||Even among failed states-- those countries unable to exercise authority over their territory and provide the most basic services to their people-- Somalia stands apart. A country of some nine million, it has lacked a central government since the fall of Mohamed Siad Barre's regime in 1991. Poverty and insecurity are endemic. Less than 40 percent of Somalis are literate, more than one in ten children dies before turning five, and a person born in Somalia today cannot assume with any confidence that he or she will reach the age of fifty. Failed states provide fertile ground for terrorism, drug trafficking, and a host of other ills that threaten to spill beyond their borders. Somalia is thus a problem not just for Somalis but for the United States and the world. In particular, the specter of Somalia's providing a sanctuary for al-Qaeda has become an important concern, and piracy off Somalia's coast, which affects vital international shipping lanes, remains a menace. In this report, Bronwyn E. Bruton proposes a strategy to combat terrorism and promote development and stability in Somalia. She first outlines the recent political history involving the Transitional Federal Government (TFG) formed in 2004 and its Islamist opponents, chiefly the Shabaab, which has declared allegiance to al-Qaeda. She then analyzes U.S. interests in the country, including counterterrorism, piracy, and humanitarian concerns, as well as the prospect of broader regional instability.