The Reporter (Addis Ababa)

8 March 2014

Ethiopia: Hydro-Oil Economics - Regional Integration Between Sudan and Ethiopia

The geographical location of these two countries made them strategically significant and vulnerable for the interference of great powers, the Middle East nations and Egypt in their mutual relations. In addition, the geographic expanse of Sudan as the largest in Africa before the breakaway of South Sudan bordering nine countries, as well as the historical position of Ethiopia in the continent, are factors that highly attract the interference of outside powers to influence the relationships of these countries.

Boundary problems, conflicting positions on the utilization of common international rivers, internal instabilities and extending support by one state to insurgent groups fighting against the other state have been sources of instability between the two states in the past. This article discusses and attempts to identify the main causes of past hostile relations, potentials for cooperation, recent collaboration between Ethiopia and Sudan, and emphasis is made on hydro economics as a case for regional integration between Sudan and Ethiopia in post-1991.

Ethio-Sudan relations and its features It is a well-known fact that there have been long historical relationships between Ethiopia and Sudan starting from the states of Axum and Merowe. There are also age-old ties between the two peoples, who have lived in one another's country over the years. Harry Verhoeven (Ph.D.), an African politics lecturer at the University of Oxford and currently a post-doctoral fellow, says that for centuries, Sudan and Ethiopia along with Egypt had fought over the Blue Nile Basin through shifting alliances and against the backdrop of global politics and local resource realities.

Political and commercial objectives - the thirst for land, trade routes and slaves - were the driving force behind state formation in the nineteenth century. These processes of power and wealth accumulation created strong core-periphery tensions that led to violence inside and outside the territory and shaped societies of today. This historical proximity of politics and economics is an important factor that shaped the mindsets of generations.

In addition, the border shared on the Sudan being the longest of its kind for Ethiopia, the two countries have a strong people-to-people relations. A case in point would be the fact that, while a significant number of Ethiopians have taken residence in Sudan, Ethiopia is home to a significant number of Sudanese including refugees. Over the years, the two countries have been forging harmonious and hostile relationships between themselves. The history of these two neighboring countries is affiliated with internal dynamics and external pressures, according to Verhoeven.

Looking at the history of the two countries in the recent past, which has direct relevance to the state of things presently, the two countries had a strained relationship. The cumulative factors of geographical proximity, shared natural resources and people-to-people ties created a situation in which developments in one directly affected the other. And so, during the Derg rule (before 1991), due to the ideological variations between the then-ruling elites of the two countries and due to the global atmosphere created by the cold war, the relationship was marked by the involvement of one on the internal affairs of the other, most notably in the form of assisting the opposition groups of each other.

After the downfall of the Derg regime in Ethiopia, relations between the two countries changed for the better as steps taken by both sides, except for the unfortunate incidence of the extremist tendencies and consequent terrorist activities observed in Ethiopia having their roots in the Sudan, like the 1995 failed attempt to assassinate the then Egyptian president Hosni Mubarak. After this, the occurrences of certain events became the turning points of the hostile relations that the two found themselves in.

One of these was the hostile Eritrean mafia diplomacy that affected both countries. In addition to holding a common enemy in the form of Eritrea, what contributed in the change in relations was Ethiopia's crucial and noticed genuine effort in the Sudan/SPLA peace talks and subsequent results as a member to the IGAD mediation committee subcommittee. Moreover, developments in the Sudan, which saw the ousting of some prominent political figures who were staunch proponents of the "Islamization" agenda and the growing desire of the Sudan to get Ethiopia on its side in its petition for the lifting of the sanctions laid upon it due to its then status of a terrorism sponsoring state contributed to the change in relations between the two states.

It can safely be said that the good relations, which were restarted after this point, have in general been maintained if not strengthened, Ethiopia playing a crucial role in the reaching of a peaceful resolution to the longstanding conflict between the Sudan and South Sudan culminating into the relatively smooth secession of the latter.

Oil for hydropower According to Verhoeven, the challenges facing Ethiopia and Sudan are remarkably similar. Both need to boost food and energy production and stimulate manufacturing while adapting to climate change. Both have poor infrastructure, turbulent political histories and troublesome neighbors. After a decade of oil-driven growth in Sudan and the priority that both Khartoum and Addis Ababa accord to harnessing water resources for electrification and irrigation, energy is assuming great importance in discussions about security and development of the two states.

A regional integration having energy linkage with oil and hydropower exchange between the two countries as its nucleus of relation would not only assist the two countries in getting out of poverty and thriving economically, but also tremendously help the region as a whole to have a stable, politically more integrated and secure existence. This is so because if there is energy production and distribution based linkage, there is a better opportunity for economic cooperation and consequently a strong and direct interest of one state on the conditions of the other, which is more practical and real than a concern borne out of sentiment or fraternity. Hence, energy linkage leading to economic based integration would open doors for more concrete and justified institutional and political integration, drawing a collaborative effort in tackling problems and effectively utilizing opportunities.

