Ethiopia-Eritrea handshake renders Lapsset obsolete

[Geza Ulole]

Financial Standard
Ethiopia-Eritrea handshake renders Lapsset obsolete
By Macharia Kamau
Published: Jul 23rd 2018 at 23:28, Updated: July 23rd 2018 at 23:28
Ethiopia is rising.

Under the stewardship of the new, vibrant 41-year-old Prime Minister Abiy Ahmed, the Horn of Africa country with more than 100 million people is on the hegemonic path.


And what Mr Ahmed has done in his first 100 days in power, including opening up of the economy and mending diplomatic relations and political freedom such as the release of political detainees and prisoners, outshines what his predecessors did in the last 25 years.


The PM, who took over from Hailemariam Desalegn after his unexpected resignation in February this year is the chairman of both the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) and the Oromo Peoples’ Democratic Organisation, which is one of the four coalition parties of the EPRDF.

And when the dust settles on the reforms that Ethiopia is undertaking, Kenya might be the biggest winner as well as a major loser.

Local firms are optimistic about finally setting a foot or more into the mammoth market that they have drooled over for years but kept out of their reach by State protectionism and communist-like administration.


“The arrival of Prime Minister Abiy Ahmed, whom I reckon represents the most consequential arrival of any African politician - at least since Mandela in 1994 - has busted the door wide open. This is a once in a lifetime opportunity for Kenya Inc. to enter this market at the bargain basement,” said Aly Khan Satchu, a financial analyst.


Ethiopia could also make up for the dwindling fortunes in South Sudan that has been encompassed by unending civil war for years now despite Kenyan firms making huge investments in the nation.

Safaricom and KCB Group appear front runners and have talked of plans to set up operations there. “The banking sector will peel open as well and I forecast a surge in capital markets activity, the launch of a stock exchange and a big crowding in the Ethiopian Diaspora so KCB is right to be eager to plant the KCB flag,” said Mr Satchu.

“Basically, there are opportunities everywhere I look. The thing is, you will need some stamina and staying power.”

The changes taking place in the country could, however, be a pain for some Kenyan players. These include the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor, whose mega projects are expected to give Ethiopia access to the proposed Lamu port.

The integrated transport corridor that includes a refined petroleum products pipeline, roads and railway is expected to open up the northern parts of Kenya where the Government has until now invested little in infrastructure. It is also expected to link Kenya with Ethiopia and South Sudan, with hopes of deepening trade among the three countries.


But relations between Ethiopia and Eritrea, which have been icy since the latter seceded from Ethiopia in 1993 and blocked Ethiopia’s access to the coastline, have warmed up and could put a damper on Lapsset’s ambition of offering the country access to a port.

Ethiopia has in the meantime heavily relied on Djibouti and hoped that Lamu would give it access to another port, especially to serve the southern regions


Following the truce with Eritrea, however, it will now have access to the port in Asmara, which is in addition to Djibouti. The country also plans to work closely with Somalia in establishing a similar corridor, putting in doubt Lapsset components that originally hoped to service landlocked Ethiopia.

Mega infrastructure

A few months ago, the Lapsset programme seemed a sure thing. The multi-billion-shilling project, started during former President Mwai Kibaki’s administration, was expected to open up northern Kenya as a sure way to rev up the economy.

With leaders from the region, it was agreed that the mega infrastructure project was necessary and for Kenya, it meant a foothold in the populous northern neighbour. But things did not exactly pan out as Kenya envisioned following the unexpected truce between Ethiopia and Eritrea that has radically changed the landscape.

“I must agree that from a geo-economic position, our advantage has been eroding. The loss of the Lake Albert Total Kenya pipeline and marked the beginning of what could easily become a slippery slope. Obviously, Djibouti is a big Loser now that Prime Minister Ahmed and Eritrea’s President Isaias Afwerki have kissed and made up,” said Satchu.

“However, our transit state advantage (we were once the undisputed route to the sea for ourselves and at least 13 countries) is being eroded at speed. Lapsset, for example, was predicated on a lack of options in the Horn of Africa.”

The Lapsset Corridor Development Authority (LCDA) however downplayed such fears even as the chief executive Silvester Kasuku met Ethiopian Marine Authority officials in a bid to secure continued support for Lapsset.

