The Paradox of Progress: Foreign Investments, Kinship, State-Building, and Conflict in Somaliland

Abstract This article explores the complex interplay between foreign investments, state-building, and kin-based political structures and conflict in Somaliland. While foreign investments are often viewed as mechanisms to bolster governance and foster economic development, they can also exacerbate existing socio-political tensions. We argue that this has been the case in Somaliland. By tracing the historical and structural shifts in Somaliland’s governance from consensus politics to a more centralized model influenced by external economic engagement, we trace how investment-driven development intersects with marginalization, in some cases contributing to destabilization. This culminated, we argue, in a conflict over the strategic town of Lasanod from late 2022 onward, during which the Somaliland state lost control of almost a third of its territory. We situate these dynamics within wider debates on extraversion, showing how external rents are mediated through kinship institutions that shape both co-optation and confrontation. Understanding the role of kinship in these processes is essential for more nuanced theories of state-building and conflict in Somaliland and similar states seeking international recognition. Politics in the region accelerated when, on 26 December 2025, Israel recognized Somaliland (as the only state so far) and, in response, the Somali president and his government visited Lasanod on 16 and 17 February 2026 to underline Somalia’s territorial integrity. Our text provides a necessary background to assess these unfolding dynamics.