Renaissance Dam - Screenshot from Google Maps Renaissance Dam - Screenshot from Google Maps

Opinion:Can boycotting Qatar yield Ethiopia’s Dam talks in Egypt’s favor?

Fri, Jul. 21, 2017
CAIRO – 21 July 2017: Saudi Minister of Foreign Affairs Adel Al-Jubeir will visit Ethiopia during the 29th African Summit this July in Addis Ababa. The visit is happening amidst a boycotting crisis where Saudi Arabia, Egypt, Emirates and Bahrain have boycotted the Qatari regime. This may be a potential opportunity to push forward the negotiations about the Renaissance Dam between Egypt and Ethiopia.

The alliance between Egypt, Saudi Arabia and Emirates against the Qatari regime may contribute to further pressures on Addis Ababa, especially given the investment and economic powers enjoyed by Riyadh and Abu Dhabi in Ethiopia. Therefore, Egypt may ask its Gulf allies to cooperate with it to solve the Renaissance Dam crisis, based on the cooperation needed in a multi-party alliance when it comes to shared issues.

This potential opportunity depends on the ability of Egypt’s Gulf alliance to influence the Ethiopian decision-maker, given the close partnerships in areas of politics, economy, and the military, on top of huge humanitarian and social aids.

While all these methods are important, the economic method is the most effective in this regard, especially that Gulf countries are the largest economic partner to Ethiopia. It is noteworthy that Ethiopian economy is based on agriculture and animal production, and that Gulf investments dominate these two sectors—while the word is out that there is also unannounced Ethiopian oil. This is all on top of the large number of Ethiopian workers in the Gulf, who greatly contribute to the Ethiopian Gross Domestic Product (GDP).

Even though Ethiopia and its partners intentionally did not disclose official statistics, all indicators show that the backbone of the Ethiopian economy is in the hands of the Gulf. The following points emphasize this.

Saudi-Ethiopian economic relations

Databases of the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO) and the World Bank indicate the expansion of trade exchange between Ethiopia and Saudi Arabia during the past decade. The only exception was 2009, which was low due to the global economic recession.

According to the latest UNCTAD estimates in 2016, the value of Ethiopian exports of goods to Saudi Arabia is approximately half a billion dollars, whereas the value of its imports from the Kingdom is around 301 million dollars. Saudi investors get the lion’s share of direct economic investments, particularly the businessman Mohammed Hussein Al-Amoudi who is a Saudi of Ethiopian roots.

Cement factories built by Al-Amoudi in Ethiopia are considered the main source of cement used in the construction of Saudi dams. His companies also hold a partnership with the Italian Salini company, where the big bulk of productions of two cement factories are exported to build the Renaissance Dam. Contracts are also signed with intermediary corporations he owns to provide logistical services to the project.

According to diplomatic statements made by Marawan Badry, Consul General of Ethiopia in Saudi Arabia, the size of Saudi investments in Ethiopia reached $13.3 billion in many fields, particularly agricultural production.

Emirati-Ethiopian economic relations

The commercial exchange between the two states has witnessed a significant rise during the past decade and was only negatively influenced in 2009. According to the latest UNCTAD data of 2016, the volume of Ethiopian exports to Emirates reached approximately $460 million, whereas the value of its imported goods from Emirates is approximately $160 million.

In addition, Emirates News Agency (WAM) said that the volume of Emirati investments in Ethiopia has reached 3 billion Emirati dirham, mostly in the sectors of tourism and hospitality, aluminum manufacturing, agriculture and animal production.

Third, Bahraini-Ethiopian economic relations. Commercial exchange between the two countries has been rising and falling throughout the past decade, but for the last two years, it has been on the rise. According to the UNCTAD of 2016, the volume of Ethiopian goods exports to Bahrain reached about $141 million, and the goods imports from Bahrain reached $196 million.

Potential challenges

The greatest challenge in this case is what Qatar might do in light of the boycott, as it could employ all its investments and aids in Ethiopia, to compel Addis Ababa not to cooperate with Egypt, and to continue more promptly with the construction of the Renaissance Dam.

The reason why it is likely for Qatar to use this method is that it has a strong cooperative relationship with Ethiopia since 2012 in different fields, but primarily the economic field. This is especially true after 4 years of severed ties between the two countries, based on accusing Doha of supporting Eretria.

In addition, reading about and analyzing the volume of commercial exchange between the two countries according to the UNCTAD indicate that this volume is on the rise, even if it witnessed a decline in 2016. It still was constantly on the rise for four years before that. Add to this the large and various Qatari investments in Ethiopia.

In the final analysis, we can say that it is likely for the Gulf countries allied against Qatar to play a role in pushing the Renaissance Dam crisis forward and in Egypt’s interests, especially with how totally pragmatic the Ethiopian regime is, as it remained neutral during the Gulf crisis.

Original story was published in Arabic in Al Siyassa Magazine

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