China Invests in Somalia Despite Instability
Adam Wolfe writes in Power and Interest News Report:
he Financial Times reported on July 13 that the Chinese National Offshore Oil Corporation (C.N.O.O.C.) has signed a deal with Somali President Abdullahi Yusuf to explore the northern Puntland region for oil. The initial agreement was signed last May, and it was endorsed at the China-Africa summit held in Beijing last November.
A meeting between C.N.O.O.C. and Somali officials was held on June 24 to finalize the deal. The terms indicate that the Somali government would retain 51 percent of the oil revenues under a production-sharing arrangement. Further reporting from the Financial Times, however, revealed that Somali Prime Minister Ali Mohamed Gedi was not aware of the contract, suggesting that the oil deal remains vulnerable to political infighting.
China’s willingness to invest in Somalia — before the Transitional Federal Government (T.F.G.) completes work on a national oil law and as the security situation continues to deteriorate — shows that Beijing has not been deterred by the growing backlash across Africa at Chinese policies and remains willing to take on political risks that Western firms will not tolerate.