There has never been a better time for Somalia's leaders to use the opportunity given to them by recent events and establish the lasting peace that has eluded them for the past 16 years.

The crushing defeat of forces loyal to the Union of Islamic Courts (UIC) by the army of Somalia's transitional federal government, with the help of Ethiopian troops, has paved the way for the establishment of Somalia's first functioning central government since the toppling of former dictator Mohamed Siad Barre in 1991.

Still uncertain is Somalia's transition to democracy as the possibility of a dangerous power vacuum brews below the surface.

The arrival of government and Ethiopian forces at the gates of Mogadishu on December 28 last year put an end to years of clan-based factional fighting and the fiefdoms established by warlords, as well as the UIC's strict applications of sharia law.

However, it also brought a fear of lawlessness, dictatorial rule, renewed hostilities and possible retaliatory terrorist attacks by Islamists against potential targets in Somalia's neighbouring states and beyond.

Pressure is mounting on the transitional government to have an African Union force ready to replace outgoing Ethiopian forces stationed across the country to help keep the peace.

Ethiopia's support for President Abdullahi Yusuf Ahmed's government is deeply rooted in Addis Ababa's desire to counter Islamic expansion into the region -- as well as the threat posed by its long-term enemy Eritrea, which had offered to supply the UIC with arms and military trainers while quashing attempts by Islamists to take back Ethiopia's Somali-speaking Ogaden region.

Indeed, the vast majority of Somalis view the presence of Ethiopian troops on the streets of Mogadishu as an unacceptable situation. In the meantime, elements of the Shabbab, the UIC's radical youth wing, as well as thousands of Islamists who continue to hide in Mogadishu have vowed to beef up guerrilla-style attacks against Ethiopian forces while mounting terrorist activities against strategic targets in neighbouring countries -- particularly Ethiopia and Kenya, which are traditional allies of the transitional government.

It is no real surprise that the Kenyan, Ethiopian and Somali governments are all involved in intense negotiations to secure an 8 000-strong peacekeeping force to take over from the Ethiopians, who started withdrawing their troops from Somalia's capital city on Tuesday.

Although the United Nations passed a resolution in December that called for a peacekeeping force for the country, until recently only Uganda had publicly committed to sending peacekeepers as part of a wider mission. Malawi has also now joined Uganda in officially acknowledging their intention of sending troops to Somalia.

South Africa, Tanzania and Nigeria have also indicated that they are considering proposals for the deployment of their troops to the beleaguered country. Meanwhile, European Union foreign ministers have now publicly stated their readiness to offer financial support for the proposed AU peacekeeping force.

The return of the warlords following the defeat of the UIC presents another dilemma. The UIC was credited with removing warmongering chieftains who brought misery and bloodshed to much of the country following the collapse of Barre's regime. Now a feeling of despair prevails in Mogadishu about the transitional government's inability and lack of commitment to restrain these warlords. Any shift of power to these warlords threatens to return Somalia to clan violence and civil war.

The government's effective rule is substantially weakened by its inability to muster enough support in Mogadishu, a city traditionally controlled by the Hawiye clan, which is underrepresented in the Cabinet. A possible solution would be to invite not only moderate Islamists, but also the nominal leader of the Islamists, Sheikh Sharif Ahmed, a Hawiye, to join the government.

The government's unwillingness to negotiate with the Islamists and other opposition groups threatens to alienate many of its traditional supporters across the country and among its neighbours. Such a situation could, among the local population, lead to increased support for Islamic extremists who have indicated their intentions of engaging the transitional government in prolonged guerrilla warfare as well as terrorist attacks on Kenya and Ethiopia.

This would also fuel growing concerns that the transitional government is increasingly adopting autocratic measures to curtail activities of any opposition groups and stifle freedom of speech in the country. The decision to close down initially the country's main broadcasters, in January this year, and the recent sacking of the speaker of Parliament, Sharif Hassan Sheikh Adan, following his unauthorised talks with the UIC, have all led to speculation that the government is increasingly undermining democratic principles.

The United States, among others, has urged the transitional government to restrain its undemocratic tendencies by adopting reconciliatory measures as a way to help ensure the prevalence of peace and nation building in Somalia.

Its ability to reconcile its differences with the Islamists and build a government of national unity, based on democratic principles supported and reinforced by an AU peacekeeping force, will help cement its hold on power while strengthening the fragile peace holding Somalia together. It will be tested in the coming months on its ability to build a credible and legitimate government -- not only in the eyes of the international community, but, more importantly, among Somalis.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.