Indian Council of World Affairs

Towards the beginning of the year 2024, the Horn of Africa region witnessed a diplomatic stir as, on January 1^st 2024, Ethiopia signed a Memorandum of Understanding with a breakaway region of Somalia, the Somaliland. The deal provided landlocked Ethiopia with 20 Kilometers of direct sea access alongside the Somaliland coast for over the next five decades where it plans to construct a naval base[i]. In exchange, Somaliland will receive stakes in the state-run Ethiopian Airlines and its formal recognition as a sovereign independent state. According to the Ethiopian President, “Gaining access to sea is an existential issue and Red Sea is Ethiopia’s natural boundary”[ii]. However, the MOU sparked tensions between Ethiopia and Somalia, as Somalia considers the self-governing region of Somaliland a part of its territory and any international recognition of Somaliland as an attack on Somalia’s sovereignty. Somalia has, therefore, opposed the deal and called for its immediate termination.  This announcement has come at a critical juncture when the region is already witnessing a rise in the number of Houthi attacks in the Red Sea as a result of which maritime trade and commerce in the region have been reduced to 80%[iii]. 

Thus, it becomes important to understand what significance this deal holds for Ethiopia and Somaliland and its impact, as well as the unfolding regional dynamics and global responses.

Significance of the Deal for Ethiopia

Ethiopia’s deal with Somaliland was a way to provide it with access to the Red Sea as Ethiopia has a long-drawn ambition to diversify its access to the Red Sea. Moreover, economic concerns are also the fundamental driver of President Abiy’s decision to secure the deal, given that in the past couple of years the Ethiopian economy has struggled due to the COVID-19 pandemic and the two-year Tigray war, resulting in the economic sanctions[iv]. As a result of this, Ethiopia has to make multiple debt relief requests but yet it defaulted on the payments of bonds in 2023.

The Red Sea is an essential trade route that connects East Africa to the Middle East, Europe and Asia. It also facilitates trade and investment as it is a key maritime gateway for shipping and trade and provides significant opportunities for growth and stability for the East African region. However, when Eritrea seceded from Ethiopia in 1993 after a three decade-long war, Ethiopia lost its direct access to the Red Sea and became one of the largest landlocked states in the world. Ethiopia continued to rely upon Eritrean ports like Massawa and Assad for its trade until both states severed their ties in 1998 when they fought a border war, and this has severely affected Ethiopia’s trade, investment, transport and economy. Since then, Ethiopia has relied upon Djibouti’s port as its main trade conduit, however, it annually pays around 1.8 billion dollars in port fees to Djibouti as it manages 95% of trade from Ethiopia which accounts for 76% of its GDP. In the year 2022, Ethiopia requested the government of Djibouti to reduce this fee, but the latter denied it since its economy depends upon the rents and services secured from the Ethiopian shipping fees.[v]

Somaliland is strategically located on the southern coast of the Gulf of Aden. The Ethiopian government considers that if Ethiopia gains access to the Red Sea through this deal it might help it to diversify its trade routes, reducing its reliance on Djibouti, making its trade more resilient and thereby enhancing its economic stability. This would also help Ethiopia to seek stronger ties with the Red Sea States, like Saudi Arabia and the UAE. According to the Ethiopian government, “It shall pave way to realize the aspiration of Ethiopia to secure access to the sea…[vi].” Although, in 2005 Ethiopia and Somaliland signed an agreement over the use of Berbera port but due to the lack of logistical support on the part of Ethiopia this agreement was never implemented. In 2017 as well, Ethiopia was granted 17 % shares in the Berbera port as a part of the agreement with Emirati Logistics Management Company. While, this is not the first time that Ethiopia has signed the agreement with Somaliland over the use of its port, Somalia’s strong reaction now is because Ethiopia intends to give recognition to Somaliland, the breakaway region of Somalia, as a Sovereign independent state.

