October 02, 2018
News /
Posted by NCID

Abiy Ahmed was only a 15 year old teenager when Isaias Afwerki declared Eritrea’s independence in 1991. But Ahmed was already in politics. He first joined the Oromo Democratic Party (ODP) to fight against Mengistu Haile Mariam's regime in Ethiopia and years later he led his country’s intelligence team in the border 1998-2000 border war against Eritrea. 

Now 42, Ahmed is the youngest leader in Africa and the first Ethiopian Prime Minister to “fully accept and implement” the peace agreement signed between both countries in the year 2000, which never came into place. After two decades of closed borders, no diplomacy and mounting tensions, Ethiopia and Eritrea agreed to an end of the conflict last July and signed their commitment at the start of September in a historic meeting in Saudi Arabia. The rapprochement has also included neighbor countries Djibouti and Somalia, who also had a border dispute with Eritrea. 

International organizations have welcomed the peace agreements and UN Secretary General Antonio Guterres said “there is a wind of hope blowing in the Horn of Africa”. When the world was remembering those fallen in the 9/11 attacks at the World Trade Center, Ethiopians were celebrating their New Year by crossing the border and hugging their loved ones for the first time in 20 years. Since then flights have resumed, phone services between countries have been restored and embassies have reopened both in Ethiopia and Eritrea in a fascinatingly rapid turn of events. 

Optimism is buoyant, but many questions arise around this sudden restoration of relations. Why does this happen now and so rapidly? What are the countries’ interests in opening to one another? What impact can it have within and across its borders?

Abiy Ahmed, the reformist

The momentum sparkled when last 15th of February former Ethiopian Prime Minister Hailemariam Desalegn surprisingly resigned hoping to end political unrest. Tensions had hit the country since 2015, as the Oromos had sparked protests arguing they had been marginalized from society. The Oromo is the largest of the more than 80 ethnic groups in Ethiopia, covering almost one third of the 100 million population of the country, followed by the Amhara group, which accounts for 27% of Ethiopians. Desalegn was Amhara and his successor, Prime Minister Ahmed became Ethiopia’s first Oromo leader. He stepped into office promising profound changes. Two months later he had restored relations with its neighbor and long-time enemy Eritrea, welcomed back political opponents once considered terrorists and opened the door to a liberalization of the state-controlled economy. 

Opportunities for development

The two year war killed about 80,000 people and two decades of conflict has left 160,000 Eritrean refugees in Ethiopia. This peace deal brings a hope for change, as the border reopens and economic cooperation can bolster. 

Coming from such a strong enmity, any rapprochement is a step forward. Opening borders and lowering tariffs generates a massive opportunity for trade for both countries, as well as an opportunity for reduced commodity prices and increased competitiveness. 

Furthermore, Eritrea has been isolated with its neighbors, focusing its trade with China and South Korea, and its potential for maritime trade in the Red Sea has been wasted for long time with underutilized ports. Meanwhile, Ethiopia is the second most populous country in Africa and the fastest growing economy in Sub-Saharan Africa at a rate of 8.5%, according to the IMF. However, it still depends entirely on Djibouti for maritime trade, as this accounted for 97% of Ethiopia’s imports. Opening road and rail routes to Eritrean ports would end with its dependency on Djibouti and open a quicker and safer path to the Gulf States, avoiding the Gulf of Aden.

Gulf States’ interest in the Horn of Africa

Saudi Arabia hosted the peace agreement between both nations in a gesture which shows the increased interest for the Gulf States in establishing peace in the Horn of Africa. Recently Dubai companies have signed massive investments of up to $442 million to develop ports in Somalia, and the United Arab Emirates (UAE) signed an agreement with the self-declared government of Somaliland to establish a military base in the city of Berbera. 

The UAE and Saudi Arabia have a strategic interest in the port of Assab in Eritrea, as it is a critical point for the war they are fighting in Yemen with the Houthi rebels and against the influence of Iran in the region. Furthermore, recent studies have shown that Eritrea’s coast has the prospect of hiding vast oil and gas reserves which have remained idle for decades due to the lack of knowledge of its existence and the conflict with Ethiopia. The Gulf States and foreign powers are eager to exploit those resources which could bring a sudden massive influx of capital into Eritrea.

