Regions not recognized by the UN – investing in autonomous territories off the radar

Today we are going to analyze investment opportunities and risks in unrecognized territories such as Abkhazia, Transnistria, Western Sahara, and Northern Cyprus.

These are the “ugly ducklings” that no one wants to have anything to do with on the global playing field. However, de facto, they have their own governments and legal systems, in some cases even their own currencies and passports, but most states do not recognize them as sovereign countries.

Despite their uncertain status (or precisely because of it), these territories offer in some cases unusual opportunities for global diversification strategies. In today’s article, we will analyze them in more detail.

Those who apply the flag theory at the highest strategic level do not ignore problematic geopolitical areas, but take them into account. The goal is to combine the advantages of different jurisdictions in order to, for example, save on taxes, protect assets, make unique investments, or maximize personal freedoms.

In order to properly evaluate all possibilities, one must also take into account, of course, unconventional areas or jurisdictions far from the established state world.

We need to thoroughly study what investment opportunities, tax conditions, geopolitical peculiarities, and risks we encounter in these regions, and why, despite the risks, they are good options in certain global diversification strategies.

Before taking a closer look at each of the regions, it is important to understand why they are interesting from an investor’s perspective and for international diversification.

By looking where no one else is looking, focusing on those unpopular or supposedly unattractive places, we can discover surprising opportunities.

This principle is reflected in several established theories in the world of investment and strategy. One of these is contrarian investing, which involves deliberately investing countercyclically. This means investing where others refrain out of fear or uncertainty. Following Warren Buffett’s motto:

“Be fearful when others are greedy and be greedy when others are fearful.”

A closely related concept is the so-called first-mover advantage, i.e., the strategic advantage of being the first to enter an untapped region or sector. Especially in emerging or structurally weak markets, early entry can provide a sustainable competitive advantage, whether through market leadership, customer loyalty, or lower entry costs.

In later examples, we will see that leading companies are already applying this concept. Closely related to this is frontier market theory, which focuses on investments in particularly unstable or underdeveloped regions. These markets are considered high risk, but with good analysis and positioning, they also offer exceptionally high return opportunities.

Historical examples such as Georgia show that bold investors who recognize opportunities early on can often reap above-average returns. As the saying goes, higher risk means higher reward.

Finally, the so-called blue ocean strategy also embraces this way of thinking, but with a more entrepreneurial and innovative approach. Instead of competing in saturated markets with intense competition, it is about opening up completely new markets, the so-called “blue oceans.” The basic idea is that where there is no one else, there is no competition. Or, to put it another way, where there is nothing yet, something can be built.

All strategies are based on acting in undervalued, forgotten, or untapped spaces, whether geographical, economic, or social in nature, and systematically exploiting opportunities. Those who are willing to fill these information gaps, endure the uncertainties, and do truly pioneering work will have the opportunity to create real added value.

Unrecognized territories attract pioneering investors

In many of these unrecognized jurisdictions or areas, we find economic isolation from global markets, which opens up local investment opportunities for entrepreneurs who are more willing to take risks. Since multinational companies often (but not always, as we will see later) stay away for legal or reputation-related reasons, there is little competition in some sectors.

Local governments are often interested in attracting foreign capital and therefore offer incentives in some exceptional cases.

For example, Abkhazia planned large-scale tax exemptions for investors: on projects worth the equivalent of €20 million, investors would be exempt from income and wealth tax for 25 years. Critics of these plans warned that this could turn Abkhazia into an offshore haven for funds of dubious origin, but the truth is that Abkhazia and other similar regions are campaigning hard to attract investors.

Russian companies looking for new loopholes to avoid sanctions are now increasingly turning their attention to Abkhazia.

Transnistria, the breakaway region of Moldova, is also taking economic advantage of its gray-zone status: for years, Transnistrian companies enjoyed both free access to the EU market (through Moldova’s trade agreement) and duty-free imports from the EU. This made Transnistria something of a smuggling paradise, for example for large-scale duty-free cigarette imports.

Although the Republic of Moldova has restricted these special privileges to end competitive distortions, Transnistria’s competitive advantage remains. In principle, the state is nothing more than a real niche between East and West. And it is precisely this unique niche and special position on the world stage that makes the region so interesting.