“We have a team led by our chief executive currently in Ethiopia meeting the Maritime Affairs Authority… there should be a detailed report (after the visit),” said LCDA in a statement.

It said the Lamu port will strategically be located to service southern Ethiopia even when the country has access to Eritrean and Djiboutian ports.

“Ethiopia and Kenya have signed bilateral arrangements regarding Lapsset product oil pipeline, road connections, railway and Lamu port. Southern Ethiopia and the Hawassa Industrial Park will be served by these infrastructure projects. Our project will be in overdrive,” said authority.

“Being the second largest port in Africa and serving as a transhipment port, we are eyeing international maritime and logistics trade. We are also setting up special economic zones and industrial parks to ensure that it is our major export port harnessing all resources in the country for export.”

Foreign investments in Kenya might also take a hit. Ethiopia, already a preferred destination by international investors and gobbling up more than half of foreign direct investments (FDI) to East Africa, might see its share grow even more.

A liberal economy, a huge local market, cheap electricity and with almost similar geographical advantages as Kenya, Ethiopia might in the coming years make it harder for other EAC countries to attract international investments.

Three months into the job, Ahmed has spearheaded a raft of political and economic reforms that are setting the country on the path to be Africa’s major powerhouse and economic hegemony.

Safaricom was first to reveal its intent to venture into Ethiopia and capitalise on the reforms. The telco last week said it would take its mobile money service M-Pesa to Ethiopia through a partnership with an Ethiopian bank and Ethio Telecom.

Safaricom said it was in talks with Ethiopian government to introduce the mobile money service in the country.

The Prime Minister later confirmed the report on his Twitter handle. “Ethiopians could soon enjoy the services of M-Pesa from Kenya’s Safaricom,” said Ahmed on Tuesday last week.

M-Pesa would be competing with relatively new entrants in the Ethiopian mobile money space – helloCash and M-Birr. “If confirmed, this is an important positive for Safaricom, and would offer an important upside on M-Pesa revenue growth numbers based on the subscribers achieved in the 100 million market of Ethiopia,” said Standard Investment Bank. “The upside could be higher depending on the negotiated revenue share – but unlikely to be substantially more than 15 per cent of revenue (unless the uptake is low).”

KCB Group on Thursday said it also plans to start operations in Ethiopia.

The two firms are banking on an almost virgin market for growth, where despite the country’s size, its financial services sector is fairly underdeveloped.

Kenyan manufacturers are also looking north, with expectations that the changes will enable them to increase volumes of exports to the country, with some evaluating the possibility of setting up there.

Among the attractions to set up in Ethiopia are cheaper electricity, where users pay Sh6 per kilowatt hour (KWh) on average compared to Sh16 in Kenya. “Kenya has a 2012 Special Status Agreement with Ethiopia whose aim is to improve economic cooperation between the two countries. The agreement gives Kenya access to some restricted sectors in Ethiopia’s economy,” said Standard Investment Bank. “The pace of reforms undertaken in the last three months by Abiy Ahmed is likely to spur more private sector activity in the country.”

Kenyan manufacturers will be looking at growing exports to the country as well as setting up plants on account of the big market as well as low production costs owing to cheap power. Over the last four years, imports from Ethiopia have grown tenfold from Sh278 million in 2014 to Sh2.1 billion in 2017, according to data from the Kenya Bureau of Statistics (KNBS).

Kenyan exports have however remained stagnant and in some instances dropped. Kenya export goods valued at Sh6.9 billion last year, a drop from Sh8.1 billion in 2016.

Modest growth

In 2014, Kenya exported Sh4.9 billion worth of goods to Ethiopia, a modest growth over the four years compared to the rate of growth in imports.

“We are keen to get the market share but the enablers must be there. Ethiopia remains competitive mostly because of their cheap electricity,” said Job Wanjogu head of Policy, Research and Advocacy at the Kenya Association of Manufacturers (KAM). Among the areas that manufacturers are hoping to reap big from include food.

KAM says Ethiopia imports beverages from South Africa yet Kenya could easily meet this demand. Mr Wanjogu added that the Kenyan private sector can invest in Ethiopia, entrenching its position as a key source of FDI in the region. Kenya is a key FDI source for other countries in Eastern Africa.

