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Al Shabaab insurgency

Al-Shabaab opposed the Ethiopian military's presence in Somalia and continued an insurgency against the TFG. Throughout 2007 and 2008, Al-Shabaab scored military victories, seizing control of key towns and ports in both central and southern Somalia. By January 2009, Al-Shabaab and other militias had forced the Ethiopian troops to retreat, leaving behind an under-equipped African Union peacekeeping force to assist the Transitional Federal Government's troops.

Owing to a lack of funding and human resources, an arms embargo that made it difficult to re-establish a national security force, and general indifference on the part of the international community, Yusuf found himself obliged to deploy thousands of troops from Puntland to Mogadishu to sustain the battle against insurgent elements in the southern part of the country. Financial support for this effort was provided by the autonomous region's government. This left little revenue for Puntland's own security forces and civil service employees, leaving the territory vulnerable to piracy and terrorist attacks.

On 29 December 2008, Yusuf announced before a united parliament in Baidoa his resignation as President of Somalia. In his speech, which was broadcast on national radio, Yusuf expressed regret at failing to end the country's seventeen-year conflict as his government had been mandated to do. He also blamed the international community for their failure to support the government, and said that the speaker of parliament would succeed him in office per the Charter of the Transitional Federal Government.