Sudan and Ethiopia face similar challenges in poverty reduction, climate change, population growth and food security. They must address these through mutual trust and increasing well developed regional integration over the issues of oil and hydropower, which could even lead to conflicts if not addressed appropriately. Sharing their resource wealth to build better economic relations can help in improving the political instability and address the ecological pressures confronting their populations. It seems the Ethiopian government, with this in mind, has made it clear that it is working to provide hydropower to its neighbors, including Sudan, while trying to maximize its potential to get oil from Sudan. Similarly, the Sudan appears to value the benefit and has come on board to this agenda.

Presently, Ethiopia has started supplying power to its neighbor Sudan, beginning last October, making Ethiopia one of the few countries in the world supplying power outside its territory following the completion of the Ethiopia-Sudan Transmission Line, set up at a cost of USD 41 million. The World Bank financed the project and initially, Sudan is provided with 100 megawatts of electricity as Ethiopia embarks on the test run.

Other potential areas of cooperation In the Foreign Affairs and national security policy and strategy of the FDRE, potentials for joint natural resource management, agricultural investment projects and free exchanges along the border that would yield mutual benefits are clearly stated. Hence it could contribute to sustainable growth and more harmonious relations between the two countries if they were managed with an explicitly regional perspective.

Environmental protection is also another potential area of cooperation. Aggregate rainfall could rise but such an increase would be unevenly concentrated, both geographically and seasonally. A significant rise in the number and frequency of extreme droughts and extreme rainfall could produce a systemic crisis, affecting agricultural production as well as millions of pastoralists. Climatic shifts could exacerbate the disempowerment of marginalized communities and potentially push them towards violent micro-conflicts.

Shifting rainfall patterns, uncertainty about the Nile's future and the poor prospects for agriculture in much of Sahelian and Eastern Africa will heighten existing pressures on water consumption. Despite a difficult past, Sudanese-Ethiopian relations are better than they have been for a long time. Surging commercial interactions - including very substantial imports of Ethiopian products and livestock - have been facilitated by improved communications.

Several connecting roads have been built, now making it possible to drive from Addis Ababa to Khartoum, and there are plans under way to develop railway connections. There are also multiple joint commissions, including border issues and defense. Sudanese businessmen are regular visitors of Addis. Ethiopia has been increasingly using Port Sudan's facilities in addition to port Djibouti, which costs an average of USD 700 million in port fees annually. Hydro-Oil Economics: a case of regional integration between Sudan and Ethiopia

The foreign policy of a state is composed of specific goals designed to be achieved in the course of its relations with the other states. These goals, which constitute the content of foreign policy, are selected from diverse interests of a state as the most important and achievable ones. One should bear in mind that the national interests of a country are determined by the concerned states, and hence they define their interests accordingly.

In April of 1998, the Sudanese government issued a new policy document on foreign policy and international relations of the country. The main pillar of this document is ensuring peace and security of the region by promoting solidarity based on mutual benefit of countries. Furthermore, it promotes mutual respect for national sovereignty and equality of states with non-interference in internal affairs of other states. In addition to this, it looks forward to seeking and supporting peaceful solutions to international disputes along with the international community. Besides, it underlined the fact that Sudan can play a greater role in the cooperation of African countries and the Arab world. From the above points we can see it is a great achievement for the Sudanese government to clearly state its national interest and also open door for better relations.

On the other hand, Ethiopia's foreign policy also promotes solidarity and economic union. Article 86(5) of the Ethiopian constitution of the federal democratic republic of Ethiopia incorporated detailed provisions, which declare Ethiopia's desire to promote cooperation with its neighbors.

In this light, the FDRE government has given utmost importance to its relations with the Sudan in terms of development and security matters as stated in its foreign affairs and national security policy and strategy. The areas of cooperation specified in the FDRE foreign policy include the development of watercourses flowing from Ethiopia to its neighbors and concluding agreements for their equitable utilization; economic development; cultural relations; utilization of ports, and protection of security particularly pertaining to the control of terrorist activities.

Presently, Ethiopia has started supplying power to its neighbor Sudan while Sudan's economy has been transformed since it became a significant oil exporter in 1999 with a production of some 450-500,000 barrels per day. But it remains dependent on the Nile for irrigated agriculture and for producing electricity through dams. Ethiopia is not an oil producer and in recent years has imported about 85 percent of its fuel oil from Sudan, but it is endowed with substantial water resources. Ethiopia boasts a regional comparative advantage, ecologically and economically, in hydropower and has the potential to generate up to 45,000 megawatts of electricity.

Oil and water resources could contribute to sustainable growth and more harmonious relations between the two countries if they were managed with an explicitly regional perspective. There is a strong case for building regional economic interdependence around an energy deal by exchanging Sudanese oil for Ethiopian electricity and thus providing a new framework for political relations. Joint energy initiatives could provide a greater, cleaner and more reliable power supply for both the Sudan and Ethiopia as each country grapples with providing jobs for burgeoning populations and services to marginalized areas, declares Dr.Verhoeven.

