(CNN) -- It was an odd sight in Ethiopia's capital this week: a standing ovation for Sharif Sheikh Ahmed, the man whom Ethiopian forces had removed from power in neighboring Somalia two years ago.

Sharif Sheikh Ahmed, Somalia's new president, answers questions at the African Union summit in Addis Ababa.

He once led the Islamic Courts Union, which ruled much of Somalia in 2006 before it was routed by the Ethiopians. Now, Ahmed is the leader of Somalia's U.N.-backed transitional government -- and two days after his election to the post of president, he was welcomed with open arms at an African Union summit in Ethiopia's capital, Addis Ababa.

Two years after the invasion and the guerrilla war it provoked, Somalia has in some ways come full circle. Islamist militias control the country's capital and other key cities; the transitional government is trying to establish a foothold from outside the country; and Ahmed -- commonly known as "Sheikh Sharif" -- is in a position of power.

But several analysts who have studied the region say the new government is in a much stronger position to establish itself inside Somalia and restore order to a country that has been mired in chaos for the past two decades.

"The ascendancy of Sheikh Sharif provides an opportunity to create an inclusive coalition governing from the center outwards," said John Prendergast, co-chairman of the Enough Project, who studies the Horn of Africa for the Center for American Progress think tank.

The transitional government is currently stranded in Djibouti, unable to return to Somalia after its base in Baidoa was seized last week by Al-Shabaab, a radical Islamist militia with ties to al Qaeda. Ahmed now stands at a crossroads between quelling the militia, which once was aligned with the ICU, and including more moderates in his future government, Prendergast said.

"The fulcrum for change is in the hands of Sheikh Sharif's government," he said. "If he is able to put together an inclusive government -- even if it's only on paper, even if it's only in Djibouti -- I think it will quickly defuse any fervor of support for Shabaab."  See a list of Somalia's key players Â»

Rise of Al-Shabaab

Al-Shabaab fighters took control of Baidoa hours after the remaining Ethiopian forces withdrew under a June 2008 cease-fire deal. Rashid Abdi, a Somalia analyst for the International Crisis Group, said the loss of Baidoa is "a clear indication that the transitional federal government has lost any grip -- whatever grip it had -- in Somalia."

But Prendergast said the radical Islamist militia will most likely lose support among Somalis now that its "rallying cry" of getting the Ethiopian forces out of Somalia is gone.

"What the Islamists did was, they wrapped themselves up in the mantle of Somali nationalism and, for the last two years, they have hitched their star to throwing the Ethiopians out," he said.

Prendergast predicted that Al-Shabaab fighters "will sustain themselves for awhile and temporarily expand, but I don't envision it to be a long-term prospect at all."

Last year, the United States put Al-Shabaab -- which means "The Youth" -- on its list of terrorist groups. Analysts say Al-Shabaab models itself after the Taliban's puritanical Islamic rule.  See a timeline of recent events in Somalia Â»

Stig Jarle Hansen, a Nairobi, Kenya-based expert on Somalia for the Norwegian Institute for Urban and Regional Research, said Al-Shabaab fighters have been trained in Afghanistan, and the group has "clear connections" to al Qaeda.

There has been evidence that the group has extended its reach into the United States, as well.

The FBI is investigating what appears to be a massive recruitment effort by Al-Shabaab in the United States' Somali communities, particularly in Minneapolis, Minnesota, where more than a dozen young men of Somali descent have gone missing in recent months.

One member of Minneapolis' Somali community, Shirwa Ahmed, 27, blew himself up in an apparent suicide bombing in
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