Ethiopia’s Red Sea Gambit

By Johan Burger*

Ethiopia is the largest landlocked nation in the world. Since 1991, when Eritrea broke away and won independence this nation of 123 million has been dependent on Djibouti for trade. 95% of Ethiopian trade goes through this small but strategic republic that is located on the narrow shipping chokepoint of Bab El Mandeb that separates the Red Sea with the Gulf of Aden. In return Djibouti charges Ethiopia over a billion dollars annually in port fees. It is a very expensive proposition for a country where nearly a fifth of the population is still dependent on food aid. Ethiopia has been, therefore, desperate to find alternative access to the sea.

Being landlocked not only makes it difficult for Ethiopia to develop its manufacturing sector and becoming a competitive exporter, but it also hobbles its economic development. A UN study has listed the disadvantages of being a landlocked. It says that an average landlocked developing country (LLDC) tends to 20% less developed than what it would have been had it not been landlocked.

Being landlocked affects development through trade and various other channels, such as the quality of institutions and the stage of economic development. Figure 2 indicates the relationship between the various factors.

The Horn of Africa

Eritrea, Ethiopia, Djibouti, and Somalia collectively constitute a region that is often collectively referred to as the Horn of Africa. Given that it straddles the Red Sea and the Gulf of Aden – a transit choke point through which 10% of the world trade passes - the Horn of Africa is of vital strategic importance. The US, Japan, Italy, and China all have naval bases in Djibouti. India and Russia have also expressed their interest in establishing bases in the country. Such bases ostensibly protect global trade but also enable power projection into the Middle East.^[1] Djibouti, Eritrea, Somalia, and Sudan all have strategic locations in the Horn, with their ports at the centre of power dynamics in the region.  Eritrea and Somaliland allow the United Arab Emirates (UAE) navy to use Assab and Berbera respectively and have been developing their commercial ports through its help. Turkey has acquired the rights to the redevelopment of Suakin in Sudan and Mogadishu in Somalia.

Djibouti connects Europe, the Far East, the Horn of Africa, and the Persian Gulf. It also serves as an entrepot with a reasonably well-developed road network that connects it to 400 million consumers in East Africa and Central Africa.^[2] Sudan has significant agricultural potential. South Sudan, in turn, has significant oil and gas reserves but is constrained by also being landlocked.

Somaliland is situated on the southern coast of the Gulf of Aden, which has been strategically important since the opening of the Suez Canal in 1869. Its Bab-el-Mandeb area connects the Gulf of Aden with the Red Sea, creating the shortest route between Asia and Europe. The Port of Berbera offers a base at the entrance to the Red Sea and, eventually, the Suez Canal. Oil transportation through the port in Somaliland increased, on average, by 60% from 2020 to 2023.^[3]

Somalia was created by the union of British Somaliland (which gained independence on 26 June 1960) with Italian Somalia (which became independent on 1 July 1960). However, this union was never formally ratified and eventually fell apart.^[4] Somaliland broke away and broke away unilaterally from Somalia in 1991. No other country has yet officially recognised Somaliland as an independent state. This excluded Somaliland from receiving international aid and loans. Despite this, it has contributed to the stability, economic prosperity, and the battle against piracy and terrorism in the region.^[5]

Although Somalia has rejected Somaliland independence, the two sides have since 2012 periodically been involved in negotiations to try and patch up their frosty relations. The announcement of the MoU between Ethiopia and Somaliland only made the relationship worse.^[6] It came just as Somaliland and Somalia would resume.^[7]

Ethiopia and Somaliland, however, have enjoyed good relations since the early 1980s, when Ethiopia supported the Somali National Movement to overthrow the Siad Barre regime in Somalia. After Eritrea gained independence in 1991 Ethiopia lost direct access to the sea and became landlocked. It has been mostly dependent on Djibouti for trade ever since. In 2012, Ethiopia concluded an agreement with South Sudan and Kenya to construct the LAPSSET (Lamu Port-Southern Sudan-Ethiopia Transport) railway project at a cost of US$22bn. The LAPSSET project aims to facilitate the movement of goods from Lamu Port to southern Ethiopia, but it is still work in progress.^[8]

In March 2018, Ethiopia, Somaliland, and DP World concluded an agreement on the Berbera port. Ethiopia acquired a 19% stake in the port, with DP World as the major shareholder with 51%, and Somaliland receiving the remaining 30%.^[9] The deal invited a sharp rejection from Somalia, which saw it as a violation of its sovereignty.^[10] Djibouti saw it as a threat. The port of Berbera threatened to take away a big chunk of the Ethiopian trading business away from it. Nonetheless Somaliland pressed ahead and subsequently decided to construct new port facilities at the Port of Berbera at an estimated cost of US$442 million. Four years later, however, Ethiopia lost its stake in the Berbera Port for ‘failing to meet its obligations’. Ethiopia would later take a stake in the Port of Djibouti in return for Djibouti getting shares in state-owned Ethiopian firms, including Ethiopian Airlines.

