Ethiopia Using the Nile to Become a Regional Power in Northern Africa

Ethiopia’s effort to build the largest hydropower plant in Africa, a sprawling 1,780-meter dam along its boarder with Sudan, has disrupted local alliances, altered age-old treaties and reshuffled the balance of power in the region.

Construction began in 2012 on the 6,000-megawatt Grand Ethiopian Renaissance Dam, a $4.02 billion project built on the Blue Nile that will create a 70 billion cubic meter reservoir and is expected to start producing energy as early as next year.

However, Egypt has long protested the dam’s construction and last year threatened to use military action to halt the project. Egypt, a dry country, depends on water from the Ethiopian Plateau, which flows into the Nile, for 85 percent of its needs.

Ethiopia insists that the project will not significantly reduce Egypt’s water supply. However, control of the dam’s reservoir, which initially was supposed to only hold 14 billion cubic meters of water, would essentially give Ethiopia the power to “turn off the taps” when it comes to allowing the Blue Nile’s water to flow down to Egypt and Sudan.

Egypt, Ethiopia and Sudan have met five times to discuss the dam. So far, the countries have been unable to reach an agreement.

Egypt initially contested the dam on the grounds it violates a 1959 treaty with Sudan that gives Egypt the rights to two-thirds of the 84 billion cubic meters of water that flows through the Nile annually. However, Ethiopia and other upstream African countries rejected the treaty because they were not signatories to the agreement.

In 2010, six of the upstream countries (Ethiopia, Uganda, Kenya, Tanzania, Burundi and Rwanda) signed an agreement challenging Egypt’s access to the Nile. Under the new agreement, water projects on the Nile would have to be approved by the majority of states that depend on the river. Prior to this agreement, countries that signed onto the Nile Basin Initiative, a partnership of nine African countries, would need unanimous approval in order engage in projects that could affect the water use of the other countries.

The upstream countries passed the agreement so they could engage in water-related projects without needing permission from Egypt.

The diplomatic scuffle is about more than water rights or electricity. The dam represents a reorganizing of power in the region. As Nader Noureddin, a professor of agricultural resources at Cairo University, wrote in Al-Ahram Weekly:

"Ethiopia didn’t care about either electricity or irrigation. What it wanted was to have a dam large enough to keep Egypt and Sudan under its thumb. And while the Sudanese cannot afford to pick a fight with Ethiopia, on which they depend for mediating many unresolved issues with the fledgling state of South Sudan, it has been up to Egypt to speak out."

Indeed, Egypt is consolidating power south of the plateau. Last week, South Sudan and Egypt signed an agreement to create water and technical projects in South Sudan, worth $26.6 million.

The standoff over the dam is part of a larger struggle between Ethiopia and Egypt for economic supremacy in the region. Egypt, once a dominant power in North Africa and the Middle East, was weakened economically after the revolution that occurred during the Arab Spring. Since being elected, Egyptian President Abdel Fattah el-Sisi has engaged in numerous projects to rebuild the economy and encourage foreign investment.

Last week, Egypt’s central bank sold more than $1.7 billion in dollar-denominated treasury bills to local banks and foreign investors in order to balance its budget and finance infrastructure projects. Egypt has already committed $8 billion to add a new lane to the Suez Canal in the hopes that the project will increase shipping traffic on the waterway and benefit the economy.

Meanwhile, Ethiopia is courting its own foreign investors. The country announced this week that it will begin selling dollar-backed bonds for the first time and the government plans to spend $20 billion developing its power infrastructure.

Ethiopa’s economy has grown by 9.3 percent in the last four years, faster than any other African country. The Grand Ethiopian Renaissance Dam is one of many power projects underway in Ethiopia. Once the work is completed, Ethiopia expects it will be able to reduce its trade deficit by $8.5 billion and earn $2 billion a year by exporting power to nearby countries. 

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