The deteriorating security situation in Somalia, and particularly the 7/11 bombings in Kampala, triggered high-level discussions in continental and international policy circles. This study advances the argument that while the security situation is worsening, the policy options being pursued are limited and inadequate. After showing that a discernable and increasing shift has emerged in the balance of power between the TFG and the armed opposition groups, particularly Al Shabaab, the paper critically reflects on the major policy approaches currently being pursued in Somalia. While Al Shabaab has been collectively vilified without the increasing threat it poses being treated with the seriousness it deserves, the focus has been on propping up the TFG, which has failed in regaining military control, achieving credibility and legitimacy among the Somali public, and establishing consensus and coherence within itself. At another level, the nature of the peacemaking and peacekeeping mechanisms being used in Somalia does not match the situation on the ground. The paper accordingly proposes that a reconsideration of the way the TFG and the armed insurgency are treated needs to be accompanied by a more robust diplomatic and peacekeeping intervention.