- Harry Clynch
- January 5, 2024
Ethiopia has signed a landmark deal with Somaliland to gain access to ports on the Red Sea, in a controversial move that could significantly raise the risks for foreign investors in East Africa.
Ethiopia, which is the world’s most populous landlocked country, has long considered access to the Red Sea as a strategic imperative. Addis Ababa briefly secured a coastline in the years after the Second World War, when Eritrea was subsumed into Ethiopia, but then lost this in 1993 following Eritrean independence.
Since then, Ethiopia has been highly dependent on neighbouring Djibouti for its imports and exports. Over 95% of Ethiopia’s import-export trade volume passes along the corridor between Addis Ababa and Djibouti. Ethiopian leaders have therefore frequently expressed uneasiness that the country is effectively dependent on the goodwill of Djibouti. Last year, the prime minister of Ethiopia, Abiy Ahmed, said that the country was living in a “geographic prison” and stated that access to the seas was a crucial issue for “Ethiopia’s very existence.”
Post
Ethiopia’s gambit for a port is unsettling a volatile region.
In recent months the country’s prime minister has alarmed observers
with aggressive calls for his people to break out of what he has termed a
“geographic prison” https://econ.st/48aCKpX
Ethiopia’s gambit for a port is unsettling a volatile region
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Part of the reason for Ethiopia’s strong position on this issue is the vital strategic importance of the Red Sea. The shipping lane through the sea accounts for some 15% of global trade, with billions of dollars of goods and supplies passing through every year. “The Red Sea is not just an economic lifeline, it plays an essential role in facilitating trade, supporting infrastructure development, and providing opportunities that underpin the growth of the East Africa region – it is a crucial trade route connecting the Middle East, Europe, and Asia,” writes one analyst.
Many Ethiopians believe that its lack of access to this trade route has stunted its broader economic development, with its limited ability to access global markets and the high costs associated with the Addis-Djibouti corridor arguably derailing Ethiopia’s ambitions to become a middle-income nation by 2025.
Now, Ethiopia has signed a memorandum of understanding (MOU) with Somaliland which will see Addis Ababa gain access to Red Sea ports in Somaliland, a breakaway region of Somalia that is not officially recognised as a sovereign state by any country in the world apart from Taiwan. The government in Somalia said the agreement was “null and void” and said that such a violation of its sovereignty was an act of “aggression.”
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However, critics of the government in Addis Ababa suggest that, far from securing Ethiopia’s future prosperity, this move could raise the risks of conflict in the region and deter foreign investment. At a time when tensions in the region are already rising – as a result of the conflict in Gaza and Houthi attacks on commercial shipping in the Red Sea – is Abiy Ahmed gambling on the future of the Ethiopian economy?
Getachew Temare, an Ethiopian human rights activist, told Disruption Banking that “the memorandum of understanding between Ethiopia and Somaliland, which facilitates limited sea access for landlocked Ethiopia, while paving the way for the state recognition of Somaliland, has taken me by surprise […] this move carries strong geopolitical implications, notably evident in Somalia’s swift reaction. For Abiy Ahmed, it serves as a valuable distraction from internal conflicts, including war and economic crises. Since its announcement, it has dominated public discourse.”
He fears that this move could heighten the risks in the region and therefore deter foreign investment from Ethiopia and nearby countries. This could be particularly damaging for Addis Ababa at a time when the country has recently defaulted on its debts and its international partners, particularly the US, are considering whether further economic aid should be given to a government widely believed to have committed human rights violations in Tigray.
“It’s evident that this agreement seems to be destabilising the region,” Temare said. “Eritrea is anticipated to support Somalia, likely sparking a proxy war. Reports indicate heightened military preparations are underway, particularly from Eritrea, even before the agreement has been concluded […] overall, the situation appears increasingly volatile.”
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Abiy Ahmed, and Ethiopian prime ministers before him, have long seen access to the Red Sea as an economic imperative and a crucial part of Ethiopia’s ambitions to transition away from its dependency on aid. But with tensions in the region threatening to stunt trade, growth, and investment in Ethiopia and elsewhere, could this ploy end up proving self-defeating?
Author: Harry Clynch
#Ethiopia #Somaliland #Somalia #Eritrea #Africa #RedSea