Even in Somalia, the best way to shut down a terrorist group is to go after the money.

This morning, an African Union peacekeeping mission in Somalia is hemming in Somalia’s powerful Al Shabab militia – a group that has paid allegiance to Al Qaeda – inside Somalia’s largest marketplace, the Bakara Market in Mogadishu. Al Shabab taxes the shopkeepers and traders of Bakara Market, using those proceeds to fund their operations. Al Shabab also controls the busy port city of Kismayo and derives income by taxing exports and imports that come through that port.

Together with the shaky but recently trained and rearmed troops of the Transitional Federal Government of Somalia, the African Union force – made up of 5,000 Ugandan troops and 3,000 Burundian troops – has increasingly taken territory away from Al Shabab and its allies, Hizbul Islam. In a statement this morning, AU spokesman Paddy Ankunda told reporters that the AU force would not enter Bakara Market, but instead would lay siege to the market in an effort to starve out Al Shabab.

"We crossed the Wadnaha road, al Shabaab's main route in, and we are at the edge of Bakara now," Reuters news agency quoted Mr. Ankunda as saying. "We do not want to enter Bakara, we want to lay siege to it."

In addition to denying tax revenues to Al Shabab, taking back Bakara Market would also put an end to Al Shabab’s use of the market as a base for military operations. Shabab fighters often launch mortar attacks from Bakara onto AU peacekeeper positions at the presidential palace compound, in hopes of provoking AU artillery retaliation into Bakara’s heavily populated areas.

A spate of recent fighting in central Somalia and in Mogadishu itself would seem to be part of an oft-discussed “offensive” by the Transitional Federal Government of President Sharif Sheikh Ahmed. President Sharif’s government, which suffers from corruption and frequent internal disputes, has lost hundreds of fighters, recently trained by Somalia’s allies, because of the Sharif government’s inability to pay regular salaries. But with the apparent surge of African Union peacekeepers (under the African Union Mission in Somalia -- AMISOM), Shabab forces have found that their tacit control of Somalia is no longer a given.

Contributing the largest number of peacekeepers to AMISOM is Uganda, which has rededicated itself to the peacekeeping mission in Somalia despite Shabab threats to repeat its twin suicide bombing attack of last July, which killed dozens in the Ugandan capital of Kampala.

“It seems that the AMISOM offensive has been successful, and Al Shabab and its allies are in disarray,” says a Western diplomat in the region, requesting anonymity.

Al Shabab – a breakaway group that emerged after a year-long Ethiopian occupation force toppled the Islamic Courts Union government of Somalia in December 2006 – has fallen on hard times recently. Once the dominant force in southern and central Somalia, Al Shabab has seen a rival moderate Islamist militia – Ahlu Sunna Wal Jama’a – taking away territory in the central region of Galgadud. In the South, forces opposed to Al Shabab have declared their own autonomous state of Jubaland, an attempt to form a buffer zone that prevents Shabab’s easy access to arms, money, and recruits coming in from Kenya’s expatriate Somali community.

Yet as Shabab forces continue to be hemmed in, there is little sign of weakness or willingness to come to a negotiated settlement with the Transitional Federal Government of President Sharif Sheikh Ahmed. President Sharif’s government itself remains shaky and heavily reliant on the whims of a loose confederation of clan elders from across Somalia, most of whom are reluctant to cede actual power or to donate substantial numbers of fighting men to the federal government that they, in theory, serve.

Despite this, President Sharif continues to talk tough, and his government retains the military support of most of his nation’s neighbors, as countries such as Ethiopia, Kenya, Djibouti, and Uganda provide military and police training for TFG forces.

"Al Shabab is on the verge of collapse," Sharif told reporters in Mogadishu as recently as March, after a recent surge of AU-TFG fighting against Shabab. "We shall also sweep them from Mogadishu. Our enemies have suffered a great loss, it is obvious they will run away from many towns."