Significance of the Deal for Somaliland

Somaliland considers that it has much to gain from the deal. There are major socio-economic challenges faced by Somaliland, given that it has a weak economy with few opportunities for foreign investments. Somaliland has a GDP of approximately 2 billion dollars, which is the fourth lowest in the world, which it majorly receives from remittances.[vii]

Somaliland has operated as a functional de facto state ever since declaring its independence from Somalia in 1991, although it still lacks international recognition. Somaliland’s government maintains that its thrust for sovereignty is premised upon the fact that it meets all requirements of statehood as outlined in the international law. The government of Somaliland argues that its position of independence is premised upon the principle of respecting colonial-era borders, which is also in accordance with the African Union’s (AU) position of upholding the sanctity of colonial borders to avoid territorial disputes and conflicts and therefore AU must recognize Somaliland’s borders as they were at the time of its brief period of independence[viii]. Somaliland lacks international recognition which restricts its participation in the international forums for instance the United Nation’s membership. Somaliland’s government maintains that a formal recognition of Somaliland as a sovereign independent state would unlock its economic opportunities and access to protections under international law. Until now, only Taiwan has recognized Somaliland as a sovereign, independent state. According to Somaliland’s Foreign Minister Essa Kyad, “Recognition is what we have been fighting for all this time and it is the most important thing that we can offer to the people of Somaliland.”[ix] The deal will allow Somaliland to attract more than 87 lakh tons of Cargo per year and will result in Somaliland becoming a logistical hub in the Gulf of Aden.[x]

Somalia’s Position and Impact on the Region

The deal is going to impact the dynamics of Somalia’s ties with its two neighbors, Ethiopia and Somaliland, with which it has a history of intra-regional tensions and conflicts. The Somalian government maintains that Somaliland is an autonomous state of Somalia and that only the Somalian government has the right to lease its land to foreign powers.

Somalia perceives that the deal is a hostile violation of its sovereignty. The Somalian government maintains that by far this is the most outrageous attack on Somalia’s sovereignty, and in response to this, Somalia has recalled its Ambassador from Ethiopia and requested African Union and UN to convene upon the issue[xi]. According to the President of Somalia, “As a government we have condemned and rejected all illegal infringement of Ethiopia into our national sovereignty and territorial integrity…. Not an inch of Somalia can or will be signed away by anybody[xii]”. The Somalian government further maintains that there is no room for dialogue with Ethiopia and has also issued a threat of war if Ethiopia continues with the deal. The agreement has resulted in estranged ties between Somalia and Ethiopia. In fact, Somalia had previously attempted to reconquer the border region of Ethiopia, Ogaden, under the reign of Said Barre.[xiii] However, the possibility of an armed confrontation between Ethiopia and Somalia is less likely as Ethiopia’s, military spending is three times higher than Somalia and secondly, Ethiopia is a part of the African Union Transition Mission in Somalia (ATMIS) coalition fighting Al Shabab in Somalia[xiv]. The rupture of diplomatic ties between Somalia and Ethiopia might have an adverse effect on the region. Ethiopia has currently stationed around 4000 troops in Somalia as a part of the African Union’s Transition mission in Somalia and has deployed around 1,000 soldiers as a part of the bilateral agreement with Somalia to combat the Al Shabab since 2023.  Ethiopia’s’ withdrawal might severely affect Somalia’s plan to oust Al Shabab’s safe havens in southern Somalia[xv].

Besides, the deal was signed at a time when Somalia and Somaliland agreed to resume dialogue sponsored by Djibouti on December 28, 2023. Both Somalia and Somaliland had decided to resume negotiations and avoid policies that could disrupt their bilateral relations. The two sides had agreed to focus on engaging in dialogues with a focus on the underlying issues and to chart out a roadmap to establish peace and stability in the areas affected by conflicts in the regions, such as the Cyan and Saanag regions of Somaliland.[xvi]

The Regional Dynamics

The Ethiopia-Somaliland deal will likely have a ripple effect, since it has unleashed new tensions in a region already torn apart by war and terrorism. The regional organizations like African Union, Arab league and IGAD have expressed their concern over the contestation between Ethiopia and Somalia and its impact on regional stability. They have requested both Ethiopia and Somalia to exercise restraint and to engage in a meaningful dialogue in order to find a peaceful resolution. However, the Somalian government has by far refused to engage in any dialogue with Ethiopia until it retracts the deal. These regional organizations have been concerned that these dynamics will lead to another nexus of regional instability in Horn of Africa or will set the precedent for the secessionist movements in future. In this context it is important to take note of the regional dynamics at play, involving Ethiopia’s neighbors like Egypt, Djibouti and Eritrea.

