Ports, protests and power projection: The Ethiopia-Somaliland deal

New Year’s Day – usually a day for reflection and nursing sore heads – instead brought a different kind of conundrum to the Horn of Africa. In Addis Ababa, Ethiopian Prime Minister Abiy Ahmed and Somaliland President Muse Bihi Abdi signed a Memorandum of Understanding that will see Ethiopia lease a 20-kilometre corridor from Somaliland for 50 years. Ethiopia envisages using the land for commercial purposes, including access to the Port of Berbera, and more controversially for a potential military base, while Somaliland will receive shares in Ethiopian Airlines or EthioTelecom in return. 

Heralded by many in Addis Ababa as Ethiopia’s long anticipated “return to the Red Sea”, the reaction in Somalia, across the wider region, and among international partners was less favourable. Landlocked Ethiopia’s efforts to gain sea access and project power in the Red Sea were rebuffed by its neighbours, and set back Ethiopia’s attempts at rebuilding strained diplomatic relationships. The timing was inauspicious as fears mount of another conflict in the region. However, the move may have helped the government to deflect attention away from its premature default on a USD 1 billion Eurobond following a missed coupon payment in late December.

Ethiopia seeks access to the sea

Addis Ababa has an imperative to diversify its routes to the sea. These currently hinge on access to Djibouti, which accounts for more than 95% of Ethiopia’s import and export trade by volume. Transit via Djibouti also costs Ethiopia USD 1.5 billion in port fees per year – a sum greater than its entire foreign currency reserves. Hence the deal with Somaliland is regarded as a means to establish alternative port access options, while offering the potential for both a commercial and military sea base, which the country has lacked since Eritrea’s independence in 1991. 

Although this is not the first time Ethiopia has signed a deal to leverage access to regional ports to boost its economic and trade prospects, the conflict in Sudan has eroded any hope of a 2018 agreement for a stake in Port Sudan ever materialising. Addis Ababa has also lost patience with the LAPSSET corridor project, despite being afforded a central role in the project.

Somaliland expects recognition

While Ethiopia hopes to gain access to the sea, Somaliland is banking on the deal providing the diplomatic recognition which the breakaway nation has failed to obtain since it declared independence from Somalia in 1991, citing colonial era boundaries and a brief period of autonomy in 1960. This major prize is where the MoU risks coming unstuck on account of global concerns over Somalia’s territorial integrity. Critics fear that de jure recognition of Somaliland’s de facto independence from Somalia would establish a precedent for other secessionist causes in Africa and beyond. The move would also break with central tenets of the African Union and its predecessor, the Organisation of African Unity, both of which were founded on the adoption of colonial-era boundaries – irrespective of their shortcomings – acknowledging the risks of fueling border disputes. 

Previous governments in Addis Ababa have stated that Ethiopia would be the “second country” to officially recognise Somaliland. Yet, the MoU earned strong rebuke, not just from Mogadishu which recalled its ambassador to Addis Ababa and where large protests were held in opposition to the deal, but also from other neighbours. While Eritrea, during a visit by Somali President Mohamud, stated the country would refrain from immediate comment on “provocative agendas”, Asmara subsequently hosted the Egyptian Foreign Minister, indicating a strengthening of relations between countries increasingly critical of Ethiopia. Meanwhile, Djibouti called for an extraordinary summit of the Intergovernmental Authority on Development (IGAD) to be held on 18 January in Kampala, further regionalising the issue. 

This indicates that any formal recognition would not be taken unilaterally but rather in coordination with other countries following suit. Ethiopia would be subject to criticism by international partners and allies, such as China, Russia, the EU and the US, which have all made public commitments to Somalia’s territorial integrity. This has already driven Addis Ababa to clarify that it intends to aid Somaliland’s quest for legitimacy, rather than being the first to upgrade its relations from de facto to de jure recognition. Hargeisa has, however, stated that diplomatic recognition is a prerequisite for the deal to be implemented, resulting in a stalemate that is unlikely to be resolved in the short-term. 

Outsiders object

While Somaliland, as a peripheral actor in the international system, has little to lose from the deal, if Ethiopia were to proceed with the implementation of the MoU, it would surely alienate regional and global partners, offsetting any commercial gains. Addis Ababa would ostracise fellow members of the AU, as well as Western donors. The US and EU remain crucial to ensuring the delivery of food aid and other humanitarian assistance to conflict and drought-affected communities, and are expected to play a central role in post-conflict reconstruction in northern Ethiopia.

Yet, the greatest fallout risks being with China, which remains Ethiopia’s single largest lender, with Addis Ababa owing nearly USD 14 billion in debt to Beijing. China is set to oppose the deal on account of diplomatic relations between Somaliland and Taiwan – which Beijing regards as a breakaway province. China is also Ethiopia’s largest bilateral investor, creating another potential avenue for pressure on Addis Ababa. 

However, across the Red Sea, the United Arab Emirates (UAE) continues to be one of Ethiopia’s strongest partners, having invested heavily in infrastructure, agriculture, and renewables. Emirati DP World is the main shareholder of Berbera port and would stand to benefit from a possible pivot from Djibouti to Somaliland. Ethiopia and UAE are also new members of BRICS since January, following the bloc’s first expansion in 13 years, strengthening alignment around regional policy.

Testing the waters 

Ultimately, decision-makers in Addis Ababa should have better anticipated negative reactions to the MoU, given how earlier comments about Ethiopia’s need for access to the Red Sea were received. While regional and international concern may focus on whether these statements, and this MoU, would entail the use of force, they should instead be seen as Ethiopia’s attempts to further project its power regionally and internationally. 

Although a high-stakes gambit, Prime Minister Abiy’s October comments to parliament and this proposed deal have instead shone a light on Ethiopia’s status as the world’s most populous landlocked country, and the government’s desire to ensure it has access to the sea in support of its long-term political and commercial ambitions. Irrespective of the success of the deal, Ethiopia’s desire for access to the Red Sea will remain a central feature of its foreign policy and regional dynamics, further concentrating minds on the need for better regional economic integration as a means to promote improved trade. 

About the author

Tewodros Sile is Head of Intelligence and Analysis at Africa Practice. He has a particular focus on Ethiopia and the wider East/Horn of Africa region. He can be contacted at [email protected].