gas pipelines to Ethiopia, and to build a road from Berbera to Wajile, a town on the border of Ethiopia and Somaliland [2]. The fact that both Hong Kong businessmen with infrastructure experience and Ethiopian as well as Somaliland leaders were working together on the deal suggests that all of these nations seek some major economic benefit. Let us examine how.

China is in a ravenous mood for natural resources to fuel its development. While Somaliland itself is not a particularly mighty or wealthy country, it has a very strategic location south of the Red Sea (and away from the troubles in Egypt and Yemen), it has a strong opposition to the piracy of Puntland and other Somali regions, and though its own natural resources are (to date) rather small, it offers a very convenient shipment point for the larger reserves of other countries in the Horn of Africa region—namely South Sudan. If China is concerned about the blocking of its resources because of problems in the Gulf of Aden or in the Red Sea, Somaliland is a perfect location for its own bases in the area, as the United States is based heavily in Djibouti, a next door neighbor to Somaliland. A friendly enclave in a vitally important region is a definite bonus for China, even if (perhaps especially if) that nation’s international status allows it to fly under the radar, without a lot of other people paying attention to it.

Somaliland, for obvious reasons, is also a winner in this deal. A small nation starved of international aid because of problems over its status as a de facto state, Somaliland clearly benefits from having powerful friends, even if those friends (in the case of China) are largely mercenarial in their own interests. The fact is, Somaliland has something (strategic location and the rule of law) that China wants, and it has the savvy to use what is has to get what it wants (more attention and more foreign direct investment to build its own infrastructure). The fact that Somaliland also has a positive working relationship with both South Sudan and Ethiopia (which are its main allies in the Horn of Africa region) means that China’s efforts to build up Somaliland’s infrastructure have larger ramifications.

Ethiopia is also a winner, and fairly obviously so. Ever since the successful breakaway of Eritrea from Ethiopia in 1991 (one of the major precedents for Somaliland’s bid for international recognition), Ethiopia has been a landlocked country. Relationships between Ethiopia and Eritrea are poor, and so that way to the sea is largely closed off for Ethiopia. Both Eritrea and Somaliland remain viable options for Ethiopia’s trade to the sea, and the fact that China is willing and able to help Somaliland’s development gives Ethiopia more options for its own trade—moving through Djibouti means working with the Europeans and Americans, and moving through Somaliland will now mean working with the Chinese. More options means better opportunities for Ethiopia. In addition, the new roads and pipelines from Somaliland also mean that Ethiopia may profit from being a transshipment nation of South Sudan’s oil and natural gas resources, which may further increase both Ethiopia’s financial stake in such matters as well as gain a greater level of local hegemony since the two main rivals of Ethiopia for regional dominance, Sudan and Somalia, are now both divided as well.

And finally, South Sudan, though not mentioned in the Reuters article, is also a winner because of these actions. Currently, South Sudan is rich in oil and natural gas reserves, but its pipelines are all set to go through Northern Sudan. As relations are not all that great between the two nations of North and South Sudan, South Sudan’s bids to gain wealth through its resources could be thwarted by a jealous and bitter Khartoum regime. However, the development of natural gas and oil pipelines going south through Ethopia and Somaliland offer South Sudan the chance for more options on its own trade, allowing it to bypass an unfriendly regime in Khartoum and trade with friendlier regimes in the region. China (which has previously been a major supporter of Sudan’s military government) may switch its support to the regimes in Ethiopia and Somaliland to preserve its access to South Sudanese oil and natural gas, bypass the risky chokepoints of the Suez Canal and Yemen, and pick up a few new allies/client states as well in the bargain. In the process, everyone wins, because everyone has something that someone else wants. As long as that remains true, the good relations between all parties concerned can continue. Let us see how long all parties involved have and see the benefits to this working relationship.

[1] http://somaliland247.wordpress.com/2011/08/06/somaliland-president-ahmed-silanyo-set-to-visit-china/

[2] http://somaliland247.wordpress.com/2011/08/19/somaliland-in-port-deal-with-china-businessmen/