In the Western Sahara, meanwhile, a territory currently occupied by Morocco, Rabat specifically subsidizes the local economy: installation bonuses, wage increases, and food subsidies are intended to motivate Moroccan citizens and companies to settle there. This state aid has led to the rise of an agricultural and fishing export sector which, in 2022, supplied the EU with products worth more than €590 million (mainly fish and tomatoes). Thanks to special agreements, these exports were able to be made tariff-free, saving European importers around €44 million in taxes in 2022 alone.

These figures show that disputed areas are highly economically dynamic, as they often become de facto special economic zones, where investors operate under the protection of a sponsor (such as Morocco, or in Transnistria, Russia, Northern Cyprus, and Turkey, etc.) and enjoy advantages not found elsewhere.

Tourism and real estate as favorable entry markets

Other sectors with potential in almost all “separatist areas” are tourism and real estate. Some of these regions have attractive landscapes or coastlines that, regardless of political problems, attract visitors. For example, the Turkish Republic of Northern Cyprus has experienced a real estate boom in recent years. The Mediterranean coast and low prices attract not only foreign buyers but also retirees. In addition, casino tourism is flourishing in northern Cyprus, as gambling is prohibited in strict Muslim Turkey, but casino resorts operate legally in the northern part of Cyprus.

In Western Sahara, several luxury hotels have sprung up in places such as the Atlantic city of Dakhla, in an attempt to establish the area as a high-value tourist destination. There are also numerous untapped opportunities here, making it an interesting market to enter compared to long-established tourist destinations. Adventure seekers or travelers who want to travel overland, for example to neighboring Mauritania, also often stop in Dakhla.

Transnistria is also very interesting from a tourist point of view because of its special political situation, but also because it is practically the largest open-air museum of Soviet culture and architecture.

Education is also an unexpected investment sector: Northern Cyprus has established several international universities that attract students from Africa and Asia. These niches exist because there is a lack of major players and local governments are willing to welcome almost any initiative that creates jobs or generates foreign exchange.

In short: lax regulation, state aid, and gaps in the market offer risk-taking entrepreneurs and local digital nomads the opportunity to establish themselves with relatively little competition.

Tax conditions and unofficial practices in unrecognized territories

Many of the semi-autonomous areas also promote themselves through particularly advantageous tax models, whether officially enshrined in law or informally tolerated. Lower tax rates or total tax exemption are intended to attract capital, often due to a lack of other location advantages.

Transnistria is often openly described as a tax haven. The area has no international tax agreements, which means that companies based there are not subject to any global transparency obligations (such as the OECD exchange). Therefore, in Transnistria, companies can conduct operations in a more or less gray area that would be regulated or taxed elsewhere. However, this has also led—and one must be aware of this—to Tiraspol, the capital of Transnistria, acquiring a certain notoriety as a hotspot for smuggling and corruption. This must be taken into account when considering any idea or attempt to do business in the country, and should not be approached too naively.

In comparison, Northern Cyprus offers a much more established and serious environment. The country attracts with a very favorable tax system for companies: corporate tax is officially only 10%. Particularly interesting: in Northern Cyprus, there are special free zones and offshore companies. Companies registered as “International Business Companies” that only operate outside Northern Cyprus are completely exempt from corporate tax. In addition, VAT is only 16% and applies in full to exporting companies in the free zones. These regulations make Northern Cyprus very attractive for global offshore strategies, similar to classic tax havens, but much less well known and less established.

In Western Sahara, the situation is particularly noteworthy: Morocco treats the area internally as a special region with almost zero taxes. According to reports, individuals and companies residing there enjoy an “almost total exemption from any direct or indirect taxes.” In practice, this means that companies in Western Sahara (provided they are loyal to Morocco) can produce and export tax-free, which is a huge incentive for Moroccan (and foreign) investors.

And yet Western Sahara is no longer a secret at all, with even companies such as Siemens Energy now operating there. It is no coincidence that companies such as the German Siemens Group, which is carrying out several large wind farm projects in Western Sahara, highlight the attractive investment climate and local renewable resources. Siemens Gamesa supplies turbines to almost all wind farms in the region. All this is so popular that even the front line of climate activists around Greta Thunberg has protested against investments in Western Sahara. So, it is clear that this secret destination is increasingly coming out of the shadows and becoming the subject of widespread attention.