Egypt has condemned the deal and called it a clear violation of Somalia’s sovereignty.[xvii] Egypt’s support for Somalia’s territorial integrity is a result of its troubled relations with Ethiopia over the Grand Ethiopian Renaissance Dam and Egypt considers it an opportune moment to build on its existing political relationship with Somalia, neighbor of Ethiopia. This aligns with Egypt’s interest to maintain regional stability for ensuring security of the Suez Canal. Suez Canal is a primary source of revenue for Egypt, amounting to a revenue of around 9 billion dollars per year, given that Red Sea is a key conduit to the Suez Canal. The Ethiopia Somaliland agreement would further destabilize the Red Sea region, which is already witnessing an increasing number of Houthi’s attacks.  According to the Egyptian President, “We will not allow anyone to threaten Somalia or infringe upon its sovereignty [xviii].

Besides, if this deal is honored Djibouti will witness a decline in the commercial transit in addition to losing Ethiopian annual fees given that the revenues from port and foreign military bases are Djibouti’s primary source of income. Djibouti is discontented with the fact that Somaliland has become Ethiopia’s preferred maritime and commercial partner and the deal will result in the decline of around 2 billion dollars rent which Ethiopia used to pay to Djibouti every year for facilitating about 95% of Ethiopia’s trade through its ports. Thus, the deal will result in the increasing tensions between Djibouti and Somaliland, given that the deal will adversely affect Djibouti’s economy which is already at a risk because of the Red Sea crisis.

Eritrea has also rejected the Ethiopian claims and is supporting Somalia as far as the Ethiopia Somaliland Deal is concerned given that after gaining independence from Ethiopia after a fierce conflict, Eritrea perceives, Ethiopia- Somaliland port deal as a potential threat to its territorial integrity. The deal could reignite the tensions between Ethiopia and Eritrea as Somalian President paid a visit to Eritrea for security talks, just a few days after the Ethiopia Somaliland agreement was signed. As far as the security talks are concerned both sides focused upon strengthening bi-lateral relations and addressed regional and international security concerns.

Role of External Players

In addition, the involvement of the external actors like Turkey and UAE in the region would further escalate the regional tensions.

The UAE, supported the agreement between Ethiopia and Somaliland and has maintained that the deal will strengthen the security, economic and political partnership between Ethiopia and Somaliland and strengthen Ethiopia’s position as a powerful player in the Red Sea region. The UAE has played a major role in developing port Berbera in Somaliland given that in 2016, DP World, a Dubai based firm made an investment of around 442 million dollars to develop port Berbera into a regional trade hub. The UAE was also interested in building a military base near port Berbera that it could use to fight the Houthis.  In 2019, DP World sold 19 % of the stakes of port Berbera to Ethiopia. Thus, it has key strategic interests in the region.[xix]

Turkey maintains strong diplomatic, economic and military relations with both Somalia and Ethiopia. However, as far as the Ethiopia– Somaliland deal is concerned, it has thrown its weight behind Somalia. On February 8, 2024, Turkey has inked a defense pact with Somalia, at a time when the region is witnessing rising tensions between Ethiopia and Somalia over the Ethiopia Somaliland deal. According to the defense agreement, Turkey will provide training to Somali naval forces and will guarantee protection of the Somalian coastline and its maritime borders from any threat. Somalia considers that, with UAE providing its support to Ethiopia-Somaliland deal, the Turkey Somalia defense agreement will strengthen Somalia’s position as far as its dispute with Ethiopia is concerned. Also, Turkey has signed a similar agreement with Djibouti in January this year. Thus, Turkey’s defense agreement with Somalia is not only about backing Somalia against Ethiopia but also about establishing a Turkish Naval base on Somalia’s Red Sea coast as this will allow Turkey to increase its influence in the region.

