The trouble with undiscovered oil in Somalia

Before the sharp decline of commodity prices in 2014, high international oil prices over the last decade drew exploration companies to the far corners of the global oil industry. Even in Somalia, a country weighed down by decades of conflict, new exploration concessions were announced in 2012. But even without a commercial discovery, oil exploration has only fuelled unrest between communities in Somalia and neighbouring Ethiopia.

This working paper by Jakob Grandjean Bamberger and Kristian Skovsted examines how oil concessions in Somali inhabited territories of Somaliland, Puntland, south-central Somalia, as well as the Ogaden region of Ethiopia, fed into conflict and political dynamics, upsetting preexisting institutional weakness.

The paper finds that the likelihood of oil alone through exploration can trigger a number of the negative trajectories associated with the so-called resource curse such as corruption, mismanagement of economic funds, and violent conflict. It concludes with policy recommendations for how to mitigate and prevent these negative outcomes of conflict and unrest.