“If our manufacturers can align themselves, there are huge opportunities. When you look at what they are exporting to Kenya, there are many areas where Kenyan firms have the expertise and comparative advantage. These include pesticide, rubber tyres, prefabricated building materials and lids and caps for containers,” he said.

“There, however, lurks the danger of Ethiopia being a manufacturing powerhouse and overrunning Kenya’s industry.

This is already seen in the growth of imports from the country while Ethiopia still runs a closed economy while exports from Kenya stagnated.”

Opening up to manufacturers might see the balance of trade slowly tilt in favour of Ethiopia.

While setting up in Ethiopia might mean exporting jobs, Wanjogu noted that these would be investments that give Kenya dividends.

Ethiopia-Eritrea handshake renders Lapsset obsolete

MY TAKE
LAPSSET is meant to be a big tembo mweupe!

 

[Geza Ulole]

The politics of ports in the Horn: War, peace and Red Sea rivalries
BY DAVID STYAN
JULY 18, 2018
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How national, regional and international competition over ports is shaping political alliances and enmities across the Red Sea zone.

The Port of Doraleh in Djibouti. Credit: UN Photo/Evan Schneider.

This is the second part of The Thin Red Line, an African Arguments series focusing on dynamics around the Red Sea.

For over 25 years, maritime strategy and port development in the Red Sea and Gulf of Aden appeared relatively static. Eritrea looked inwards, neglecting its coast. Djibouti flourished, lucratively embracing Ethiopia’s trade, overseas investors and foreign military bases. Somalia’s shores became synonymous with piracy, prompting Western and Asian naval manoeuvres, quietly ensuring free passage to the Suez Canal.

But now things may be changing. Ports in the Horn of Africa and Gulf of Aden are suddenly in the spotlight.

Ethiopia’s Prime Minister Abiy Ahmed has repeatedly emphasised port developments on his whistle-stop tour of neighbouring countries, including Somalia, Sudan and Djibouti. The rapprochement between Ethiopia and Eritrea raises the possibility that the mothballed Eritrean ports of Assab and Massawa could be rehabilitated. And just 25km across the Bab al-Mandab straits, the war in Yemen has given nearby African ports new geostrategic significance; the United Arab Emirates (UAE) has been using its base in Eritrea’s port of Assab to besiege and bomb Yemen’s crucial port of Hodeida since mid-June
These developments beg three key questions. Firstly, why are countries in the Horn of Africa developing so many new ports? Secondly, who will finance these projects? And finally, how do control of ports in the Horn relate to the war in Yemen?

Why so many new ports?

The first question is the most straightforward. The Horn needs improved ports and infrastructure to handle the current pace of Ethiopia’s economic growth, on which broader regional integration and prosperity relies. This is why ports have been one of Prime Minister Abiy’s priorities on his foreign visits.

In Djibouti, he called for joint investment in the tiny nation’s ports. In Sudan, he and President Omar al-Bashir presented plans to modernise Port Sudan together. And in Somalia, he announced that Ethiopia would work with Mogadishu to upgrade four Somali ports.

Land-locked Ethiopia is clearly looking to break its heavy dependence on Djibouti, which has handled 90% of its foreign trade since the border war with Eritrea was triggered in 1998. However, it is crucial to understand that Addis is only seeking to diversify its access to the sea – and drive-down freight costs via increased competition – rather than reduce its use of Djibouti. In fact, these trade volumes will continue to grow as Ethiopian, Chinese and Djiboutian authorities have invested heavily in upgrading and enhancing infrastructure capacity along the Djibouti corridor.
Earlier this year, the centrepiece of this strategy – the 750km railway linking Addis Ababa to Djibouti – began full operations.

The $3.4 billion project – financed, constructed and managed by China – has drastically cut the time and cost of shuttling containers between Ethiopia’s capital, its nascent manufacturing export zones, and Djibouti’s ports. The development of prospective oil and gas projects in Ethiopian Ogaden and neighbouring Somali states, which would also be exported via Djibouti, reaffirms the port nation’s ongoing centrality to regional growth and integration.