Global Responses

The international community has been concerned about the rising tensions in the Horn of Africa region with the signing of two historic deals that is Ethiopia Somaliland agreement and Somalia- Turkey defense deal. 

The global responses are largely in line with the Somalian response to the Ethiopia Somaliland deal, which states that the deal violates Somalia’s sovereignty and must be declared null and void.

The United Nations Security Council convened a meeting against the backdrop of the rising contestation between Ethiopia and Somalia at Somalia’s request. The UNSC Resolution reaffirmed that Somaliland is an integral part of Somalia and declared the MOU signed between Ethiopia and Somaliland null and void. It maintained that this contestation between Ethiopia and Somalia has threatened the security of the Red Sea region. It has also requested both Ethiopia and Somalia to de-escalate the tensions and engage in constructive dialogue.

The USA has condemned the deal and has been concerned about the impact that it will have on regional peace and stability given that it could hinder the counter terrorism measures in the region. According to an official statement made by the government, “We support Somalia’s sovereignty and its territorial integrity and it’s got to be respected… The potential recognition of Somaliland by Ethiopia threatens to disrupt the fight against al-Shabab[xx].” As of now the Biden administration has deployed around 450 troops in Somalia to combat al-Shabab and is also engaged in providing training and support to the Somalian army.

Although the UK has expressed serious concern over the rising tensions in the region and has asked both the parties to de-escalate the tensions and has reaffirmed its support for Somalia. According to the British Embassy in Somalia, “UK is concerned by the escalating tensions in the Horn of Africa. We affirm our full respect for the sovereignty and territorial integrity of the Federal Republic of Somalia.”[xxi]

Conclusion 

Presently, the Horn of Africa region is fraught with uncertainty. Somalia’s strong response to the deal given that it has refused to engage in a dialogue with Ethiopia until it backs out from the deal and with Ethiopia on other hand not willing to give up on the deal and the signing of the Turkey Somalia defense agreement has raised serious concerns about the stability of this region. Although the possibility of an open conflict is less likely but the deal has given rise to new tensions which can have a destabilizing impact.

*****

*Dr. Gauri Narain Mathur is a Research Fellow at the Indian Council of World Affairs.
The views expressed are personal.

Endnotes

[i] “Don’t Do it : Somali President warns Ethiopia over Somaliland Port Deal’. Al Jazeera. 23 January 2024. https://www.aljazeera.com/news/2024/1/23/dont-do-it-somali-president-warns-ethiopia-against-somaliland-port-deal

[ii] Alex Dwal. ‘Ethiopia PM Abiy Ahmed Eyes Red Sea Port Inflaming Tensions’. BBC News. 8 November 2023 . https://www.bbc.com/news/world-africa-67332811

[iii] Sharda Surbhi. ‘ Houthi Attacks: The High and Low Trade Impacts of Red Sea Disruptions on India’. The Economic Times. 21 February 2024.  https://economictimes.indiatimes.com/news/economy/indicators/houthi-attacks-the-high-and-low-trade-impact-of-red-sea-disruption-on-india/articleshow/107884166.cms?from=mdr

[iv] ‘ Ethiopia Somaliland reach Historic Agreement on Access to Port’. Modern Diplomacy. # January 2024. https://moderndiplomacy.eu/2024/01/03/ethiopia-and-somaliland-reach-historic-agreement-over-access-to-ports/

[v] Zehcharias Zelalam. ‘Ambiguous Ethiopia’s Port Deal fuels uncertainty over Somaliland’s Statehood.’ Al Jazeera.4 January 2024. https://www.aljazeera.com/features/2024/1/4/ambiguous-ethiopia-port-deal-fuels-uncertainty-over-somaliland-statehood

[vi] Harun Maruf. ‘Ethiopia Secures Access to Sea After Deal with Somaliland.’ VOA Africa. 2 January 2024. https://www.voanews.com/a/ethiopia-secures-access-to-sea-after-deal-with-somaliland/7420589.html

