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Cablegate: Somalia - Diaspora Business Thrives in Dubai

VZCZCXRO5366
PP RUEHDE RUEHROV RUEHTRO
DE RUEHNR #2618/01 3250733
ZNR UUUUU ZZH
P 200733Z NOV 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 7626
INFO RUCNSOM/SOMALIA COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC 3095
RHEHNSC/NSC WASHDC
RUEKDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
RHMFIUU/CJTF HOA
RHMFIUU/CDR USCENTCOM MACDILL AFB FL

UNCLAS SECTION 01 OF 03 NAIROBI 002618

SIPDIS

SENSITIVE

DEPT FOR AF/E AND A/S FRAZER
ALSO FOR AF/EPS - Ann Breiter and Ada Adler
STATE PLEASE PASS TO USAID/EA
COMMERCE FOR BECKY ERKUL

E.O. 12958: N/A
TAGS: PGOV PREL ECON ETRD EAID KWMN SO AE
SUBJECT: SOMALIA - Diaspora Business Thrives in Dubai

REF: A) Nairobi 543 B) Nairobi 2553

1. (U) SUMMARY. This cable is the first of two on Somalia's
Dubai-based Diaspora. Though Somalia remains mired in conflict, the
country's private sector boasts successful operations in a variety
of sectors including livestock, telecommunications, shipping,
transportation, import and exports of various commodities. Major
business leaders are based in the United Arab Emirates (UAE), using
Dubai's open trade and financial platforms as a lifeline to their
interests across Somalia. The Dubai-based Somalia Business Council
is defunct, having split three years ago in conflict over its
leadership, but there was interest in re-organizing another formal
association. Our interlocutors welcomed the prospect of
strengthening trade and commercial relationships between Somalia and
the United States. All said that full U.S. engagement on Somalia,
especially with our allies in the Persian Gulf, is a necessary
ingredient for any success. END SUMMARY.

-------------------------
Dubai: Somalia's Lifeline
-------------------------

2. (U) Between November 7 and 13, Somalia Unit PolOff met with some
of Somalia's most successful business leaders who operate from Dubai
but maintain major influence in the vibrant economy that continues
to grow despite the ongoing conflict (Reftel A). Somalia has
historically been an important link for trade between East Africa
and the Arab World and Somalis have established close relations with
countries across the Middle East. In addition to long-held
religious ties that bind Somalia to Saudi Arabia, countries like
Qatar, Kuwait, Yemen, Oman, and Iran have played an increasingly
important role. Yet the UAE has emerged as a hub for Somali
business and in the post-civil war era, Dubai has become Somalia's
lifeline. With the collapse of the Somali government, failed
institutions, and violence that has forced millions to flee, a large
Somali community has found safe-haven in Dubai.

3. (U) Many Somalis living in UAE hold passports from other
countries, typically Canada, the U.S., and several European
countries. Others retain only their Somali nationality. While
travel for them in most parts of the world is difficult, they have
had no trouble declaring residency in the UAE, and are welcomed in
Dubai as "fellow members of the Arab world." It is standard to have
several nationalities in one family. The Somali Embassy in Abu
Dhabi does not have a formal count of the number of Somalis in UAE,
but some observers estimate that as many as 100,000 Somalis are
residents and countless others regularly travel there on business.


4. (U) With its open trade platform and financial system, Dubai has
become the base for activities across all of Somalia's sectors. In
telecommunications, for example, operators are unable to directly
purchase equipment for their Somali-registered companies as most
suppliers (except Chinese) refuse to sell, ship, and install
equipment in Somalia. Instead, they use their Dubai-registered
affiliates to order any necessary equipment, now mostly sourcing
from Asia, and then trans-ship via Dubai to Somalia. In financial
services, major money transfer companies use Dubai-based
institutions for their transactions, especially as most of the U.S
banks have recently closed their accounts. For major commodity
trading, the shipping operators use Dubai as the hub for their
activities, ordering rice from India, Pakistan and China to import
(along with every other imaginable item) to Somalia. The delivery
ships and planes leave Somalia filled with livestock, meat, and
charcoal, Somalia's major exports. In every sector, Dubai and its
Somali Diaspora play a major role in supplying all regions of the
country with its basic (and not so basic) needs.

----------------------------------
Help With Gulf Cooperation Council
----------------------------------

6. (SBU) Our interlocutors from all sectors discussed the
importance of Somalia's trade with the Middle East, particularly in
livestock. They said that one of the most important ways the U.S.
can help Somalia is by using its influence with countries in the
Gulf Cooperation Council (GCC), especially Saudi Arabia, to re-open
its markets for direct imports of Somali livestock. They told us
that in the late 1990s during an epidemic of Rift Valley Fever in

NAIROBI 00002618 002 OF 003


East Africa, the Middle East ceased imports from the region until
more stringent health requirements could be met. Livestock from
Somalia is now shipped, mainly from Berbera and Bossaso, to UAE,
Oman, and Yemen. While Saudi Arabia has long re-commenced imports
from others countries in the region, it has not directly accepted
Somali livestock. Instead, a significant amount of Somali livestock
is transported to Djibouti and goes through its facility (now
controlled by a Saudi company) to Saudi Arabia. They said that if
Somalia was allowed to ship directly to Saudi Arabia, the livestock
industry would grow and pastoralists across the country would be
able to sustain their livelihoods.

