Somaliland’s Exit From Turkish-Mediated Talks: A Geopolitical Crossroads for Investment in the Horn of Africa

The self-declared independent region of Somaliland’s abrupt withdrawal from Turkey-mediated reconciliation talks with the Somali federal government in April 2025 marks a critical turning point in the Horn of Africa’s fragile political landscape. The collapse of these negotiations, intended to address decades of tension, underscores the complexity of reconciling sovereignty claims in a region where external powers like Turkey are increasingly entangled in domestic conflicts. For investors, the fallout raises urgent questions: What does this rupture mean for geopolitical stability? How will it impact infrastructure projects, resource extraction, and regional trade? And where are the opportunities—or pitfalls—in a landscape rife with political uncertainty?

The Fractured Talks: Sovereignty vs. Mediation

Somaliland’s decision to exit the talks stemmed from a core disagreement over the framework’s terms. The region, which declared independence from Somalia in 1991 but remains unrecognized internationally, perceived the process as legitimizing the federal government’s authority over its territory. Bloomberg’s April report noted that Somaliland’s leaders viewed the dialogue as a threat to their self-determination, a stance that reflects the region’s long-standing demand for global recognition. Turkey’s role as mediator, meanwhile, highlighted its ambition to position itself as a stabilizing force in a region rich in natural resources and strategic ports.

Yet the talks’ failure also exposed the limits of external mediation. “When sovereignty is on the table, third parties can only do so much,” said a diplomatic source cited in the report. This reality complicates Turkey’s broader strategy in the Horn, which includes a $1 billion port project in Djibouti and a military base in Somalia’s capital, Mogadishu. These investments, part of Turkey’s bid to diversify trade routes and counter Chinese influence, now face heightened risks if political fragmentation persists.

Turkey’s Geoeconomic Gambit: Risks and Returns

Turkey’s economic stakes in the region are significant. The country’s construction firms, such as ENKA and Limak Holding, have been key players in infrastructure projects across Somalia and Ethiopia. Meanwhile, Turkish banks like Ziraat have extended loans to regional governments, betting on long-term stability. However, Somaliland’s withdrawal injects volatility into these investments.

Data reveals that the BIST 100 has underperformed global indices since 2023, reflecting investor wariness about Turkey’s geopolitical overextension. Meanwhile, FDI into the Horn has stagnated at around $1.2 billion annually—far below sub-Saharan Africa’s average—due to political instability and security concerns.

The Investment Crossroads: Opportunities Amid Chaos?

For investors, the Horn of Africa remains a paradox. The region sits atop vast untapped reserves of oil, natural gas, and minerals, including Somalia’s untapped offshore gas deposits valued at over $15 billion. Additionally, the Red Sea’s shipping lanes, which Turkey aims to secure through its port investments, offer logistical advantages for global trade.

However, political fragmentation complicates access to these resources. Somaliland’s insistence on autonomy could deter companies from investing in cross-border projects, while the Somali federal government’s weakened authority limits its ability to enforce agreements. “Investors are left in a catch-22,” said a London-based emerging markets analyst. “The Horn’s potential is undeniable, but the risks of misaligned politics and security threats are existential.”

Conclusion: The Cost of Geopolitical Stalemate

The collapse of the Turkey-mediated talks signals a critical inflection point. With Somaliland’s exit, the path to regional unity—once a cornerstone of international diplomatic efforts—appears blocked. For investors, the implications are clear:

1. Geopolitical Risk Premiums Will Rise: The Horn’s instability will likely widen the cost of capital for projects in the region. The BIST 100’s underperformance () reflects this, as investors demand higher returns for Turkey’s entanglement in volatile conflicts.
2. Infrastructure Plays Carry Caution: While Turkey’s ports and roads may eventually pay dividends, their success hinges on political stability. Companies like Limak Holding, which derive 30% of revenue from African projects, face heightened execution risks.
3. Resource Plays Require Patience: Somalia’s offshore gas and Somaliland’s mineral deposits remain stranded assets until governance structures solidify.

History offers a cautionary tale. In the 1990s, the Horn saw a surge in foreign investment tied to peace agreements, only for renewed conflicts to wipe out gains. Today, the region’s trajectory depends on whether external mediators—like Turkey—can pivot from grand geopolitical ambitions to addressing the granular sovereignty disputes that Somaliland’s exit has laid bare. Until then, the Horn of Africa remains a frontier where opportunity and peril are inseparable twins.

The data tells a stark story: Somaliland’s economy has grown at 2.5–3% annually, sustained by remittances and trade, while Somalia’s GDP has stagnated near 1% amid violence. This divergence hints at a future where the region’s economic success stories may emerge not from centralized governance, but from decentralized stability—a reality investors must confront head-on.