A four-member panel of experts, appointed by the UN Security Council, proposed on Friday that the council impose an embargo on charcoal exports and foreign fishing vessels in Somali waters, a source of revenue for warlords to buy arms.

The report recorded some 175 transactions in weapons exchanges over the last eight months - which it said was a 378% increase over the previous year - involving 10 ministers and the president of the Transitional Federal Government TFG, Abdullahi Yusuf.

Militia chiefs demand a tax on vessels carrying charcoal to purchasers in Saudi Arabia, the United Arab Emirates and Yemen.

Somali coastal waters offer rich fishing grounds and foreign ships have been attacked by militia fighters, who demand a ransom to release the ships.
   
Both Somalia's transitional government, which includes dissident warlords, and those warlords opposed to them are gearing up for a military showdown, the 60-page report said.
   
"The political process has apparently taken a back seat to these military preparations," the panel added.
   
Arms supply
   
Yemen's government admitted it had sent at least 5000 "personal weapons" to what it called the legitimate government of Somalia so it could disarm bandits.
   
But the report said Yusuf had negotiated a much larger deal for rocket launchers, anti-tank weapons, shoulder-fired missiles and other armaments.   

"The political process has apparently taken a back seat to these military preparations"

UN Security Council panel

Neighbouring Ethiopia was also supplying the TFG militia, although the government denied it. 

The Ethiopian military had conducted military training for TFG militias and the warlords that ran them, the report said.
  
In addition, another country in the region, which UN officials said was Eritrea, was sending arms to opposition warlords and groups "for the purpose of countering support provided to the TFG by Ethiopia".

Somalia has been in a state of chaos for 14 years with clan rivalries fuelled by guns left over from the Cold War and an arms market in Mogadishu.

In general, the prospect of creating a viable government in Somalia was a threat to some factions in the TFG itself as well as warlords, businessmen, traders and religious fundamentalists, the report said. 

They were used to "operating in a lawless territory" and used to having "their own kingdoms, replete with personal political power and ambitions, military-style muscle in the form of their own militia and, probably most importantly, the ongoing accumulation of personal wealth", the panel concluded.