7 ODI Policy brief Even within these structural limitations, there is some degree of both flexibility and inconsistency in international approaches to engagement with and in de facto states. The Somalia HRP does at points recognise the existence of Somaliland’s de facto government – for example when acknowledging the role of the Somaliland Ministry of Defence in coordinating demining action. The Somaliland Development Fund (SDF), jointly funded by the UK, the Netherlands, Norway and Denmark, works directly with Somaliland ministries on areas including health, education and agriculture (SDF, 2020; SDF, n.d.). As far as possible, the European Union (EU) avoids engaging with de facto authorities in nonrecognised territories in Europe (despite the fact that it must negotiate with those same authorities in order to operate in areas under their control). As such, the EU works primarily with civil society, business and other ‘non-political’ entities – an approach ‘based on the fiction that businessmen or civil activists exist in a virtual space without a state, recognized or not, or the policies set by a de facto government’ (de Waal, 2018: 75). The UN, meanwhile, engages with de facto states in order to fulfil a wide range of objectives, including in the areas of peacebuilding, humanitarian access, development cooperation, protection of civilians and promoting respect for human rights. The UN’s approach to engaging de facto entities has, however, typically been both cautious and uneven, and is in most cases complicated by member states’ political goals, and the absence of consensus on approaches to engagement in the UN Security Council and General Assembly. Non-recognition, therefore, does not rule out the possibility of international engagement; instead, it shapes the kinds of engagement that are possible. The exact forms of engagement that take place vary dramatically according to the political circumstances of different de facto states, and are determined through the interactions of the different interests and demands of de facto states’ governments, the populations of their territories, patron and parent states and the ‘international community’ as a whole. In(security) Non-recognition has clear and significant effects on the domestic political economies of de facto states and, as such, on the lives of people living in them. One of the clearest examples of this is the insecurity inherent in living in an internationally unrecognised entity whose claims to statehood are disputed or threatened by their parent state. In some cases, the precarity of de facto states’ position leads their governments to spend heavily on security at the expense of other forms of social support. In Somaliland, the World Bank estimates that, in 2002–2011, on average 51.1% of the budget was allocated to the security services (Pegg, 2017). In neighbouring Puntland in 2014–2015 an estimated 60% of the state budget was spent on security (Varming, 2019). In the border regions of de facto states, people are often exposed to significant risks, particularly where individuals must interact with overlapping or competing political orders. In the so-called