AFRICANGLOBE – Egypt and Ethiopia signed 20 trade and other bilateral deals in November, in an effort to recharge their diplomatic relations and triple the value of bilateral trade to US$500m.
Relations between the countries soured when Ethiopia began to construct a mega hydro-electric dam with the capacity to produce 6000MW of electricity on the Blue Nile. Egypt’s massive irrigation fields rely on the Nile for most of their water. Despite Egyptian protests, Ethiopian officials said the dam, known as Renaissance Dam, was 40% complete. The decision overturned decades of Egyptian control over the Nile.
During the tenure of deposed President Mohamed Morsi, Egypt threatened to arm an opposition group in Ethiopia to stop the dam’s construction, an indication of how political tensions could play out — and the danger it could pose to regional security.
“The most important outcome of the renewal of diplomatic relations is that tensions will ease and that means peace,” says Hassan Nandwa, law and Islamic studies lecturer at Zanzibar University.
Analysts say Egyptian president Abdel Fattah El-Sisi wants to re-establish Egypt’s position in regional geopolitics after three years of political conflict.
“Egypt is reawakening. The country needs El-Sisi to regain what it has lost in the past three years,” says Alphonce Mwenda, a lecturer at Nairobi’s School of Diplomacy.
“The political uncertainty in Egypt was slowly eroding its place as a key regional trading partner. Its refusal to co-operate on the Nile River agreement, and the dispute with Ethiopia, had the potential to totally break off relations with the East Africa region states. But it seems the country has rethought its actions,” Mwenda says.
The bilateral deals are aimed at enhancing co-operation in trade and investment, reviving diplomatic training, and agriculture, industry, mining and energy links, strengthening cultural ties and intensifying relations in the fields of education, health and women’s affairs.
“Both sides have agreed to support and enhance private-sector engagement and to establish an investment working group,” says a communiqué released after the meeting in Addis Ababa in November. The value of trade between the two countries is US$165m, based on 2013 statistics from Egypt’s industry & foreign trade ministry. The trade is in favour of Egypt by 77,5%.
“There is an opportunity to increase this trade value to $500m,” Egypt’s industry & foreign trade minister Mounir Fakhry Abdel Nour says.
The Ethiopian-Egypt Business Forum has been established to drive the agenda of the private sector.
Ethiopian Chamber of Commerce president Solomon Afework says Ethiopia’s private sector is well positioned to benefit from the regional trade. He says the country has enjoyed “tremendous” recent economic success which has eased the cost of doing business. It has resulted in a more developed manufacturing sector — Ethiopia has, for example, an automobile production sector and a shoe-making industry .
The trade imbalance is explained by Ethiopia’s export of primary products like meat and coffee to Egypt. Egypt exports manufactured products to Ethiopia, including chemicals, fertilisers and machines.
Egyptian foreign minister Sameh Shoukry says the improvement of relations is being fast-tracked.
“Since I have taken office in June this year, I have come to Addis Ababa almost every month. This is upon a directive of both presidents to maintain the momentum of our relations,” he says.
The renewal of diplomatic ties raises the spectre of Egypt finally agreeing to proposals to share equitably the resources of the Nile River Basin.
A colonial agreement brokered by the British in 1959 allowed Egypt and Sudan a huge share of access to the Nile waters to the disadvantage of countries that are further upstream.
The countries have sought to rectify this anomaly under the Nile Basin Initiative, a regional intergovernmental partnership that seeks to develop the Nile in a co-operative manner. Its members are Burundi, the Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, South Sudan, Sudan, Tanzania and Uganda.
The initiative resulted in the Nile Basin Co-operative Framework Agreement. However, Egypt has declined to ratify it.
“Egypt is still refusing to discuss it. We call on Cairo to reconsider its position and I really hope it does,” says Ethiopia’s minister of water, irrigation & energy, Alemayehu Tegenu.
By: Steve Mbogo
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