For Ethiopia access to Port Sudan, Berbera, and Lamu is vital. It would significantly reduce its dependence on Djibouti and widen its influence in the region. A new container terminal at Berbera was inaugurated in June 2021. The terminal is expected to, in addition to becoming a major access port for Ethiopia. After the completion of Phase One, it would increase the container capacity from 150000 twenty-foot equivalent units (TEUs) annually to 500000 TEUs. This will, at completion, increase to two million TEUs annually.^{[11] [12]} As of 2024, the cargo volumes have been increased by 35%, vessel productivity by 300%, and vessel waiting times reduced from days to hours.^[13]

Ethiopia currently imports up to US$700m worth of goods via Berbera. In 2022, Ethiopia lost its ownership stake (19%) in the Port of Berbera because the Government of Somaliland said it ‘did not fulfil its ownership conditions’.^[14]

The Status

Prime Minister Abiy Ahmed perceives sea access as “an existential issue” for Ethiopia. However, his strident drive to secure access to the Red Sea has created tensions in the region and raised fears of another conflict in the horn of Africa. For someone who was awarded the Nobel peace prize in 2019 this is something of an irony.

The year 2024 started with Ethiopia announcing its MoU with Somaliland to gain ocean access. As payment, Somaliland required Ethiopia to recognize its independence while Ethiopia reportedly offered Somaliland an unknown stake in Ethiopian Airlines. Ethiopia undertook to execute an "in-depth assessment" of Somaliland's ambition for official independence, the first time any country, except for Taiwan, offered to do so. The deal has been greeted as a ‘game changer’ by Somaliland. The breakaway republic has been lobbying for international recognition. It would be a shot in the arm for Ethiopia too. The agreement allows Addis Ababa an option to lease land where it can allegedly set up a ‘navy’.

The Government of Somalia, which views Somaliland as an integral part of Somalia, immediately rejected the Ethiopia-Somaliland MoU. In protest its recalled its ambassador to Ethiopia. The Somali cabinet described the agreement as "an open interference with Somalia's sovereignty, freedom, and unity" and declared the agreement "null and void".

Despite all the shrill rhetoric Somaliland appears unlikely to start a war with Ethiopia. Its resources have been depleted by years of instability and fighting Al Shabab – the Islamic militant group that has carried out a bloody campaign to impose Sharia law in the region. Instead the Somali government has decided to take legal action and has turned to the international community to thwart the Ethiopia-Somaliland deal. Al-Shabab, itself has objected to the agreement. ^[15]

Not everyone in Somaliland itself supports the agreement. While some saw potential economic benefits, others feared they were compromising their sovereignty. Defence Minister Abdiqani Mohamud Ateye resigned in protest at the decision of President Abdi to grant Ethiopia the right to establish a naval presence in Somaliland.^[16]

External Reaction

There are concerns that the existing power balance in the area could be disturbed should Ethiopia gain access to the sea.^[17] News of the Ethiopia-Somaliland MoU has drawn a somewhat cold response from the rest of world. The African Union (AU) fears that recognising Somaliland would establish a precedent for others to follow and break the status quo of colonial-era boundaries that nations of the continent accepted at the time of independence.^[18] It has asked both sides to de-escalate tensions. Kenya has gone a step further by calling for an emergency meeting of the Intergovernmental Authority on Development (IGAD) and the AU to ‘force’ Ethiopia to withdraw its agreement with Somaliland.^[19] Eritrea followed with a similar request. Even China has stepped in to call for a respect of Somalia's "territorial integrity". Even though Beijing maintains a very close economic and diplomatic ties with Ethiopia its stand against the recognition of Somaliland may have been motivated by a desire to counter the growing ties between Taiwan and Somaliland. The two countries have no formal diplomatic relations, but they have established embassy-like representative offices in each other's capital.^[20] China's support for Somalia was a blow to Ethiopia, as China is Ethiopia’s “largest bilateral investor” and its single largest lender, with Ethiopia owing China US$14 billion.^[21] The EU, the Organisation for Islamic Cooperation (OIC), the Arab League, Egypt, Qatar, Russia, Turkey, and the USA have all requested Ethiopia to respect Somalia’s sovereignty.^[22] The UN, which sees Somaliland as part of Somalia, has urged Ethiopia and Somalia to settle their dispute over the issue through dialogue.

Potential Fallout

Despite the rhetoric it is widely accepted that Somalia does not have the power to impose its will by force on Somaliland. But the Ethiopia-Somaliland MoU could unsettle the region in other ways. Djibouti’s commercial interests would be hurt if Ethiopia does find more reliable alternative in Somaliland. As noted, Ethiopia already imports up to US$700m worth of goods via the port of Berbera. As the port continues to expand and modernise there it could emerge as a serious competitor to Djibouti. More competition, however, may be good news for Ethiopian trade as it could bring down the hefty port fees that it currently has to pay.

Establishing an Ethiopian naval presence in Somaliland, however, could be detrimental to regional peace. It could draw Egypt into a direct confrontation with Ethiopia. The two sides do not see eye to eye on many issues and the Grand Ethiopia Renaissance Dam (GERD) that Addis Ababa has constructed has become a lightning rod of contention.

The Ethiopia-Somaliland may already have compromised the regional fight against Islamist militancy. The Ethiopian armed forces have so far been very effective in battling the menace of Al-Shabab. But a breakdown of ties with Mogadishu provides the militant group with an opportunity to unleash mayhem.  

Ethiopia may have taken a risky geopolitical gamble while pursuing its national interests. At the time of writing this piece President Ahmed and his government show little sign of changing course even as back-channel diplomatic efforts continue to find a solution. Ethiopian actions reflect the precarious situation that landlocked countries can sometimes find themselves in.

*with additional inputs by Amit Jain

 

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