This dissertation is an examination of inter-clan relations along regional borderlands within thernfederal political system of Ethiopia in the last two decades. It examines explicitly whether thernlegally decentralized political, administrative and fiscal power have been implemented at the localrnlevel, i.e. in pastoral and agro-pastoral communities. Emphasis was given to institutions, politicalrnrepresentations, administrative functions, fiscal transfers, implementation of the decentralizedrnauthority and resources, in the light of perception and participation of stakeholders; and whetherrnor not this devolution of power has promoted cooperation among various clans thereby broughtrnsustainable peace and development. Thus, a phenomenology, embedded case study which wasrnprimarily qualitative, was conducted on two case study woredas -Liban woreda of Oromia state andrnFiltu woreda of the Somali state. Data were collected through document analysis, focus grouprndiscussions, interviews and observation. In order to explain these data, a combination ofrnconceptual and analytical frameworks was constructed and organized on the basis of theories ofrnfederalism, decentralization, ethnic relations, and conflicts.rnThe findings indicate that in both woredas ; federalism and its local government institutionsâ€”andrnpublic policies from aboveâ€”have marginalized traditional institutions, the customary law of therncommunities, which used to help clans cooperatation on resources use, allocation andrnmanagement. As a result, owing to delayed actions to respond to grievances of communities-likernboundary demarcation, resource sharing, representation of pastoral community at regionalrnparliament and minority access to administrative power and unequal service delivery by localrngovernments along Somali-Oromia regional border, inter-clan relations have deteriorated.rnFurthermore, inter-clan relations in these border areas have been influenced by the absence ofrninter-governmental relations at woreda level, lack of accountability and transparency, thernpoliticization of clan identity by officials, and lack of emphasis on social service provision whichrncould serve as a means for promoting clan cooperation. Overall, the study realved thatrnconstitutionally decentralized political power, administrative functions and fiscal issues of Ethiopiarnhave not yet been fully implemented at the woreda level as planned.rnThe findings of the study also disclosed that full implementation of local level decentralization ofrnauthority in the case study areas was inadequate. This suggests that the traditional leadershiprnstructure and customary law be restored to enhance peaceful coexistence and cooperation amongrnthe clans. In addition, the local communities complain about issues related to boundary issues,rnminority representations, demand local accountability, and lack of basic infrastructures that tiernclans together in the areas need to be given immediate responses. From the study, a wellrnestablished and closely supported intergovernmental relation is implied, and hence much attentionrnneeds to be given to the woreda level inter-governmental relation by Somali-Oromia regional states.