Abkhazia and South Ossetia, the Russian-dependent territories of Georgia, have little fiscal capacity of their own and mainly attract Russian capital with tax advantages. An agreement discussed in 2023 provided for an eight-year exemption from property tax and value-added tax on investment goods for Russian companies in Abkhazia. Total tax exemption for large projects was even considered, which would de facto create a special tax zone for Russian investors. The Abkhazian government wanted to attract urgently needed capital to the country, but came under internal pressure, as many residents saw their sovereignty threatened.

In fact, tax revenues from these areas often flow through so-called sponsor states: Transnistria, for example, survives economically thanks to the free Russian gas it receives, which allows it to subsidize its industry; Abkhazia and South Ossetia receive direct budget subsidies from Moscow rather than having functioning tax systems of their own. However, for an external investor, this favorable tax environment can also be a source of uncertainty, as it is not based on solid laws, but on political favors.

Nevertheless, from the perspective of Flag Theory, these areas could serve as a flag for parking assets or establishing headquarters in order to operate outside the reach of strict authorities. For example, banks in Transnistria or Abkhazia are not part of the international SWIFT network, let alone a global data exchange.

Geopolitics: Sponsor states and frozen conflicts

Politically autonomous and unrecognized regions are often pawns of geopolitical interests. In many cases, they owe their existence to the support of a protective power, whether it be Russia, Turkey, or Morocco, which maintains a certain autonomy for strategic reasons. This gives these areas a weight in the international context that goes beyond their size.

Russia, for example, uses Abkhazia, South Ossetia, and Transnistria specifically to exert influence over neighboring states (Georgia, Moldova, etc.). These “frozen conflicts” prevent Georgia and Moldova, for example, from moving forward unhindered with their Western integration (NATO/EU membership): Moscow always has a foot in the door. In Transnistria, for example, Russia has around 1,400 soldiers stationed, officially as peacekeepers in a conflict that has never been fully resolved.

One of the many security posts with Russian soldiers in Transnistria, the so-called “peacekeepers.”

For the Russian-speaking population of Transnistria, the posts are, in fact, guarantors of peace, since without them the Moldovan government would have already taken full control of the area under the state government in Chisinau, much to the chagrin of the Russian-speaking minority, who would suddenly find themselves in a country where their mother tongue, Russian, is not even spoken (but Romanian is).

The region is also home to one of the largest Soviet-era ammunition depots in Eastern Europe, giving it strategic importance. In addition, Moscow generously distributes Russian passports to the inhabitants of the breakaway republics, allowing it to position itself as the protector of its “citizens” in the area. As a result of this passport program, most Abkhazians, South Ossetians, and Transnistrians are Russian citizens, further consolidating Russia’s influence.

In Transnistria, the discipline of the Flag Theory has long been applied: as a rule, every Transnistrian has three nationalities: a Russian passport, which Russia grants quite liberally to citizens; a passport from the Republic of Moldova, on whose territory Transnistria is located; and the Transnistrian passport shown here.

Turkey also follows similar tactics: since 1974, it has stationed up to 30,000 soldiers in northern Cyprus and keeps the area afloat economically. The Turkish Republic of Northern Cyprus serves Ankara as leverage in the eastern Mediterranean, especially in disputes over natural gas with Greece and Cyprus. In addition, Turkey has cultural and ethnic ties to some of these regions: in Abkhazia, for example, there is a Turkish-Abkhazian diaspora, and despite not recognizing it, Ankara maintains a cautious exchange (trade, ferry connections) with Abkhazia so as not to completely offend either Russia or Georgia.

On the other hand, northern Cyprus is, in fact, a Turkish province: the economy uses the Turkish lira, Turkish universities and companies dominate the landscape, and Ankara has decisive political influence. For Turkey, northern Cyprus is a geopolitical asset: it extends its sphere of maritime influence and simply serves as a bargaining chip.

Morocco considers Western Sahara to be an integral part of its national territory and invests huge sums of money to make this reality irreversible. Every year, hundreds of millions of euros are allocated to the development of the “southern provinces”: $535 million is invested annually in the fight against poverty and infrastructure alone.

Rabat has also achieved success at the international level: in 2020, the United States (under the Trump administration) recognized Moroccan sovereignty over Western Sahara, strengthening Morocco’s position. Countries such as the United Arab Emirates and other African states have even opened official representations in Western Sahara to politically support Morocco. The opposing side, the Sahrawi government of the Polisario (self-proclaimed SADR), is mainly supported by Algeria, which gives the conflict a regional dimension in the Maghreb (Morocco versus Algeria).