[vii] Ezra NNKO. ‘ Ethiopia Somaliland Deal: A Slap in Face of Somali’. Modern Diplomacy. 22 January 2024. https://moderndiplomacy.eu/2024/01/22/ethiopia-somaliland-deal-a-slap-in-a-face-for-somalia/

[viii] Jethro Norman. ‘Somaliland at the Centre of Rising Tensions: In the Horn of Africa’. DIIS Policy Brief.25 January 2024. https://www.diis.dk/en/research/somaliland-the-centre-of-rising-tensions-in-the-horn-of-africa

[ix] Fred Haratar. ‘ We Are Ready for a War: Somalia Threatens Conflicts with Ethiopia over Breakaway Region’. The Guardian. 13 February 2024. https://www.theguardian.com/world/2024/jan/13/we-are-ready-for-a-war-somalia-threatens-conflict-with-ethiopia-over-breakaway-region

[x] May Dawich and Jutta Bakonyi. ‘ Waiting for Ethiopia: Berber Port upgrades raises Somaliland’s hope for trade’. The Conversation.24 August 2022. https://theconversation.com/waiting-for-ethiopia-berbera-port-upgrade-raises-somalilands-hopes-for-trade-188949

[xi] ‘ The Ethiopia Somaliland Berber Port Deal: A New Horizon of Africa Hotspot’. Emirates Policy Center. 1 February 2024. https://epc.ae/en/details/brief/the-ethiopia-somaliland-berbera-port-deal-a-new-horn-of-africa-hotspot

[xii] Zehcharias Zelalam. ‘Ambiguous Ethiopia’s Port Deal fuels uncertainty over Somaliland’s Statehood.’ Al Jazeera.4 January 2024. https://www.aljazeera.com/features/2024/1/4/ambiguous-ethiopia-port-deal-fuels-uncertainty-over-somaliland-statehood

[xiii] David Ehl. ‘Ethiopia and Somalia: Conflict Brewing Over Port Deal’. DW. 8 January 2024. https://www.dw.com/en/ethiopia-and-somalia-conflict-brewing-over-port-deal/a-67889364#:~:text=Ethiopia's%20agreement%20with%20breakaway%20region,an%20attack%20on%20its%20sovereignty.

[xiv] The ATMIS is the African Union Transition Mission in Somalia which is a multi-dimensional mission (military, police and civilian) authorized by the African Union to help Somalia combat Al-Shabab militants.

[xv] Liam Karr.’ ‘Ethiopia Somaliland Port Deal Strains Horn of Africa Counterterrorism Cooperation and Alters Red Sea Geopolitics.’ Critical Threats. 4 January 2024. www.criticalthreats.org

[xvi] ‘ The Ethiopia Somaliland Berber Port Deal: A New Horizon of Africa Hotspot’. Emirates Policy Center. 1 February 2024. https://epc.ae/en/details/brief/the-ethiopia-somaliland-berbera-port-deal-a-new-horn-of-africa-hotspot

[xvii] ‘Egypt El-Sisi Says Cairo will not Allow any Threat to Somalia.’ Aljazeera. 21 January 2024. https://www.aljazeera.com/news/2024/1/21/egypts-el-sisi-says-cairo-will-not-allow-any-threat-to-somalia

[xviii] Amr Emam. ‘Why Ethiopia’s Red Sea Ambitions Unnerve Egypt.’ Al Majalla. 18 January 2024. https://en.majalla.com/node/308611/politics/why-ethiopias-red-sea-ambitions-unnerve-egypt

[xix] Ali Bakir. ‘How Ethiopia's Red Sea deal could impact Israel, Egypt, and the UAE’. The New Arab. 22 Jan 2024. https://www.newarab.com/analysis/how-israel-egypt-and-uae-view-ethiopias-red-sea-deal#:~:text=Under%20the%20agreement%2C%20Somaliland%20agreed,promises%20to%20recognise%20its%20independence.

[xxi] Burak Bir.’ ‘UK Expresses Concerns over escalating Tensions in Horn of Africa’ AA Europe. 5 January 2024. https://www.aa.com.tr/en/europe/uk-expresses-concern-over-escalating-tensions-in-horn-of-africa/3100737