This relationship is as crucial to Djibouti as it is to Ethiopia. Port transit fees are the mainstay of Djibouti’s exchequer and it has invested substantially in further developing this infrastructure. It constructed vast new container and cargo facilities in the form of the $590 million Multi-Purpose Port (MPP) at Doraleh. Meanwhile, it has begun developing smaller ports too. Tadjourah, is designed to handle Ethiopia’s potash; Damerjog will have facilities to export livestock and liquid natural gas (LNG).

Djibouti’s ambitious “Vision 2035” blueprint for national development sees its harbours as a hub for Asian transhipments, servicing the entire region. As it develops ports and extensive Free Trade Zones with its Chinese partners, the entrepôt nation will remain critical for Ethiopia and prospects of regional economic integration, irrespective of developments in Eritrea or Somalia. It also seeks to maintain its competitively vis-à-vis Kenya’s LAPSSET corridor, which aims to link its coast at Lamu to South Sudan and Ethiopia.

Who’s paying?

The second question this raises is who is paying for all this.

For Ethiopia and Djibouti, the key actor is China.

Djibouti’s major infrastructure initiatives are being financed and spearheaded by Chinese companies. Djibouti’s new multi-million MPP facility at Doraleh, for example, is managed and part-owned by China Merchants Group (CMG). Since 2013, the Hong Kong-based conglomerate has owned 23.5% of Djibouti’s Port and Free Zone Authority (DPFZA) and, in early 2017, bought a minority stake in Ethiopia’s state-owned shipping line, whose home port is Djibouti.

CMG is a leading commercial actor in numerous ports along China’s Maritime Silk Road, which links shipping lanes along Beijing’s global Belt and Road Initiative. As Thierry Pairault has highlighted, CMG’s role in Djibouti mirrors Chinese involvement in ports and logistics elsewhere in Africa.

However, Djibouti is unique in two ways: firstly, it is a telecommunications hub where several key transcontinental submarine fibre-optic cables meet; and secondly, it has been home to China’s first permanent overseas naval base since 2017, when it opened next to the MPP, barely 12km from the US AFRICOM base at Camp Lemonnier.

Chinese companies also have significant stakes in Ethiopia’s oil and gas fields in the Ogaden region. In November 2017, they agreed to construct a 650km oil pipeline to Djibouti and proposed building a LNG refinery at Damerjog.

The other key actor is the UAE.

Until the opening of the China-run MPP in Djibouti last year, all of Ethiopia’s container traffic was channelled through the adjacent Doraleh Container Terminal (DCT). This facility had been managed and part-owned by the Dubai-based company DP World since 2008, but this February, Djibouti unilaterally terminated its contract and nationalised its 33% shareholding. This was the culmination of a fractious six-year legal battle.

DP World is seeking compensation for its lost assets, and until the case is resolved in a London court, the Djiboutian government will have difficulty selling the sequestered shares legally. However, given Abiy’s surprise proposal that Ethiopia and Djibouti hold stakes in each other’s ports and telecommunications, it is possible that Ethiopia may obtain a minority shareholding in Doraleh Container Terminal. This could plausibly be part of a deal involving Chinese loans that could also see CMG gain a bigger slice of DPFZA equity.

While this spat has seen UAE’s long-standing involvement in Djibouti diminish, DP World is simultaneously increasing its footprint in neighbouring ports. In May 2016, the company signed a 30-year deal worth $440 million to develop Berbera port in the self-declared state of Somaliland. In March 2018, DP World scaled back its proposed investment, but announced that Ethiopia would take a 19% stake in the project, alongside its own 51% share and the Somaliland government’s 30%.

The company is also investing in building a highway to link the port to Ethiopia’s border. Meanwhile, the deal has allowed the UAE, which is playing an increasingly central role in the war in Yemen, to develop a naval base alongside Berbera.

The DP World deal is the first large international contract signed by the autonomous government of Somaliland. This has angered the Federal Government of Somalia, which doesn’t recognise the Somaliland government’s sovereignty over Berbera. This has, in turn, fuelled a spat between Somalia and the UAE, leading the latter to withdraw military supplies and advisors and close the hospital it was funding in Mogadishu. The row also compounded allegations that the Somali government is being manipulated by Qatar and its ally Turkey. Qatar reportedly helped finance President Mohamed “Farmaajo’s” election campaign, while Turkey is the Somali government’s leading economic partner.