World powers also tend to view these regions as strategic bases: Russia, for example, maintains a military presence in Abkhazia (near the Black Sea and the Middle East), the United States cooperated with the Kurdish autonomous zones of Syria/Iraq in the fight against terrorism, and China is watching Somaliland with interest, as it could secure an important maritime route in the Horn of Africa.

Investments in politically autonomous territories are always politically sensitive

For global diversification strategists, this means that investments or stays in these regions are never purely economic, but always politically sensitive. Those who engage there are moving in the middle of the tension field of the great powers. However, this can also be exploited, for example by considering so-called protector states as guarantors. Thus, investors feel relatively safe in Western Sahara as long as Morocco (backed by its Western partners) exercises control.

In Transnistria, local oligarchs are confident that Russia has no interest in any escalation as long as the status quo benefits them and Moscow. It is also interesting that some areas act as bridges: Transnistrian companies benefit from simultaneous access to Russia and the EU (via Moldova, as do Transnistrian citizens); this versatile position can be cleverly exploited to establish multiple contacts and business opportunities. However, it must always be borne in mind that geopolitically exposed areas can quickly become a chessboard where one’s own plans take a back seat when the major powers make their moves.

This brings us to the specific risks of these regions.

Legal risks and challenges of investing in unrecognized territories

However promising some advantages may be, the risks involved in participating in unrecognized territories should not be underestimated. Legal gray areas predominate here. Since, in most cases, these areas are considered part of another state under international law, investors may find themselves embroiled in serious legal conflicts. A drastic example is northern Cyprus:

According to the established case law of the European Court of Human Rights (ECHR), all properties that Greek Cypriots had to abandon in 1974 remain legally their property. Although the Turkish Cypriot authorities issued their own property deeds to the new owners, these titles are null and void from the point of view of the Republic of Cyprus (an EU member state).

In 2006, Cyprus tightened its criminal law: the purchase, sale, rental, or brokerage of land without the consent of the original owner (i.e., the person registered in the Cypriot property registry, in many cases a Greek refugee) is punishable by up to 7 years in prison.

Even attempting to carry out such a transaction can result in up to 5 years in prison. For foreigners who, for example, see a supposed bargain in northern Cyprus and purchase a vacation home, this can be a sword of Damocles: they can be sued civilly by the former owners, and Cypriot court judgments can be enforced throughout Europe. This example illustrates the fundamental danger: legal acts of de facto regimes are often not recognized internationally. Property titles, company registrations, or contracts may be ineffective in the courts of recognized states, and in the worst case, the investment will be deemed illegal.

Lack of integration into international law

For many who wish to circumvent all systems, the lack of integration of these regions into international law also poses an additional risk. There is no international court, no investment protection agreement, and no diplomatic representation to turn to in the event of disputes.

If, for example, a foreign investor in Abkhazia comes into conflict with the local authorities, they cannot resort to Georgia’s bilateral investment protection agreements (since Georgia considers these areas to be controlled by illegitimate occupation regimes, as does Moldova with Transnistria, etc.).

The usual arbitration tribunals (ICSID, etc.) are also not an option, as the contracting party is not recognized as a state. One is therefore at the mercy of the local power apparatus, or the sponsors in Moscow, Ankara, etc., to the extent that they are willing to help. On the other hand, this is a huge advantage in matters such as information exchange, extraditions, and the like.

In many places (not all!), contracts are enforced more for political reasons than for the rule of law. It is therefore absolutely essential to have a detailed knowledge of the region, the people, and the circumstances of the region in which you are investing, regardless of the type of investment.

Security risks should not be underestimated either. Some of these conflicts are only frozen, not resolved. Military escalations are still possible: tragic proof of this is Nagorno-Karabakh (Arzach), a region inhabited by Armenians in Azerbaijan. For decades, an unrecognized “Republic of Arzach” existed there. However, in 2020 and again in 2023, Azerbaijan militarily reconquered the territories, leading to the complete dissolution of the de facto regime and the mass flight of more than 100,000 Armenians. All assets and investments there became virtually worthless overnight; there was a complete change of control.

This example highlights that what appears to be a stable status quo today may end in war tomorrow. The same applies latently to Transnistria (in the wake of the 2022 war in Ukraine, some feared an expansion of the front) or Western Sahara, where new clashes between the Polisario Front and Morocco broke out in 2020.