From the Ethiopian government perspective, the provision of security, settling the nationalities' question and economic growth are central to its national agenda and the government's aspiration to play a more prominent regional role. The Ethiopian government's flagship development policy is the Agricultural Development-Led Industrialization Strategy, succeeded in August 2010 by the Growth and Transformation Plan. The FDRE government is working on delivering rapid economic growth while ensuring it is more widely shared than in the past to meet the population's newly raised expectations.

These are vital if Ethiopia is to create employment for its growing population, ranging from the legions of graduates to unskilled laborers. To achieve these objectives, Ethiopia needs more foreign exchange but also requires cheap power for industrial and agricultural expansion. Together these constitute the rationale for a national energy policy that makes the dam program a major development priority with the goal of reaching middle-income status by 2020-25, with a regional economic role of power cooperation.

Energy is an important part of the Ethiopian development challenge. In tackling energy as a strategic priority, the government aims to expand access to electricity and improve the quality of current connections, encouraging a switch from firewood and petroleum to alternative sources. Between 2002 and 2008, demand for electricity grew on average by 17 percent annually. This growth is projected to rise to almost 25 percent annually. Capacity and coverage need to be expanded if the Ethiopian government is to deliver on its promises of job creation, service provision and economic diversification from an agricultural sector affected by climate change.

The Great Ethiopian Renaissance Dam project is central to economic thinking and features prominently in Ethiopian foreign policy as the government of FDRE tries to improve its weak energy position and develop a more positive regional identity. Ethiopia's hydroelectric potential of 45,000 MW is enough to meet most of sub-Saharan Africa's current demand. In Africa, Addis expects to sell at least 4,000 MW of power to regional partners in the next decade. Such a role - a genuine hydraulic mission - would transform the perception of Ethiopia from that of a poor country, dependent on outside assistance, to that of a leading state with resources that are valuable to the entire region.

Electricity generation by hydropower has powerful attractions for Khartoum. Only limited parts of the country are currently electrified, but urban demand for electricity is outpacing the economic growth. Local communities are becoming more vociferous in demanding service delivery. According to the UN Environment Program, desertification and decreasing precipitation in the Sahelian Belt could result in sorghum production falling by 50-70 percent by 2060. Darfur, North Kordofan and the Red Sea State are likely to be seriously affected, already having suffered ecological calamities in recent years. The 2009 drought caused mayhem across Sudan's Eastern flank, with 90 percent production losses in Gedaref, and the reappearance of famine-like conditions and associated violence in Jonglei. Millions of farmers receive almost no assistance to adapt to climate change and the international sanction on Sudan deprives it of access to 'green' financial mechanisms to provide resources for sustainable development.

The way out:

The challenges facing Ethiopia and Sudan are remarkably similar. Both need to address core-periphery inequalities, to boost food and energy production, and to develop a new strategy for rural development and stimulate manufacturing while adapting to climate change. Both have poor infrastructure, turbulent political histories and troublesome neighbors. All these factors have hampered efforts to break out of the cycle of poverty. A strong case can therefore be made for Sudan and Ethiopia to work together on energy security. The Horn of Africa would benefit from an energy deal involving water and energy that would contribute to sustainable regional development. It might also lead to wider reductions in tensions in the region. The argument here centers on Khartoum and Addis exchanging Sudanese oil for Ethiopian electricity. The recent pilot electric sale to the Sudan and Ethiopia's use of Sudan's oil can be one point that needs to be strengthened.

Despite a difficult past, current Sudanese-Ethiopian relations have been better than they have been for a long time. At the political level, regular summits create trust, and personal relationships between former PM Meles (now Hailemariam), Bashir and Southern Sudan's President Salva Kiir are said to be good. There are also multiple joint commissions, including on border issues and defense. Sudanese businessmen are regular visitors to Addis. Thousands of Ethiopian citizens work in businesses in Khartoum and Gedarif, sending back remittances. Both countries have also been collaborating on the difficult issue of water through the participation of Ethiopian and Sudanese technocrats in the Nile Basin Initiative (NBI). The recent realignment of the Sudan with Ethiopia and the Nile riparian countries by supporting the Great Renaissance Dam is appreciated and the two countries should further exploit this opportunity for the sake of regional integration.

Water is the most important domain for future cooperation, linked as it is to both energy and agriculture. From a technical perspective, Ethiopia has considerable advantages as a location for building hydroelectric dams. Sudan can bring in its agricultural products and on top of all, its oil to Ethiopia in return. One hopeful beginning is the recent regional electricity interconnection project, now finalized. This is now sending Ethiopian electricity into Eastern Sudan as part of the Eastern African Power Pool framework, which was created in 2005. The case for regional integration is clear: an energy deal exchanging Sudanese oil for Ethiopian electricity should top the agenda.

Ed.'s Note: Nebiyu Tedla is a researcher in the politics of the Horn of Africa and a Master's Degree Student in Diplomacy and International Relations. The views expressed in this article do not necessarily reflect the views of The Reporter. He can be reached at

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