A year ago, the world was celebrating the signing of agreements to end the brutal war waged in Ethiopia’s Tigray region from late 2020 through 2022. Leaders and analysts were turning their focus to economic and social recovery for the vast nation in the Horn of Africa, assessing the reconfigured regional security dynamics, and rebuilding frayed relationships with Prime Minister Abiy Ahmed’s government. There was much talk of getting “back on track.”
Unfortunately, as 2023 comes to a close, it’s clear that this track is not leading anywhere good. As expected, this week Ethiopia went into default. Although the country’s relatively low debt to GDP ratio has economists and officials predicting a rapid agreement between the government and its creditors, there are other factors that may give optimists pause about Ethiopia’s economic trajectory. Foreign investors are questioning the consistency of the regulatory environment and the government’s commitment to allowing competition.
Staff of the African Development Bank (AfDB) were assaulted and detained by Ethiopian authorities on October 31, leading the AfDB to withdraw its international staff from the country. The circumstances surrounding the incident are unclear, but journalists in the region have been following leads that suggest malfeasance in the Ministry of Finance may be involved. Diminishing trust in the Ethiopian government has been something of a theme in 2023. For much of the year, food aid from the World Food Program and the United States was suspended despite the country’s vast needs. Donors had found that such assistance was being systematically diverted and it took months to agree on reforms that restored sufficient confidence to resume food aid, albeit on a trial basis.
If reasons for optimism have been hard to find on the economic governance and humanitarian fronts, they have been even more difficult on the security front. The end of the conflict in Tigray was a tremendously important and positive development, and despite outstanding issues in the implementation of the cessation of hostility agreement, that peace has held. But the fracturing of Prime Minister Abiy’s wartime coalition has led to ongoing fighting in Amhara, which has now joined the conflict in Oromo as a seemingly intractable source of instability. It has also led to tension with erstwhile partner Eritrea. Perhaps seeking to rally political elites around a new crisis, Abiy’s decision to focus attention and emotion on Ethiopia’s desire for access to the sea (the country is landlocked and largely relies on Djibouti’s port for external trade) has been understood as a threat to his neighbors.
The latest talks between Ethiopia and Egypt regarding the Grand Ethiopian Renaissance Dam and rights to Nile water failed, prompting Egypt’s Minister of Water Resources and Irrigation to talks aiming to remind the world that his country reserves the right to “defend its water and national security.” Security threats in and around the Red Sea are already imposing real costs on global shipping. Bellicose rhetoric around hot-button issues involving Ethiopia only adds uncertainty to the existing turbulent environment.
Read more: Ethiopia in Troubled Waters
Source: cfr
