1Several weeks after the Somali state collapsed in 1991, the Northwestern region declared independence. The Somaliland Republic has since reasserted the separate existence it had as the colony of British Somaliland before independence and union with the former Italian Somalia in 1960. While in Southern Somalia the restauration of peace is still a long way, Somaliland has created a state from the combination of traditional elders’ councils and a modern parliamentary system. A relative peace prevails among hiterto hostile clans, and observers appreciate the political system as a Somali innovation. In fact, observers consider the country as an unusual example for endogenous post-war peace-building. However, the international community has so far failed to extend any recognition to the Somaliland experiment. Short of an international legal status, the political future of the “quasi-state“ of Somaliland is doubtful. The absence of recognition of Somaliland is part and parcel of the international community’s attempts to suppress the decentralizing processes that are ongoing in the Horn of Africa and favor instead the restauration of centralized states.

2Why did Somaliland declare independence from Somalia ? And why does it hold on to independence ? I do not believe in a so called “ethnic“ conflict in Somalia : The civil war in Somalia is a social conflict, with roots dating back several decades. The secession of Somaliland does not mean a growing ethnicity of the Northwestern Somali people. Behind nation-building processes, one often finds instead hidden interests. Which social groups profited from the declaration of independence ? The economic decay of the Somali state during the 1980s led to political repression and to an informalization of the Somali economy – some call it “shadow economy“. The reorientation of the Siyaad Barre regime at the beginning of the 1980s – from communist to capitalist ideology – went astray with his attempt to deprive the counter-hegemonic elites from their power in Northern Somalia (Samatar 1989).

3Because of the nationalization of the most important markets there, the Northern Somali opposition party “Somali National Movement“ (SNM) received significant financial assistance from the export traders who were impeded in their economic activities by the Barre policies. This paper argues that the declaration of independence of the Somaliland Republic, as a counterhegemonic project, was a direct result of the formation of elites during the commercialization of pastoralism under British colonial rule. Separation from Mogadishu and limitations on Somaliland state power are both in the very interest of the dominating traders. To secure these economic interests, much effort is invested into keeping state power marginal. Main actors in Somaliland are holding on to independence, knowing that the international community nowadays favours the model of the European nation-state. Donors are only attracted by state-like structures – even though it may be nothing but a façade.

4Decay of state institutions and structural adjustment programs lead to the formation of parallel markets. This “informal“ sector helps the little man to survive but is also used by elites to enhance their prestige and monetary wealth. Many argue that in Africa nowadays only the informal sector affords endogenous economic development. It is expected that from this economy comes the power to rebuild the state (Kappel 1999). However, the idea of a dichotomoy between state and civil society is a European artifact. In Somaliland, it is obvious that the main economic actors are the formerly disenfranchised state elites who saw no opportunity to profit from the state system (Chabal and Daloz 1999). They concentrated on the parallel economy to reap the benefits from these structures in a fully deregulated economy of a new state, Somaliland. For, indeed, the economy of Somaliland is completely deregulated despite state institutions that were rebuilt after independence. Informal economic activities are not seen as illegal but are “legitimate informal“ – to use Chabal and Daloz’s terminology. The former president of Somaliland who died in May 2002, Maxamed Xaaji Ibrahim Igaal, introduced a national currency and a national bank. However, the main actors do not trust Somaliland’s financial policy : national and international companies prefer to change money on the parallel market (Mubarak 1997). The government‘s attempts to support the national financial system failed. For example, in 1995, the government tried to support the Somaliland Shilling by sanctioning foreign exchange operations and by fixing the exchange rate, which caused strong public protest. Many traders threatened the government with moving their activities to Puntland in Eastern Somalia, where there are no restrictions on export trade.

5Even though the parliament dropped this unpopular decree in 1996, the economy is still very suspicious to state policy (Mubarak 1997). The main economic actors blame the government for extreme inflation in 1996 as well, when the state tried to compensate enormous budgetary deficite by printing money. The public revenues of the Somaliland state total about 30 million US$. This amounts to only 60 percent of actual expenditures. One reason for this shortfall lies in the difficulties the administration encounters in taxing its nomadic population, like all of its Somali predecessors.

6Shortly after the Somali state collapsed in 1991, the port of Berbera in Somaliland was reopened. This allowed for he reactivation of foreign trade relations which confirmed Somaliland’s economic orientation on trade. Livestock account for the majority of exports, with cultivation and trade of khat an upcoming business. Since the late 1960s, livestock trade via Berbera has increased constantly (Samatrar 1989). Close to Arab markets, livestock prices have been high. In 1978, about 80 percent of livestock exports left the country through Berbera. After the port reopened in 1991, this trend continued. Today, Somaliland export traders are successful in controlling the majority of all Somalia‘s livestock exports (Marchal 1999). Northern Somali descendants of the first national elite are benefitting thereby from Somaliland, as independence pushed them from periphery to the core of power. To some extent, export traders have their own state now. They no longer compete with southern rivals or need to fear Mogadishu‘s hegemony. Furthermore, they exert great leverage over their fiscally weak government in the north. Threats to move their activities out of Somaliland, which would shatter state revenues, are usually sufficient to keep the state complacent.

