The post-2005 period witnessed an intensified state-led mobilization of the Ethiopian diaspora, leading to the enactment of a national diaspora policy in 2013. This policy was aimed at creating a favorable environment for diasporic involvement in socio-economic life. Prior to this, Ethiopia's Somali Regional State began taking measures for inducing the Ethiopian Somali diaspora to participate in development efforts, which culminated in formation of the Regional Diaspora Affairs Coordination Agency in 2012. This working paper examines the political economy of diaspora remittances in Ethiopia's Somali Region, focusing on diasporic engagement in trade and investment. Whereas diaspora returnees in other Somali-inhabited territories of East Africa regularly engage in political activities including electoral contests, this is not an option for members of the Ethiopian diaspora. But although Ethiopian diaspora returnees are required by law to abstain from politics, political considerations very much underpin their engagement in trade and investment. As this paper highlights diaspora returnees are required by the Ethiopian government to support its peace and development initiatives, which are political in nature. Precluding the diaspora from playing a political role in domestic politics can thus be seen as a political move aimed at ensuring regime survival.