Egypt, Ethiopia clinch dam agreement as Riyadh’s Red Sea initiative moves forward

The United States, China, Japan, Turkey, Italy and France are “extra regional” powers that have established a presence in the Red Sea and Gulf of Aden.
Sunday 26/01/2020

DUBAI - Egypt, Ethiopia and Sudan reached a preliminary agreement on the filling and operation of what will be Africa’s biggest hydro-electric dam project.

Ethiopia, which is building the Grand Ethiopian Renaissance Dam (GERD) at a cost of $4 billion and which is approximately 80% complete, has long-running disagreements over the project with Egypt, which fears the dam will compound its water insecurity issues and strike an economic blow to its lower-income population.

The project has hung over relations between Egypt and Ethiopia for years. Both sides have remained at loggerheads, giving rise to fears the project could draw the two neighbours — both key US allies in Africa — into a military conflict.

Ethiopia is hoping to start electricity generation from the dam as soon as possible with its construction at a stage at which filling can begin on short notice. The preliminary agreement will allow Ethiopia to fill the dam in stages during the area’s wet season. However, a final agreement, which is being brokered by US Treasury Secretary Steven Mnuchin and World Bank President David Malpass, is contingent on technical negotiations to iron out details.

The GERD was constructed on a tributary known as the Blue Nile that contributes more than 80% of the Nile’s water, which supplies Egypt with 90% of its water. Egypt, a country of nearly 100 million, worries that a drop in water flow could affect its electricity generation from the Aswan Dam, costing it hundreds of millions of dollars.

On the other hand, nearly two-thirds of Ethiopia’s 108 million people do not have access to electricity and the GERD promises to not just correct that with 6,000 megawatts of electricity generation capacity but to export surplus to neighbouring countries, including Sudan, South Sudan, Kenya, Djibouti and Eritrea.

Egyptian and Ethiopian officials hope to finalise an agreement by the end of January after they were unable to deliver the finer details of a deal by a January 15 deadline.

Officials described fundamental differences between the Egyptian and Ethiopian sides as persisting but the process holds growing promise and, in a much-desired development, talks eased tensions between the two sides. An amicable resolution of this and warming of relations between Egypt and Ethiopia, though a complicated task, would prove a huge boon for the region’s political and economic outlook.

Saudi Arabia’s push for a Red Sea bloc moved forward as representatives of eight countries met in Riyadh to sign a charter to establish the Council of Arab and African States bordering the Red Sea and Gulf of Aden.

Saudi Arabia introduced the initiative just more than a year ago but the signing of the charter overcame important challenges by bringing together countries that have not always seen eye to eye on regional issues. The council brings together Egypt, Sudan, Yemen, Djibouti, Somalia, Jordan and Saudi Arabia.

The Red Sea corridor spans 2,250km at its widest point and is a key waterway that separates the Mediterranean from the Indian Ocean, linking two strategic choke points in global maritime trade — the Bab el Mandeb Strait and the Suez Canal, through which about 10% of global trade and 4 million barrels of oil pass daily.

The United States, China, Japan, Turkey, Italy and France are “extra regional” powers that have established a presence in the Red Sea and Gulf of Aden through various bilateral arrangements. Yet, despite the growing international interest in the Red Sea and Gulf of Aden, relatively limited trade takes place between the countries overlooking the waterways despite their combined population of 230 million and land mass covering an area larger than the European Union.

The Horn of Africa and Yemen have suffered from long-standing political instability, ethnic conflict and the menace of illegal activities those conditions typically incubate. Drug and human trafficking together with arms smuggling remain the region’s most pressing challenges in the years ahead and will represent the council’s greatest priorities.

Saudi Arabia accounts for nearly two-thirds of the combined GDP of the Red Sea’s and Gulf of Aden’s littoral countries but the potential for deeper economic integration and the growth that could unlock offers great promise. It is estimated that, by the end of the next decade, Africa will account for as much as one-quarter of the world’s consumer market.

Saudi Arabia’s Vision 2030 and its $500 billion NEOM project at the northern tip of the Red Sea needs a secure wider environment in the Red Sea and the Gulf of Aden to deliver dividends to both the kingdom and its immediate neighbourhood.

Through the council, Riyadh will hope to put a lid on growing influence from regional rivals, in particular Turkey and Iran, which have sought to expand their own footprint in the Red Sea and Gulf of Aden regions in recent years.