7Khat is a mild narcotic, mainly cultivated in the highlands of Ethiopia. Its active substance evaporates within days. Its increasing consumption in the Horn of Africa and in Yemen makes its cultivation and trade a boom industry – especially in Somaliland. Khat chewing is a relatively new phenomenon in Somaliland (Gesheketer 1983). It started along with urbanisation and the rise of an indigenous elite under British colonial rule. Improvement of transportation led to an increase of consumption by the uprooted youth of urban areas. “Nowadays, it seems that everybody is chewing khat all day, everyday“ (Nair 1999). A few wholesalers make a large profit from khat, but increasing consumption means a serious danger for society and the national economy. Chewing khat is indeed an expensive activity. It is estimated that the costs of chewing amount to 1,500 US$ per person per year – about the same as per capita income.

8Some argue that chewing khat slows down the productivity and leads to an erosion of working morale (Green 1999). This may not be accurate as its consumption actually rises with unemployment figures.

9Whether one stigmatizes the chewing of khat or call it the “food of the holy man,“ there is no doubt that the narcotic‘s trade is one of the most productive economic sectors in Somaliland. This claim is supported by an UNDP study from 1997 (Nair 1999). Khat is not criminalized in Somaliland, and the administration even imposes a tax on its import. But taxes on khat are lower than any taxes levied on luxury goods in similar states. The UNDP recommended therefore a higher taxation which may be difficult in reality. The wholesalers are members of the Habr Awal clan which is quiet successful in controlling the government. This lobby is setting limits to the power of the state.

10Now, what is exactly the role of Somaliland state ? Let us think of the European ideal. There, the state guarantees its citizen‘s legal protection. The monopoly on the use of force means protection against personalized power. Sovereignty means security for economic actors.

11The internationally recognized nation-state is a fund-raiser who provides access to the markets. The division of the ruler‘s person and the institution of his rule means that all citizens are equal in law and equally good. Such concept of the state is pure fiction in Somaliland. The state is not institutionalized at all, nor does it claim the monopoly on the use of force and full control of its territory (Piguet 2000). The power of the president is fully legitimated inside the country, but he does not enjoy any legal status beyond the borders of Somaliland. Yet, missing international acknowledgment is not the only factor that weakens the state. Its power is actually meant to be marginal, as its legitimacy comes from a combination of clientelism and lineage-dominated organisation, based on networks. This clientelistic system favours a weak state who has no administrative control of its territory. The Somaliland state is thus completely privatised. The political class favours its clients in taxing, assigning goods, placing public orders. And the clients make available money for demobilization. But the most important role of the state in Somaliland is to maintain an unequal access to the market. “Economic tensions have an clan dimension” (Bradbury 1997). The clan next to Igaal, Habr Awal, keeps control over the Berbera port and the trade in khat, while the clans of Garxajis and Habr Jeclo control the most important parts of livestock trade. Trade in Somaliland is such a profitable business, because the administration is used to maintain the balance of the clans‘ economic power (Marchal 1999).

12Trutz von Trotha once said that in Africa, places of power are always places of petitioners (Trotha 2000). Yet, in Somaliland, one notices the opposite. High government officials only draw symbolic salaries. Their real income are donations from members of their own clan (Piguet 2000). The donors know very well that the recipients are obliged by the donation. In return for it, the officials speak up in parliament for their friends‘ tax exemption or turn a blind eye on wildlife trophy traffic. So, in Somaliland, few economic tycoons are interested in building a state system whose power is easy to control. This behaviour does not encourage the state‘s consolidation but weakens it in the long term. For the donation cements given inequalities between the different clans. In fact, a national identity or even a polity cannot be constructed because the conditions of reproduction do not fall within the state‘s abilities. In Somaliland, it is a small and influential part of the society which captures the state, and not the opposite. The following illustration provides an example of this. A big success for the wholesalers of former president Igaal‘s clan Habr Awal was a change of the main trade route for khat. Every day, ten tons of Khat leave Ethiopia for the Arab peninsula. When Somaliland was still a part of Somalia, the narcotic en route to Yemen was always shipped via Djibouti. Nowadays, Berbera is the port of choice. For, in the quasi-state of Somaliland, taxes and duties are lower, and legislation is more vague than in Djibouti (Piguet 2000).

13The question now is whether a state like Somaliland can claim its independence on a long-term basis. Will Somaliland ever be a full member of the international community ? The construction of national institutions and the nearly successful demobilization, the creation of democratic structures like parliament and national elders council make Somaliland look like a stable and secure partner. The government wants to show that the country is ready for international donors, and suffers from the lack of international interest. Although there are many reasons for Somaliland’s institutional marginalization, two deserve to stand out in conclusion to this paper. First, Somalia is still a full member of the United Nations, even though its membership is suspended for the moment. As long as there is no government in Mogadishu that accepts Somaliland as independent, there will not be any international recognition. Today, there is only little hope that the actual provisionary government of Mogadishu will move in this direction. Abdoulkassim Salat Hassan, interim president of Somalia, is fully accepted by the international community. He will not let Somaliland go its own way, because Mogadishu needs its tax revenues. In fact, the independent status of Somaliland and the hope for a long-term solution of the Somali conflict along the lines of a federal system, is likely to be sacrificed in favour of an ad hoc installed provisionary government which certifies for the world that African borders remian sacrosanct. Besides, the international community still favours the European model of the nation-state. There is a great fear in Europe and the United States of so called “failed states“. The world faces them with suspicion and helplessness, rejecting endogenous political developments as processes of “re-traditionalization“ who do not fit with modernity. Time will tell, if the world will one day accept human political systems and societies that differ from the European model.