What are the UAE’s plans for Yemen and the Horn?

The fact that the UAE’s involvement in Berbera has enabled it to set up a naval base there leads us to our third question: how is competition over new container and cargo ports linked to the war in Yemen?

This is the most difficult to answer, but it is clear that as the UAE’s prosecution of the war against the Houthis has intensified, so has their engagement in the Horn of Africa.

Since 2015, the UAE has massed military and naval hardware alongside covert training and detention facilities in the Eritrean port of Assab. Its armed forces are also now present in Berbera in Somaliland (as well as on Socotra island and Yemen’s southern coast).

Is the war in Yemen also the reason that UAE authorities now appear to be investing energetically in diplomatic overtures to both Ethiopia and Eritrea? In May, Prime Minister Abiy visited the UAE. In June, Crown Prince Sheikh Mohammed bin Zayed Al Nahyan of Abu Dhabi (MBZ) returned the favour. During this visit, the UAE’s de facto ruler announced a $1 billion emergency loan to ease Ethiopia’s acute forex shortage and promised further foreign direct investment.

It was then an Emirates plane that ferried the Eritrean delegation to Addis on 26 June. Furthermore, Eritrea’s President Isaias Afewerki was subsequently welcomed to Abu Dhabi prior to Abiy’s arrival and effusive proclamation of peace in Asmara on 8 July.

There are also recent hints from Saudi Arabia and UAE suggesting they may back Ethio-Eritrean rapprochement with substantial funds. Some analysts claim these would be used firstly to rehabilitate Eritrea’s ports of Assab and Massawa. They would then help finance infrastructure linking Assab to Addis Ababa and, far more ambitiously, Massawa to Mekelle, the capital of Ethiopia’s Tigray region.

This may be wishful thinking and/or hubris. Nevertheless, Ethiopia has ambitious, fully-costed long-term infrastructure plans, involving rail, road, air, and sea routes.

Encouraging rival Arab and Chinese investors to compete for a share of the profits generated by integrating Eritrea’s ports back into Addis’s long-term infrastructure plans should be relatively straightforward. However, it is far less certain whether Eritrea’s dilapidated authorities can undertake domestic economic reforms and facilitate competitive tendering for new port and maritime services while fulfilling short-term pledges to the UAE.

It is unclear how realistic the suggestion of Arab finance behind the peace-deal is. It is also impossible to tell whether the UAE’s recent diplomatic activism reflects a medium-term political strategy or whether it is simply an opportunistic response to changes in the Horn and a tactical stop-gap in the bloody stalemate in Yemen.

Does the UAE have a concerted plan in the Horn of Africa? Does it foresee that its military lease of Assab could be transferred to DP World once Yemen’s Houthis have been bombarded or starved into submission?

It is too early to tell, but what is clear is that the ports in the Horn of Africa are proving to be of increasing interest to rival Arab and Chinese investors and that the politics of ports have become central in shaping political alliances and enmities across the region.

The politics of ports in the Horn: War, peace and Red Sea rivalries - African Arguments

 

[Geza Ulole]

RED SEATOP STORY
Beyond the Red Sea: A new driving force in the politics of the Horn
BY ALEX DE WAAL
JULY 11, 2018
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Relations between the Middle East and Horn of Africa have long been neglected. But now they are changing everything.

The UAE’s Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, visiting Addis Ababa. Credit: Crown Prince Court, Abu Dhabi.

This is the first part of The Thin Red Line, an African Arguments series focusing on dynamics around the Red Sea.

The opening of the Suez Canal in 1869 transformed the Red Sea. Overnight, it turned from being a mere strip of water into a vital artery in international maritime trade. To symbolise this newfound importance, the French sculptor Frederic Bartholdi conceived a huge statue to stand at the canal’s entrance. The design, featuring a woman holding a lantern, was inspired by the monumental figures of Ancient Egypt and was to be called The Statue of Progress or Egypt Bringing Light to Asia.

The sculpture, however, was never built. Egypt had borrowed heavily from British banks to build the canal and, under nineteenth century international law, unpaid creditors were permitted to wage war and annex a country in debt. 14 years later, the British did just that and took control of the canal. Bartholdi’s plan for the statue was scrapped, though France got some revenge by donating an identical statue to the United States. It was placed in New York harbour where it became known as the Statue of Liberty.