At the same time, the circumstances must also be placed in a global context. A few years ago, few would have imagined armed conflict in Europe and debates about the reintroduction of compulsory military service. In principle, this only proves one thing: supposedly safe regions and supposedly unsafe regions are not always what they seem. And, as with any investment, it is important to be well informed about the situation.

Regions that are not internationally recognized form a parallel world beyond the established state order. Opportunities and risks are very close together. On the one hand, they attract entrepreneurial freedom, minimal tax burdens, and special geopolitical situations; on the other hand, they lack legal certainty and international protection. They can play a role in niche markets for global diversification strategies, for example, as an additional location to obtain certain advantages (tax exemption, anonymity, access to special markets).

However, these options must be approached with open eyes and sound risk management. Concrete examples such as Abkhazia and Transnistria show that it is possible to benefit if one acts in harmony with local power factors. Similarly, cases such as Northern Cyprus or Western Sahara illustrate that, under the protection of a sponsoring power, a relative parallel market is created that can be used globally, from the tax-free export of agricultural products to the creation of an offshore company. But in the end, it remains a balancing act.

If you are interested in international diversification, we would be happy to help you make the best decision for you. Contact us.

Summary of the most important politically autonomous and unrecognized regions

Abkhazia (Georgia)

• Location: Black Sea coast, Caucasus.
• Status: recognized by Russia and a few states, internationally considered part of Georgia.
• Special features: pleasant climate and beaches (former Soviet Riviera), tourism potential, especially with Russian visitors. Strong Russian influence: the ruble is the currency, Russians make up the majority of tourists and investors.
• Investment incentives: extensive tax breaks for Russian companies, planned authorization for foreigners to purchase land.
• Attractiveness: could be interesting as a retirement location or for an offshore company if trading mainly with Russia.
• Risks: not legally recognized by the West, Georgian law prohibits unauthorized entry/investment (under penalty of law); high dependence on Moscow: de facto Russian protectorate.

Abkhazia is the last sovereign territory in the world that Christoph visits. After his visit in May 2025, he will publish a travel diary. This is due to the need to obtain a double-entry visa for Russia, which Christoph already used in 2019 for South Ossetia. This time, he travels without a visa to Russia with his Vanuatu passport.

Transnistria (Moldova)

• Location: narrow strip east of the Dniester River in Moldova, on the Ukrainian border with Odessa.
• Status: has declared itself independent, but no UN member recognizes it
• Special features: the largest post-Soviet open-air museum, with statues of Lenin and its own currency, controlled by an oligarchic “sheriff” group.

• The group owns almost everything in the country.
• Economy: industry (steel, electricity)
• Taxation: classified in part as a tax haven, previously privileged by loopholes in the dual trade regime.
• Attractiveness: interesting for people operating between the EU and the CIS: Transnistria’s inhabitants can participate in the EU market via Moldova and at the same time obtain cheap Russian gas.
• Digital: there is internet and it is not censored, but the infrastructure is poor. The area is considered safe (low crime rate, strong control); surprisingly, some Western expatriate soccer players live here, as a local club pays high salaries; incidentally, the club also belongs to the Sheriff group.
• Risks: politically isolated, no embassies, no man’s land status from a legal point of view.
• Latent risk of conflict (Russian troops on site, war in Ukraine nearby).
• In addition: corrupt environment, difficult to do serious business without local contacts.

Read Christoph’s travelogue to Transnistria here.

Western Sahara (SADR/Morocco)

• Location: desert area in northwestern Africa, on the Atlantic coast, south of Morocco.
• Status: disputed between Morocco (which controls around 80% as “southern provinces”) and the Polisario Front (self-government in the rest of the territory, SADR government in exile recognized by around 50 states).
• Special features: Raw materials: large phosphate deposits, rich fishing grounds, great potential for wind and solar energy. Morocco is developing massive infrastructure, e.g., the new port city of Dakhla, roads, and air connections.
• Investment climate: tax exemptions and subsidies created by Morocco, plus special development programs worth billions.
• Examples: multinationals such as Siemens Energy are building wind farms
• Attractiveness: very interesting for raw materials and energy companies (no taxes, guaranteed purchase by Morocco). Adventure tourism is also growing (desert rallies, kitesurfing in Dakhla): digital nomads with a taste for the exotic might appreciate the remote oases and low cost of living, but they should be aware that they are actually acting under Moroccan law.
• Risks: controversial from an international law perspective; possible legal uncertainty in long-term contracts if the political landscape changes. In addition, there are calls for boycotts by activists: those who exploit Sahrawi resources, for example, may find themselves in a bad light.
• Security: currently high in areas controlled by Morocco, but there is a restricted military zone near the front line with the Polisario Front.

