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May 9, 2022 at 8:22 am #3912
In this essay, I argue that Ethiopia is now in a geopolitical crisis and decline in its geopolitical relevance. I use the term geopolitics to capture the objective political-economic conditions in domestic and external realms. Both Internal and external dynamics have caused and exacerbated the geopolitical crisis. The political crisis that started as popular resistance against the EPRDF-led government was followed by a promising transition. However, the euphoria turned into hopelessness following the crisis with EPRDF and its split into two. The war between the Ethiopian government and TPLF ravaged the country and harmed its foreign relations.
Domestic political-economic dynamics exhibited similar patterns as a result of the political crisis. Recently the country has been deeply embroiled in political and socio-economic crises. Unemployment together with skyrocketing inflation hardened people’s lives and the economy. The country suffered from an acute shortage of foreign currency.
The global geopolitical competition and international disorder contributed to Ethiopia’s geopolitical crisis. The US and its affiliate multilateral institutions have been pressuring and sanctioning Ethiopia during the Trump and Biden administrations. Moreover, the absence of Chinese concessional loans to Ethiopia, regional geopolitical rivalries, the coronavirus pandemic, and the Ukraine-Russia war contributed to the geopolitical crisis Ethiopia is facing now. Each factor that has contributed to this crisis is discussed below.
The GERD Crisis and Following External Pressures
When Prime Minister Abiy Ahmed came to power in 2018, the Ethiopian government embarked on a new agenda. The new administration proposed the ‘Homegrown Economic Reform’ plan to transform the Ethiopian economy.
The US and international financial institutions such as the World Bank and IMF promised to support the reform plan. The IMF pledged 2.9 billion dollars for Ethiopia to be disbursed in three years. The World Bank announced a 500 million dollars support for the reform plan. The US said that it would back the reform program with five billion dollars of investment within three to five years.
Later on, these pledges were abandoned. The World Bank immediately suspended the 500 million dollars it promised for Ethiopia as emergency financial support after Ethiopia started the first round of water filling in June 2020.
The Trump administration imposed an aid cut to Ethiopia over the GERD dispute with Egypt and Sudan. The US and the World Bank intervened to mediate the dispute. However, the mediation was de-facto adjudication as seen from the US government’s partial position towards the GERD politics favoring Egypt. The United States government warned Ethiopia not to start filling the dam before reaching an agreement with Egypt and Sudan. The World Bank had also been exerting pressure on Ethiopia during the mediation process so that Ethiopia could come to terms with Egypt and Sudan.
A few weeks later, it was reported that the World Bank additionally suspended the 2.9 billion dollars it had pledged to provide Ethiopia for the ‘Homegrown Economic Reform Plan’. The Bank at first promised to cover 60% of the 10 billion dollars of finance needed for the three-year reform plan.
The IMF suspended the disbursement of the billions of dollars to Ethiopia. The country has been blocked from accessing grants and loans from international financial institutions.
As Egypt is a close geostrategic ally of the US, it can mobilize American and Arab League support against Ethiopia over the Nile geopolitical rivalry.
American Pivoting to the Indo-Pacific and US Internal Dynamics
Since WWII, the Middle East and the Red Sea region had been geo-strategically important to the US. America was focused on the region and making Ethiopia geopolitically important to the US.
Haile Selassie’s Ethiopia was a very close ally and a major recipient of American assistance due to its geopolitical relevance to US interests in the Red Sea.
EPRDF’s Ethiopia was also a crucial and close ally of America after the 9/11 attack and following the war on terror campaign. The regime had been the intimate partner in the Horn of Africa in countering Al Shabaab and extremist movements.
Traditionally, the Middle East, Europe, and East Asia were America’s top priorities respectively. Now, the Middle East is the least US geopolitical priority among the others. Due to domestic geopolitical changes, American focus in the Red Sea region has declined.
The US is now almost energy-independent and has no reason to focus on the Red Sea region. American administrations have to focus internally due to rising socio-economic division and crisis within the US society. The Biden administration has spent trillions of dollars to that effect.
This dynamism has greatly contributed to Ethiopia’s geopolitical crisis making the country no longer strategically important to the US.
The decline of Chinese concessional loans to Ethiopia
Chinese loans had been behind the overhyped economic growth of the Ethiopian economy. Ethiopia has more than 30 billion dollars in external debt and out of which close to 14 billion dollars is owed to China.
The concession of China to the World Trade Organization and its huge forex surplus also opened a great opportunity for the EPRDF government to enjoy access to finance and stimulate the economy.