For the past 150 years, most world powers have seen the Red Sea as little more than an extension of the Suez Canal. In that time, it has seen major wars and turmoil on both its shores yet has only been closed twice. The first time was the 1956 Suez Crisis. The second was the 1967 Six Day War after which the canal remained shut for six years. The Red Sea has also withstood ongoing threats from maritime piracy up to the modern day. In recent years, a multinational task force has had to suppress Somali pirates and tackled a few cases of political piracy by Yemeni groups including Al Qaeda in the Arabian Peninsular and the Houthis (officially called Ansar Allah).

Yet amidst all this, the cargo shipped annually through the narrow straits of the Bab al Mandab at the sea’s southern entrance has not been interrupted. However, it is partly because major powers have been so effective in ensuring this continued flow of trade, now worth $600 billion, that they have tended to neglect the region’s wider politics and security.

The Red Sea has been overlooked by academics and policy analysts too. In his 1986 book, The Africans: A Triple Heritage, Ali Mazrui identified Africa’s Arab-Islamic culture as one of three components that make up the continent’s religious-cultural heritage. He argued that the Sahara desert joins North Africa and sub-Saharan Africa as much as it divides them. But if North Africa is part of the continent, he goes on to ask, why not the Arabian Peninsula too?

Mazrui highlights the historical ties that bind the countries across the two shores before writing: “The most pernicious sea in Africa’s history may well be the Red Sea. This thin line of water has been deemed to be more relevant for defining where Africa ends than all the evidence of geology, geography, history and culture.”

Academic neglect of the region can be seen in the dearth of publications on the topic. Google Scholar yields just 37 scholarly articles when “Red Sea” is searched for alongside “peace” and “security”, compared to 530 for “Persian/Arabian Gulf”. The best book on the politics of the Red Sea is Roberto Aliboni’s The Red Sea Region: Local actors and the superpowers. Published in 1985, it is already well over 30 years old.
The most obvious reason for the scarcity of analysis is that the Red Sea lies between two different regions: the Middle East and Africa. It thereby divides policy focus, academic expertise, and the bureaucracies of foreign ministries and the United Nations. The thin line of water acts as a deep gulf which has proven remarkably hard to cross.

Reviving the Red Sea forum?

In the 1970s and ‘80s, Saudi Arabia and Egypt each made proposals for establishing a Red Sea forum composed of states along the shore. These did not succeed partly because of Cold War divisions and questions over the participation of Israel.

More recently, this proposal has been revived: firstly by the European Union special envoy to the Horn of Africa, who emphasises the importance of the sea lanes to Europe’s economy; secondly by Egypt, which sees the Red Sea and Gulf of Aden as an extension of the Suez Canal. But the same questions arise over who should be part of this forum. Should Israel, a littoral state, be included? What about non-coastal countries with major interests in the Red Sea such as Ethiopia and the United Arab Emirates (UAE)? In response, the African Union (AU) has begun talking of a “Red Sea arena” with a wider span and less formal composition.

The main reason there has never been a common security mechanism for the Red Sea so far is that it has not been needed to protect the trade route. During the Cold War, for example, the US and Soviet Union had a common interest in keeping the sea lanes open. China’s decision to locate its first overseas naval base in Djibouti indicates its strategic interest in the area and suggests it shares the US and Europe’s priorities regarding freedom of navigation.

Now, however, the Red Sea arena is becoming increasingly fractious. Regional powers have become more assertive. In the 1990s, the Gulf’s main political interest in the Horn of Africa related to terrorism. The Saudi-born Osama bin Laden, for example, was based in Khartoum as part of Sudan’s sponsorship of radical Islamist groups. Other Gulf involvement included investment, notably in agriculture, and support for Salafi mosques and schools by private individuals and charities. But in the last decade, Middle Eastern engagement has hugely expanded.

Qatar, Turkey and Egypt awake

The first mover was Qatar, which sought to position itself as a mediator of choice – hosting peace talks for Darfur, and between Eritrea and Djibouti – and as a key sponsor of civil Islamism. It also used the media outlet Al Jazeera to generate an impact far beyond the country’s small size. Qatar’s influence began to wane in 2013, however, when Emir Hamad al Thani abdicated in favour of his son Tamim.