Furthermore, a long term peace that brings stability to the region will mean increased tourism, as well as increased confidence from foreign investors which were pushed back by the insecurity. Sectors such as the telecommunications industry will benefit from the opening of telephone lines between both countries, as there will be an increase demand amongst citizens, proving a pocket of opportunity for investment.

Peace can bring incredible economic opportunities and development for the Horn of Africa. However, Ethiopia and Eritrea still face many challenges within their borders that they have to resolve first. 

Ethiopia could face an increase in ethnic tensions  

Despite being the fastest growing in Sub-Saharan frica, Ethiopia is also one of the countries which worst redistributes it, being one of the poorest countries with an income per capita of $783, according to World Bank data. Furthermore, Ethiopia is popularly known as the “China of Africa”, with a state-controlled economy that limits competitiveness and keeps off private investment. 

Since Prime Minister Ahmed’s arrival to power the executive power has opened the possibility for private sector participation in public companies such as Ethio Telecomm and Ethiopian Airlines, a first step for a more market oriented approach that seeks to drive foreign investment into the country into key sectors such as infrastructure, energy and telecommunications. 

Furthermore, the political opening that Prime Minister Ahmed has promoted has suffered a backfiring in recent days. Ethnic tensions have caused more than 20 dead and 100 arrested between the Oromo region and the capital Addis Ababa, after supporters of the Oromo Liberation Front, an opposition separatist party legalized by the current government which was once considered a terrorist group, entered the capital and painted the streets with their flag to welcome back their exiled leaders. In his vow for multiparty elections and democracy advancement, Prime Minister Ahmed has to take care of the complex ethnic relations in his country and ensure violence is stopped.

Eritrea’s Afwerki still needs to demonstrate his will for change

Regarding Eritrea, President Afwerki comes out in a strong position after Ethiopia accepted the 2000 border resolution and has already asked for UN sanctions to be lifted, as the country was hit in 2009 with an arms embargo for allegedly providing assistance to rebel fighters in Somalia. 

However, the situation inside its country has still to change deeply if he wants to benefit from the potential development of this peace agreement. The country is second to last, just above North Korea, in Reporters Without Borders’ 2018 Press Freedom Index, and still has 11 journalists jailed considered as terrorists. Moreover, it ranks 165th out of 180 countries in Transparency International’s 2017 Corruption Perceptions Index and 189th out of 190 countries in the World Bank’s 2018 Ease of Doing Business Report. 

One necessary change to bolster the labour market is the end of the current national service conscription. Since 1998 what used to be an 18 month military service turned into an open-ended plan, meaning an indefinite period which for some has lasted for more than 20 years, as Amnesty International reported. This situation dragged out of the labour market thousands of Eritreans and had direct influence in food provision, as about 80% of its citizens are subsistence farmers which couldn’t harvest their crops, as The Economist explained. The government used the conflict with Ethiopia as an excuse for their indefinite national service, but after the peace agreement President Afwerki must end with this neo-slavery policy that has caused thousands to flee the country and restricted the development of an increasingly young population with a median age of just above 18 years old.

Ethiopian Prime Minister Ahmed has taken a step forward and President Afwerki has had a positive stance towards a peace agreement. In itself this is great news for a conflict prone Horn of Africa. However, for this deal to succeed and provide the massive economic and democratic opportunities it comes with, both leaders have to look inside and change its way of government. While Prime Minister Ahmed has taken steps to attract foreign investment and establish multi-party elections, it still has to materialize his will in concrete policies, and President Afwerki has yet to take a step forward to show his will to end with the oppression he has placed for years on its citizens. The increasingly young population in the Horn of Africa is an incredible opportunity to foster a currently practically nonexistent middle class, but it can also end up with increased poverty if the doors towards social, political and economical openness remained closed.

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