Chinese concessional loans are no longer attainable as Ethiopia failed to effectively use the huge Chinese finances.
China has also barred Ethiopia from getting loans from its banks. Recently the Export-Import (EXIM) Bank of China suspended the disbursement of a 339 million dollar loan resulting in the halting of the construction of 12 major infrastructure projects.
Ethiopia lost access to concessional Chinese loans mainly because Ethiopia is unable to pay back debts and failed to service the loans and partly due to the Belt and Road Initiative (BRI) that demands huge amounts of money. This has played a crucial role in Ethiopia’s geopolitical crisis and geo-economic deterioration.
The Coronavirus Pandemic and the Ukraine-Russia War
The broke out of the coronavirus pandemic and the Ukraine-Russia war have been the major events that have hurt Ethiopia’s economy. The pandemic devastated the trade and logistics sectors. Reports anticipate that the country may lose 4.3 percent to 5.5 percent of its GDP due to the pandemic.
This ravaged the engine of the economy which is the construction sector. It has brought about galloping inflation.
These factors have contributed to the foreign currency crunch that seriously hurt the Ethiopian economy. A few weeks ago, it was reported that the country had only 1.6 billion dollars in forex reserve which is equivalent to a month and three weeks of import.
Regional Geopolitical Rivalries and Ethiopia’s Vulnerability
There have recently been regional geopolitical competitions in the region where Ethiopia is located. As America is withdrawing from the region, Middle Eastern powers like Saudi Arabia, UAE, Iran, and Turkey have been involved in the region to expand their geopolitical influence.
Horn Africa and Ethiopian geopolitics is related to and is mainly a spillover of Middle Eastern geopolitical dynamism.
Ethiopia could be positively and negatively impacted by this Red Sea competition in which Saudi Arabia, UAE, and Egypt are on one camp and Iran and Turkey on the other front. As part of it, Saudi Arabia, UAE, Turkey, and Iran have competed in Ethiopia. All these powers who have diverse geopolitical interests in the country were supporting the federal government in its fight with the TPLF.
As they have conflicting interests against each other, this geopolitical competition may adversely impact Ethiopia and add to the geopolitical crisis.
For instance, Turkey is a rival of Egypt and may use Ethiopia to challenge Egypt’s Nile water security. UAE owns the majority share of the Somaliland port and may dictate Ethiopia use it as its main outlet that abandoning the Djibouti Port. Eritrea and Djibouti are foes. The rapprochement with Eritrea together with the potential shifting of outlet to DP Port may hurt Ethiopia’s relations with Djibouti.
The 2019 regime change in Sudan and the installation of a pro-Egypt government has also been a major geopolitical change that affected Ethiopia negatively. Sudan and Ethiopia have since recently been in a dispute over the GERD and territory. This opened an opportunity for Egypt to intensify its geopolitical fight against Ethiopia particularly regarding the GERD.
Armed Conflict and Instabilities
The armed conflicts and instabilities have two i.e., internal and external impacts. They exacerbated internal crises and damaged the country’s relations with the outside world.
The war tarnished Ethiopia’s relations with the West and multilateral institutions.
The European Union cut 109 million dollars in budgetary support to Ethiopia at the end of 2020.
The Biden administration continued the unilateral sanction imposed by Trump by relinking it to the Tigray armed conflict. The US cut off Ethiopia from the duty-free preference under the AGOA.
This lack of financial provision from the West and multilateral institutions unleashed socio-economic crises.
The armed conflicts and instabilities have also made the country vulnerable to regional geopolitical rivalries and crises. The conflicts particularly the war between the TPLF and the federal government exacerbated the geopolitical irrelevance and crises in Ethiopia.
Therefore, the correspondence between external geopolitical dynamics and internal factors entangled Ethiopia in a geopolitical crisis. Consequently, Ethiopia’s geopolitical relevance has greatly declined.
Ethiopia has to recognize the geopolitical concerns of America and Egypt over the Nile River. The Ethiopian government should reach an agreement regarding the filing of the dam.
It ought to end the armed conflicts including the war and prevalent instabilities across the country.
The country has to balance its relations to manage the severe impacts of the regional geopolitical rivalry among the Middle Eastern powers.
Ethiopia should mend its relations with the West as their support is crucial. Informed and professional diplomatic endeavor has to be in place.
* Hagos Gebreamlak is a journalist at Inform Africa.
Publisher’s Note: This contribution is part of a series of stories CARD publishes to encourage intellectual discourse among the youth in Ethiopia. If you want to make contributions or respond to this particular piece, please email your draft to us via firstname.lastname@example.org.