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AFRICA: Why Egypt And Ethiopia Can’t Reach a Dam Deal

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(Bloomberg Opinion) — Ethiopia has announced that its latest talks with Egypt over a giant dam on the Blue Nile have achieved a mutual understanding, paving the way for a “breakthrough agreement.” Given the history of claims and counterclaims attending the negotiations over the Grand Ethiopian Renaissance Dam, this should be taken with skepticism. There have been several occasions in this decade-old dispute when, after a bout of heated discussion, both sides have put out contradictory statements on what was agreed. 

The Egyptian characterization of the latest round, mediated by the African Union, is more muted than Ethiopia’s. Cairo says the parties have agreed to continuing talks with the goal of establishing a binding mechanism governing the filling and usage of the dam—a longstanding Egyptian demand. Addis Ababa says the goal of future talks will be a “comprehensive” agreement, rather than “binding” one. The distinction is important: Egypt has previously made it clear that it will settle for nothing less than a cast-iron commitment from Ethiopia on rules governing the management of the dam.

There was optimism of a breakthrough at the start of the year, when the U.S. Treasury tried to broker a deal. That round eventually collapsed in February, when the  Ethiopians refused to return to Washington for the final discussions, claiming they had to consult with local stakeholders. Addis Ababa would go on to accuse the U.S. of failing to act as a neutral observer, dashing the Trump administration’s hopes of a rare foreign-policy success.

The reasons why talks have yielded no agreement have not changed: The parties involved have no real leverage over each other, and there is insufficient external pressure to move the needle.

Ethiopia believes it has little, if any, obligation to make concessions to Egypt; for all its rhetoric, Cairo has little, if any, capacity to force concessions out of Addis Ababa. Leaders in both countries, keen to avoid the appearance of weakness, are encouraging nationalistic sentiments. This makes the prospect of compromise, necessary for the resolution of stalemates, very dim.

For Egypt, the main anxiety over the GERD is not the filling of the reservoir, but the long-term prospect of another country having power to control its water supply, with no effective mechanism governing that power. Ethiopia says the dam will not divert any water for irrigation, and is meant strictly for power generation: As Addis Ababa points out, 70% of Ethiopians have no electricity. It also hopes to export electricity to its neighbors, including Sudan.

For decades, Egypt has insisted that it has the right to veto any upstream project on the Nile, citing the 1959 Nile Water Agreement. The agreement was updated in 1959, adding Sudan to the deal alongside Egypt and Britain. Ethiopia rejects the agreement as a colonial era document to which it was not a signatory.

In 1978, when Ethiopia considered building a series of dams on the Nile, President Anwar El Sadat suggested Egypt would sooner go to war than tolerate such a development. For decades, potential sources of financing for an Ethiopian dam were unwilling to furnish the necessary funds without downstream agreement. In 2010, Ethiopia opted to finance the dam through the domestic sale of bonds. The result is that Ethiopians are, literally and figuratively, invested in this national project. (Cairo worries that the Ethiopia’s ability to build and operate the dam without international assistance will encourage other riparian states to revisit projects of their own on the Nile, adding to the possible threats to downstream countries.)

Since then, Ethiopia has pursued construction without serious consultation with downstream countries nor first conducting an environmental-impact study that would normally be required. While negotiations have been ongoing for several years, Ethiopia has been reluctant to sign any binding mechanisms for dispute resolution. Addis Ababa has treated talks as an opportunity to play for time as it establishes facts on the ground to weaken the negotiating position of Egypt and Sudan.

Ethiopia has repeatedly claimed it does not need an agreement to fill the dam’s reservoir despite the insistence of Egypt and Sudan. Ethiopian officials have claimed the GERD won’t harm Egypt’s share of Nile waters, but this claim is belied by the fact that the main point of contention is how much water Ethiopia is obligated to allow through the dam during periods of drought.

On top of historical grievances and current distrust, the Egyptian and Ethiopian governments are facing other serious challenges that make their disagreement over GERD a politically useful opportunity to rally domestic support. Ethiopia’s Prime Minister Abiy Ahmed is struggling to quell mass protests against him and his government.

Egypt, meanwhile, is trying to shore up its position in Libya, where the rebel forces it supports are being threatened by government troops backed by Turkey. Cairo is now seriously considering deploying troops to Libya to prevent the strategic cities of Sirte and Juffra, declared as a “red line” by President Abdel-Fattah El-Sisi, from falling to government forces. On Monday, Egypt’s parliament authorized an intervention. Even if Sisi were minded to follow through on Sadat’s threat, any military entanglement in Libya will make war with Ethiopia untenable.

Like much of the world, both countries have also been hit hard economically by the coronavirus pandemic: Egypt and Ethiopia have received emergency funding from the IMF. Ethiopia’s economy is expected to grow barely 1.9% this year, the lowest rate since 2003. In April, the IMF reported Egypt’s would be the only economy in the Middle East and North Africa to grow (an estimated 2%) this year. But it has since revised downwards its MENA estimates sharply without offering a country-wise breakdown.

In the context of these challenges, leaders on both sides will likely balk at serious concessions on the dam project for fear of appearing weak. Abiy is especially vulnerable in this regard, and has little incentive to compromise. For its part, Egypt feels it has already conceded a great deal by accepting the dam itself, albeit by fait accompli. Any talk of a “breakthrough” is, at best, premature.

Source: Bloomberg L.P.

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