Turkish Republic of Northern Cyprus (TRNC)

• Location: northern part of the island of Cyprus.
• Status: only recognized as a state by Turkey; the rest of the world considers it occupied territory of Cyprus.
• Special features: Mediterranean idyll with one flaw: beautiful beaches, historic port cities (Kyrenia), and a quieter tourist atmosphere than southern Cyprus. In fact, free of foreign income tax.
• Economy: Strong focus on tourism, universities, and real estate. Many students from the Middle East and Africa, many tourists from Turkey and the UK.
• Taxation/regulation: Very favorable for businesses: only 10% corporate tax and offshore regime with a partial 0% tax. Visas are available for digital nomads and efforts are being made to attract tech startups. Officially, income tax is 37% on worldwide income, but in practice a territorial system is applied.
• Attractiveness: For EU citizens, it is undoubtedly a place to spend the winter or take refuge: the cost of living is much cheaper than in the south, English is widely spoken, and there is good internet connectivity.

• Investors are particularly attracted by the real estate market (holiday complexes, student residences) and the fact that Turkey acts as a backup (economically through the lira, legally as a protective power).
• Risks: as explained above, serious legal problems with land, partly controversial titles, and oligarchic corporate structures. International trade is complicated (no direct flights except from Turkey). The economy of the Turkish Republic of Northern Cyprus depends on the unstable Turkish lira and Turkish politics. Nevertheless, Northern Cyprus is considered stable: peaceful separation for decades, low level of everyday crime, multicultural expatriate community. For many, the secret location for years. An article exclusively about Northern Cyprus is in preparation; there are very good contacts on site.

South Ossetia (Georgia)

• Location: mountainous region of the Caucasus, on the border between Russia and Georgia.
• Status: like Abkhazia, recognized by Russia (along with some other countries), otherwise part of Georgia.
• Special features: very small population (~50,000 inhabitants), extreme economic dependence on Russia (budget subsidies, ruble currency). It has hardly any resources of its own, except for some agriculture.
• Attractiveness: minimal for outsiders, no tourist or commercial relevance, except as a transit corridor (connection between the North Caucasus and Georgia, but effectively closed). Not a destination for diversification strategists, except as an example of total dependence: Moscow even occasionally considers annexation (incorporation into the Russian Federation), which would put an end to autonomy.
• Risks: politically sensitive (epicenter of the 2008 Russian-Georgian war), without any international protection.

Read Christoph’s travelogue on South Ossetia here.

Somaliland (Somalia)

• Location: northwest of the Horn of Africa, along the Gulf of Aden.
• Status: governed independently since 1991, but no state has officially recognized it (de jure, part of Somalia).
• Special features: fairly stable democracy in an otherwise fragile region. Own currency (Somaliland shilling), elected governments, relative peace. Strategic location: the coastal city of Berbera is an important port for landlocked Ethiopia.
• Investments: Foreigners are officially kept out, but there are important partnerships, e.g., DP World (Dubai) is investing in the expansion of the port of Berbera and in a free trade zone industrial park. Somaliland grants foreign investments a three-year tax exemption in many sectors (agriculture, fishing, mining, energy, tourism, etc.), which can be extended, followed by several years with a 50% tax reduction. These incentives, enshrined in local investment law, are intended to attract capital to the country despite its lack of recognition.
• Attractiveness: very interesting for pioneering investors focused on Africa, as they offer the advantages of being the first to arrive in an emerging country without much competition. Geopolitics: Somaliland maintains a delicate balance between the powers: cooperation with Ethiopia (memorandum of understanding on possible recognition in exchange for port rights), good relations with Western NGOs, and, at the same time, Chinese and Arab interest in mineral resources and ports.
• Risks: Total legal gray area: all contracts are based solely on Somaliland law, which is not applicable internationally. Somalia continues to claim the territory, which holds the potential for long-term conflict (although currently unlikely). In addition, much infrastructure is still lacking and the financial system is rudimentary (many transactions are conducted through informal money transfers).

Read Christoph’s travelogue about Somaliland here.