Issue 325

HARGEYSA, Somaliland, Apr 9, 2008 – The ruler of the self-proclaimed republic of Somaliland said on Wednesday he wanted the United States to put a military base there and had high hopes for finding oil.

Dahir Rayale Kahin, president of the former British protectorate that broke away from war-torn Somalia in 1991, told Reuters he would seek a second -- and last -- term in presidential elections scheduled sometime after October.

Kahin, whose main goal is to win international recognition, said priorities this year were smooth elections, fighting Islamic militants and an auction for oil exploration licenses.

"The major thing is the election. We're also trying our best to fight the terror -- We're the only Muslim country that has that in the constitution," Kahin said in the city of 800,000 where goats roam the centre and trees are decorated with discarded plastic bags swept up by desert winds.

Kahin said he had offered to host a U.S. naval base at the port of Berbera as part of efforts to win recognition. Kahin, who visited Washington and hosted the top U.S. diplomat for Africa early this year, did not say how his offer was received.

A planned auction of oil licenses will give priority to U.S. oil companies holding concessions from the 1980s, he said.

Somaliland, a region the size of England and Wales in northern Somalia, has been doing all the right things to please the West with democratic elections, a free press and passing on scraps of information on Islamic militants, said Peter Pham of James Madison University, ahead of the Kahin interview.

"If the elections are held and are perceived as legitimate and fair, that will be a major step toward recognition," he said.

Somaliland's accidental president, Kahin took office when Somaliland founder Mohamed Ibrahim Egal died in 2002. Kahin, from the minority Gadabursi clan, was elected the following year with a margin of just 80 votes out of 490,000.

Clean 2008 elections are key, especially as Kahin faced criticism last year after three journalists were thrown in jail for defamation, as were three politicians who tried to set up a new party in violation of the constitution.

Kahin, 56, arguing that the politicians and journalists were convicted by the courts, said he had since pardoned them.

His 4 million people have had peace for almost two decades but are poor, and the economy is mostly powered by $450 million a year in remittances from diaspora. His government's annual budget is $40 million -- an amount the U.S. government spends every six minutes.

OIL HOPES

One answer is oil. Kahin, who says he's paid $3,000 a year, said he was "very hopeful" a survey being wrapped up by oil consultants TGS Nopec would show oil and gas deposits -- an extension of Yemen's oil basins across the Gulf of Aden.

Oil majors such as ConocoPhillips (COP.N: Quote, Profile, Research), BP Plc (BP.L: Quote, Profile, Research), Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and Chevron (CVX.N: Quote, Profile, Research) staked out claims in the 1980s but suspended operations when Somalia imploded.

"We'll invite them and they'll have priority, but we'll give the concessions to whoever is ready to invest," Kahin said.

Small producers such as Ophir -- an outfit backed by South African businessman and veteran ANC politician Tokyo Sexwale -- have staked out new claims.

Resource-hungry China has taken an interest, too, with oil exploration firm CNOOC (0883.HK: Quote, Profile, Research) signing a production deal with Somalia's interim government in 2006.

"It's a false agreement," Kahin said of the CNOOC deal. "People who do not govern an area cannot sign an agreement."

If anybody does strike oil, lawyers will be dusting off old agreements. For now, the majors stay put, said Monica Enfield of industry consultants PFC Energy ahead of the Kahin interview.

"Being in a place that doesn't have sovereignty will be the biggest concern. The second is violence," Enfield said.

Kahin's overtures to attract petrodollars such as Dubai World's $800 million investment in neighboring Djibouti have failed so far. " Somaliland is facing a problem because of the lack of recognition" he said.

Somaliland already looks like an independent state. It has its own currency, army, flag, national anthem and tourist visa.

Recognition, though, would give it access to capital markets and investments. And it would solve its biggest gripe: That the world recognizes the failed state of Somalia.

" Somalia doesn't exist. The reality is that there is a functioning state in the North and a non-functioning one in the South," said Kahin.

The West wants the African Union (AU) to take the lead on Somaliland, but many African leaders are reluctant to open a Pandora's box of ethnic groups redrawing the continent's colonial borders.

Kahin doesn't buy that. Somaliland is not redrawing but reinforcing the historic British Somaliland border with Italian-ruled Somalia, he said.

"Countries tell us: `We won't be the first but we'll recognize you second," Kahin said. "But we're not interested in your being second."

Source: Reuters

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