7. (SBU) Slaughterhouses in Mogadishu, Galkayo, Beletweyn, and
other cities regularly supply fresh meat to Dubai that is inspected
at the point of origin by officers of Dubai-based municipalities.
The meat (usually beef and lamb) is then transported by 15 to 16 ton
capacity Russian-made aircraft to Dubai where it is once again
inspected and sold to wholesalers who supply meat markets in the UAE
and beyond. The Somali business owners told us they would be able
to get a better price if they had their own facilities and could
directly supply the Gulf region. They said that more formal U.S.
recognition of the TFG would encourage GCC countries to recognize a
national authority that could formally certify the livestock and the
meat in Somalia at the point of origin. The Dubai-based Somali
business leaders requested full engagement by the U.S. on Somalia's
economy, not just its politics. They agreed that if the U.S. were
to ask Saudi Arabia, Kuwait, Qatar, and other countries to focus
their efforts on Somalia, the Gulf countries would immediately be
forthcoming with increased official assistance and more private
initiatives to increase trade and sustain livelihoods in Somalia.


------------------------
Somalia Business Council
------------------------

8. (SBU) From 2001 until about 2006, Dubai was the home of an
active Somalia Business Council (SBC) that all agreed was highly
successful for about five years. The SBC was reportedly comprised
of about fifteen members, four of whom were from Somaliland. The
organization operated as an advocate for business interests in
Somalia and was a venue for information-sharing and
community-building among its members. As the organization
developed, it began the process of drafting by-laws and articles of
association. When it came time to elect a Chairman, two highly
influential businessmen, Sharif Ahmed Ba'alawi and Mohamed Jirde,
each received the same number of votes. Neither Ba'alawi nor Jirde
were steadfast on holding the office and each volunteered to let the
other lead, but neither of their respective constituencies would
back down. Although the council formed a committee to resolve the
leadership dispute, they also reached an impasse. The Council
subsequently dissolved and has not been active for approximately
three years.

9. (SBU) Many of the persons with whom we spoke indicated an
interest is reviving an SBC-like structure. Others criticized us,
the World Bank, the UN, and other institutions for reaching out only
to the SBC and for not engaging with business leaders outside of
this organization. In particular, some of the medium- and
smaller-sized businesses said they are equally important, if not
more so, because their numbers are greater, yet they are never
sought out for consultations. A few mentioned the more recently
established Djibouti-based Somali Business and Investment Council
(SBIC) (Ref B) as another institution with whom they have alliances.
There are also other trade-specific organizations like the Somali
Telecommunications Association, established in 1998, which has
worked with UNDP and the Work Bank to develop Somalia's
telecommunications infrastructure. While personal business
interests are the highest priority, the business leaders believed
that collective action would have the greatest long-term impact on
improving Somalia's investment environment.

-----------------------------
Women-Owned Business Thriving
-----------------------------

10. (SBU) While the major Dubai-based business leaders are men,
there is a growing numbers of women who have successful operations
in the city. In the area of Dubai known as the Old Gold Souk, there

NAIROBI 00002618 003 OF 003


are at least 100 Somali-run shops selling jewelry, clothing,
perfumes, beauty products, and other items. Many of these are owned
and managed by Somali women. We met with first woman to open a
jewelry store in Dubai. She said that most of her clients are
Somali or West African women typically from Senegal, Mali,
Mauritania, and the Gambia who purchase goods in Dubai for resale in
their home countries. On a regular basis, she sends gold jewelry to
Somalia. She said, "We get reports of shooting and violence, and
yet they call later the same day and order nine kilos of gold --
they have always accepted each shipment."

11. (SBU) Many of these women shop owners have worked their way up
from infrmal trading and some "graduate" to other activities.
While in Dubai, we met one shop owner who is currently a TFG Member
of Parliament. Another businesswoman, Amcit Sofia Nurie, has owned
a jewelry store, a "ready-made" clothing shop, and now owns five
trucks and contracts with Dubai-based construction companies to
transport materials. There is no formal association for the Somali
women business owners and there were no female members of the SBC
when it was operational. The women with whom we met also closely
followed current events inside Somalia and they had very strong
political views. Many told us, "It is the men that have caused all
of the problems in Somalia and alone, they will never get anywhere -
it is time for women to take a more active leadership role." All
were delighted to hear of U.S. interest in Somali women
entrepreneurs. Zahra Abdulle, a Canadian-Somali business owner who
has been living in Dubai for 28 years, recommended that we reach out
to intellectuals as well as business leaders to expand the "small
prism" through which we view Somalia.

-------------------------------
Engaging the Business Community
-------------------------------

12. (SBU) We are working with the United Nations Political Office
for Somalia on its meeting to engage Somalia's business elite,
scheduled for December 20-23 in Dar es Salaam, Tanzania. SRSG
Ahmedou Ould-Abdallah hosted a meeting of several of the most
influential Dubai-based business leaders in January 2008 and S/E
Yates participated in this event. UNDP is also spearheading an
initiative to engage with Somalia's business sector and recently
spent two weeks in Dubai to assess how to re-energize the Somali
Business Council. We will continue to strengthen our relationships
with the Dubai-based business community, as well as with Djibouti's
SBIC, Nairobi-based business leaders, and with the formal an
informal associations operating inside Somalia. These networks are
critical for their influence on the economic development of the
country and their business leaders also play an important role in
Somalia's political arena.

13. (U) The Somalia Unit thanks Consulate Dubai for facilitating
the visit on which this telegram is based.

RANNEBERGER

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