Next to move was Turkey. Before the Syrian war began in 2011, Prime Minister Recep Erdogan had a vision of reviving Turkish leadership throughout the lands of the former Ottoman Empire using the soft power of trade, aid and education. Turkey became the first country to open an embassy in fragile Somalia after its Transitional Federal Government returned and has remained a major supporter of the new government. It is also an active investor in Sudan with plans to open a base at Suakin on the country’s Red Sea coast.

Egypt has also woken up to the Horn of Africa recently after many years of lethargy. In 1995, former president Hosni Mubarak stopped attending African summits after a failed assassination attempt against him in Addis Ababa. Ethiopia used the opportunity of his absence to quietly mobilise the continent around its view that the Nile Waters agreements needed to be revisited. It then took advantage of the turmoil during the 2011 Arab Spring to accelerate the building of its Grand Renaissance Dam. The hydroelectric project will only be useful when waters run through it, but Egypt is fearful that the dam gives Ethiopia the capacity to stem the Nile’s flow.

Egypt only truly awoke to the consequences of its neglect of sub-Saharan Africa in 2013 when it was suspended from the AU, which deemed the military takeover that brought President Abdel Fatah al Sisi to power unconstitutional and hence in contravention of Article 4(p) of the Constitutive Act. Egypt then began a frantic diplomatic effort to return to the AU and was readmitted in 2014.
As well as being on poor terms with Ethiopia, Egypt also has a troubled relationship with Sudan. Khartoum has swung behind Ethiopia on the Nile Waters partly because its own plans to expand irrigation rely on the Renaissance dam. Turkey’s plan to build a base in Sudan also greatly irritates Cairo.

Egypt is therefore seeking to contain Sudan and Ethiopia, and counterbalance Turkey and Qatar. It has cultivated ties with Eritrea, stationing troops there, and is helping finance the government of South Sudan as a counterweight.

Saudi Arabia and UAE: a new driving force

Saudi Arabia has also begun developing its own security doctrine as US involvement in the region has diminished. Its principal fear is Iran and the possibility that it might interrupt the shipment of oil through the Straits of Hormuz to Saudi Arabia’s east. This led the Saudis to develop strategic options in the Red Sea and prepare measures to protect its southern and western flanks.

These plans include a Red Sea fleet and efforts to uproot Iran’s presence in Sudan, Djibouti and Somalia. In 2014, Saudi Arabia pressed those countries to shut down Iranian cultural missions and expel diplomats; they complied. Things then escalated in 2015 when Crown Prince Mohamed bin Salman (“MBS”) began military operations against the Houthi rebels in Yemen on the grounds that they were supported by Iran.

Eritrea and Sudan promptly started competing for Saudi favour. Eritrea expelled the long-standing Houthi mission in Asmara and offered up troops and bases. For Eritrea’s President Isaias Afewerki, this was a welcome escape from the country’s isolation, imposed by Ethiopia. Sudan also offered troops, ultimately supplying 7,000 paramilitaries. For Sudan’s President Omar al Bashir, Saudi patronage meant not only money but advocacy support in persuading the Americans to lift sanctions.

The UAE joined the Saudi-led coalition shortly afterwards. It soon became the senior partner in the air war on Yemen’s coastal strip and opened an air base in Eritrea’s coastal town of Assab. Meanwhile, the UAE company Dubai Ports World aggressively sought control of the ports in Berbera and Bosaso, located in the self-declared republic of Somaliland and the Somali federal state of Puntland respectively. It has also maintained a close political relationship with Egypt.

The UAE’s foreign policy is the most assertive and patronage-based of all the Middle Eastern powers. It is Salafi at home and secular abroad. The key figure is Crown Prince Mohamed bin Zayed (‘MBZ’) of Abu Dhabi, who is supreme commander of the armed forces and shares many of the same concerns as his Saudi counterpart.

These two allies became more assertive in 2017 as they tried to isolate Qatar on the grounds that it was maintaining links with Iran, sponsoring the Muslim Brothers, and supporting opposing factions in Syria. The shock waves of the rivalry rippled across the Horn.

