Somalia: The difficulties of predicting policy impact in a failed state

An article published just yesterday about Somalia, the 2nd most fragile state according to the 2014 Fragile States Index, describes how the country may become more fragile than it already is.  Due to concerns over money laundering, California’s Merchant Bank, the last bank in the US that conducts wire transfers between the US and Somalia, will no longer conduct such transactions.  Ideally, this measure will prevent money laundering to terrorists in Somalia such as al-Shabaab as part of the war on terror; realistically, because of Somalia’s lack of infrastructure (largely due to the fact that Somalia is a failed state with a colonial past), the measures will likely increase rather than decrease terrorism in the region.

About 40% of Somali citizens rely on remittances transferred to Somalia by family members working abroad in order to survive.  Without this money, it is feared that Somalians, especially young males, will turn to new sources of money for survival; mainly, terrorist organizations like al-Shabaab.  The US policy intended to combat terrorism and protect citizens worldwide from terror might just push citizens to join terror groups and grow the threat of global terror.

How, though, has Somalia come to a point where 40% of citizens must rely on remittances from family abroad?  And why are there no banks in Somalia to transfer the remittances that likely do more good than harm?

This BBC timeline shows the highlights of Somalia’s history since the 1860’s.  As you look at the timeline, you might notice something in its first portion: between the 1860’s and 1960, Somalia was occupied by Egypt, France, Britain, and Italy, whose claims often overlapped. These arbitrary and overlapping divisions caused many problems once Somalia gained independence in 1960.  After 1960, the timeline becomes increasingly more complex with border disputes between Somalia, Ethiopia, and Kenya, assassinated presidents, droughts and famines, tsunamis, warlords as rulers, Islamist and al-Qaeda advances into the region, the emergence of pirates, and constant, widespread violence.

The problem amidst this chaos is the lack of opportunity to create modern infrastructure and for citizens to have stable income sources.  While Somalia has ports that create opportunities for pirates, it never created systems such as the banking system necessary to transfer remittances into the country.  Instead, Somalia must rely on outside banks to make the transfers; outside banks are no longer willing to do so because of US policies aimed at combatting terrorists there.  As a failed state, special consideration must be given to the impacts of external policies.  While it is logical to think that by cutting off money flow, terrorist resources will shrink, in a state with a troubled history and limited modern infrastructure, the policy will hurt citizens and drive them to terror groups.  The outcome could likely be exactly opposite of the one intended.


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