http://www.economist.com/World/africa/PrinterFriendly.cfm?Story_ID=2559183 (it requires a login... article pasted below) I specially like the part about taxation and the difficulties of implementing it... Somalia Coke and al-Qaeda Apr 1st 2004 | MOGADISHU

From The Economist print edition

Reuters Africa's most chaotic country is a bit calmer, but probably still home to anti-western terrorists Get article background THERE are two ways to run a business in Somalia. You can pay off the local warlord, not always the most trustworthy of chaps, and hope he will stop his militiamen from murdering your staff. Or you can tell him to get stuffed and hire your own militia. After 13 years of civil war, businessmen are increasingly plumping for the latter option, and their defiance has been rewarded. A veneer of normality is returning to the world's most chaotic country. An economy, of sorts, is beginning to thrive. Somalia's first Coca-Cola bottling plant opened in the capital, Mogadishu, last month. That its carbon dioxide chambers are encased in mortar-proof reinforced concrete is almost beside the point. Somalis now have the opportunity to rot their teeth like anyone else, and that feels good. Countrywide distribution will be smoothed by the presence of hundreds of experienced security guards, who are also responsible for protecting the odd foreign expert who drops in. Newcomers are encouraged to calm their nerves by firing off a few rounds or lobbing a hand-grenade shortly after arrival. It really works, enthuses a visiting Kenyan engineer. Perversely, this renaissance has been made possible by Somalia's continuing fragmentation. There is still no proper central government but, where once there was only a handful of warlords, there are now at least 24, and that is only the serious ones. With smaller fiefs to pillage, few can now afford the $100,000 or more that it costs to wage a six-hour battle, so such battles are less common. This is what passes for peace in Somalia, and it is enough to tempt many homesick exiles to return. They bring money as well as skills and contacts. In the past few years, hospitals, schools, businesses and even a university have appeared. In some ways, anarchy makes doing business easier. There are no formal taxesgiven how heavily-armed the average Somali is, these would be hard to collectand no regulation whatsoever. But the costs of chaos outweigh the benefits. You can roar through a warlord's road block unmolested if you have ten gunmen in the back of your pickup, but you have to pay your gunmen. Nationlink, one of the country's three mobile-phone operators, employs 300 guards to protect 500 staff. Everyone yearns for a restoration of stability and a proper government. A dozen attempts at negotiating a formal peace have failed. But since September 11th 2001, western governments, anxious to prevent al-Qaeda from using Somalia as a base, have pressed the warlords to make peace. On January 29th, after talks in Kenya, they were rewarded with a power-sharing agreement providing for a 275-strong parliament that is meant to represent all the country's main clans and minorities. Somalis are sceptical, however. Under the accord, warlords will choose the MPs, whose appointment will be confirmed by traditional elders. Who will pick the elders? Many worry that the warlords will. Some even argue that western support for the peace process encourages violence, by rewarding thugs with a share of power. Businessmen and other non-violent types have been excluded from the talks. We have built schools, repaired hospitals and rebuilt roads. Yet no one is asking us what we think, says Nationlink's managing director, Ahmed Abdi Dini. Since the power-sharing agreement, the talks have stalled. Amid the acrimony, consensus was reached on one issue: the warlords, many of them barely literate, unanimously agreed to abolish a clause barring those without a secondary education from parliament. Meanwhile, a decade after its botched intervention to protect food-aid deliveries in Somalia, the United States is back; this time, hunting for terrorists. American intelligence officers are working with two warlords to gather information about suspected al-Qaeda people in Somalia. Last year, an American commando raid on a Mogadishu hospital netted a Yemeni terrorist suspect, now in Guantanamo Bay. Hussein Aideed, son of the warlord whom American troops tried but failed spectacularly to capture in 1993, was apparently paid $500,000 for 41 Strela missiles to ensure they did not fall into bin Ladenite hands. It is rumoured that other warlords have also been paid: enough, possibly, to restock dwindling weapons supplies. Your correspondent saw some impressive hardware, including four gleaming Howitzers, at the base of one of the warlords, Mohamed Qanyare Afrah. Short tempers, tall stories President George Bush's war on terror has won him few friends in Somalia. In 2001, America forced the closure of Somalia's biggest remittance bank, on the ground that it was used to launder terrorist funds, and froze the assets of al-Haramain, a Saudi charity with alleged terrorist links. This may have made life harder for al-Qaeda, but it also made it harder for expatriate Somalis to send money to their relatives back home, and led, among other things, to the recent closure of Somalia's biggest orphanage. Since America is offering Somalis nothing by way of compensation, they are furious. We must become terrorists, says Abdulkadir Ahmed, a militiaman who claims to be training to fight America. With typical Somali bravado, he adds that: Palestinians who do suicide bombings and just kill a few people are stupid. If I had to sacrifice my life, I would take between 1,000 and 7,000 Americans with me. Copyright ) 2004 The Economist Newspaper and The Economist Group. All rights reserved.