Somalia’s federal government remained neutral. The Saudis appreciated that the weak government in Mogadishu, which gets backing from Turkey and Qatar, was not in a position to choose among its patrons. The UAE, which has close links to the regional governments of Puntland and Somaliland, was less forgiving. Like Somalia, Sudan also equivocated, not wanting to jeopardise either its long-standing political ties to Qatar or its financial dependence on Saudi Arabia.

Recently, the UAE has also found itself invested in Ethiopia as well as Eritrea. Crown Prince MBZ visited Addis Ababa shortly before Prime Minister Abiy Ahmed declared his willingness to talk with Asmara, suggesting that Arab countries can also use their influence to push for peace. Abiy’s recent visit to Asmara and end of the state of war between Ethiopia and Eritrea is an unequivocal cause for celebration. But it also a signifier of a new driving force in the politics of the Horn.

MBZ also pressed Ethiopia to step down from the chair of the East African regional body IGAD, setting the stage for Sudan’s President al-Bashir and Uganda’s President Museveni to corral the warring leaders of South Sudan in Khartoum last month, where they signed a classic marketplace-style deal to divide the proceeds of expanded oil production in return for sharing power. The Khartoum Agreement may yet bring peace to South Sudan, but it is only as strong as the configuration of power from which it was born.

Taking advantage of Middle Eastern interest

Today, the Horn of Africa increasingly resembles the ‘great game’ of 19th century colonial power projection as regional and world powers scramble for naval bases. But the African countries are not passive clients. They have turned their links with the Middle East to their advantage.

Sudan has expertly balanced its relationships, never fully cutting ties with any partner even while succumbing to the pressure or entreaties of another. Eritrea has used its links with Saudi Arabia, the UAE and Egypt to escape from its isolation imposed by Ethiopia. Djibouti has skilfully leveraged its strategic location to avoid over-dependence on any one of its powerful patrons and successfully rebuffed the hegemonic ambitions of the UAE.

Ethiopia meanwhile has sought to balance good commercial and security relations with Saudi Arabia, the UAE and Qatar, all of which have investments in the country and the ports it uses.Somalia, Somaliland and Puntland have also benefited from Arab investment, generally taking advantage of competition between their Middle Eastern sponsors; the Gulf dispute has, however, upset the power balance between the federal government in Mogadishu and the regional governments, particularly Puntland.

A different dangerous kind of politics

In terms of security architecture, there is a chasm between African multilateralism and the types of relationships cultivated by the Middle Eastern countries. Since its establishment in 2002, the African Union has developed a peace and security architecture with shared aims and principles. But no such norms and practices exist in the Middle East.

What the Gulf States have in common instead is that they provide direct financial aid or budgetary support to the leaders of African states in the expectation that it will be reciprocated with personal loyalty. Their politics is transactional and bilateral. Military victory is regarded as a legitimate political objective (as seen in Yemen). Adversaries are excluded from political forums. And militarisation is preferred to democratisation. There is no Arab peacekeeping.

For the Middle Eastern states, the Horn is a second or even third order priority, well below their concerns with Iran, Iraq, Syria and Yemen. In fact, their interest in Africa is an offshoot of these higher concerns. They do not treat African states as equals, not least because African leaders tend to ask for money when they visit.

The African Union has come to recognise that it needs an external policy for the “shared space” of the Red Sea. But it approaches the Middle East from a position of relative weakness. The most dramatic illustration of such an imbalance was Libya in 2011 when the Arab states and NATO brushed aside an African Union initiative for a negotiated solution to the war.

The spurned African strategy for Libya is worth pondering again as individual Middle Eastern states play hard old games of politics and security in the Horn, undermining and displacing Africa’s hard-won peace and security architecture, and imperilling the fragile progress towards stability made in the region.

A momentary “Pax Arabica” may emerge based on Gulf money used to meet African leaders’ urgent cash needs. But any peace agreements that result will be only as good as the transitory alignments of political interests from which they arose. Today, the UAE’s immediate need for a friendly African hinterland as it presses forward with its war in Yemen creates such a configuration. But that is not a foundation for a durable peace and security order.

Beyond the Red Sea: A new driving force in the politics of the Horn - African Arguments


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