Ethiopia Into Geopolitical Trade

26 August 2023
The Reporter (Addis Ababa)
opinion By Ashenafi Endale

Ethiopia has said goodbye to its traditional policy of non-alignment as it joins BRICS, signaling a strategic shift that experts say could reshape geopolitics on the horn of Africa.

BRICS, the emerging markets bloc consisting of Brazil, Russia, India, China and South Africa, has expanded its sphere of influence by opening its doors to new players.

Ethiopia charts new path as the BRICS bloc expands its reach in Africa.

- Advertisement -The east African nation was among six countries invited to join the emerging markets group at its annual summit this week in South Africa. Founded as a challenge to western dominance, BRICS has expanded its sphere of influence by opening its doors to new players.

"We have decided to broaden BRICS involvement on the global stage," President Cyril Ramaphosa announced on Thursday, confirming Ethiopia, Egypt, Saudi Arabia, the UAE, Argentina and Iran will become full BRICS members from next year. With BRICS members surging to eleven soon, the block's economy is forecasted to surpass the OECD's block.

The additions cap years of jockeying for position among nations seeking greater autonomy in international affairs. At least 40 aspired to join BRICS, though few possess Ethiopia's pedigree as the ancient home of coffee and intellectual vigor long insulated from superpower influence. Nigeria, Africa's giant, and Algeria had also lobbied vigorously for admission but must watch from the sidelines this time around. African countries desperation to join the BRICS, is driven by the aspiration to grow, and disapointments in western policies toward developing countries, according to analysts. African countries also wanted to get rid of dependence on dollar, and benefit from BRICS' dedolarization policy. The BRICS expansion decision came at a time when most african countries are struggling to cope up with economic and poltical crisis induced by the Ukraine war as well as covid19 before that. US's pressure to police african states against siding with Russia in the war with Ukraine, also pushed african leaders to land in the BRICS camp.

When Prime Minister Abiy Ahmed (PhD) first challenged the global financial order at the Paris Summit last year, calling for debt relief and a new economic architecture, many dismissed it as a pipe dream.

But Abiy was playing the long game. Just months after joining the emerging BRICS bloc, the fruits of Ethiopia's strategic maneuvering became clear.

In a huge coup for Addis Ababa, China announced it would suspend one year debt payments over the next year. The reprieve offers critical breathing room as war continues to drain Ethiopia's coffers.

While past requests to Western-led institutions like the IMF fell on deaf ears, Abiy had skillfully shifted Ethiopia's fortunes by embracing alternatives like BRICS.

The Prime Minister now hopes deepening ties within the rising powers alliance will leverage traditional creditors France and China into delivering the comprehensive restructuring his country desperately needs.

Yet as Ethiopia celebrates its newfound membership in the emerging BRICS alliance, questions swirl over what really clinched its acceptance into the rising economic powers club.

"Did Beijing sweeten the deal to keep Ethiopia firmly within its sphere of influence just before its BRICS nod?" asks Constantinos Berhutesfa, a former anti-graft chief at the African Union.

According to Constantinos, China's surprise debt relief package for Addis Ababa was no coincidence. "Beijing feared Ethiopia was tilting toward the West," says Constantinos, who argues the original BRICS five wanted Ethiopia in years ago, but the late PM Meles' pro-West leanings barred the door.

While criteria for the six new members remain hazy, many see net economic benefits from the bloc - including potential fuel price cuts by BRICS countries that could hugely benefit developing economies like Ethiopia, according to experts.

Ethiopia may significantly benefit from the New Development Bank (NDB) established by the BRICS nations in 2014 with USD 50 billion investment. The NDB was conceived as an alternative to Western institutions like the World Bank and IMF, which have been criticized for imposing strict economic conditions on developing countries.

The NDB is also expected to give Ethiopia a counterbalance to traditional Western institutions by providing funds without the same policy strings attached. This greater flexibility could allow Ethiopia to pursue development projects that better fit its domestic economic priorities and needs, according to experts.

In addition, the BRICS nations also introduced the Contingent Reserve Arrangement which is designed to offer emergency financial assistance to members during times of economic crisis or financial turmoil. Should Ethiopia experience a future economic shock, this reserve could serve as an important fallback source of funds to help address balance of payments issues or currency pressures.

Prime Minister Abiy claims new military and trade ties with members, though analysts argue BRICS' main value lies in investment potential if Ethiopia can improve business.

Coupled with Ethiopia's dissatisfaction with the west particularly regarding the lagging debt restructuring, number of factors contributed for Ethiopia's selection to BRICS. Some experts say Ethiopia's selection into BRICS amidst the country is ravaged by conflict, is more attributable to strategic interests.

"China and Russia have been shielding Ethiopia from UN sanctions. So Ethiopia will repay that by joining BRICS. Ethiopia is the seat of AU and ECA, which BRICS countries cannot avoid in their strategy towards Africa. Another issue is BRICS cannot choose between Egypt and Ethiopia, but to allow both to join BRICS," says a seasoned diplomat who spoke to The Reporter requesting anonymity.

"Ethiopia's joining into BRICS, will bring danger than benefits. In terms of trade and finance, Ethiopia might benefit from the currency convertibility of trading with BRICS countries without the need of dollar. But western countries will hit back on Ethiopia by introducing exclusionary policies."

PM Abiy is already using ethiopia's membership to BRICS as a power projection in the horn of afirca. "Ethiopia is an entry point between Africa, the middle east and the wider asia. With our growing regional integration endeavours and infrastuructres in airlines, telecom and land transport, Ethiopia will become a connectivity hub for those regions."

According to PM Abiy, Ethiopia joined BRICS by its own merit. "Ethiopia is selected due to the huge prospect it has. This membership is gained after a big struggle and negotiations with the five BRICS members. Our membership to the BRICS family, indicates the success of our diplomacy. BRICS cannot be successful without Ethiopia. Ethiopia has a huge potential to grow, and enhance the south cooperation."

The PM also stressed the world is at a critical time when "unheard voices in the global arena are striving to be heard." Antonio Guterres, UN chief who also attended the BRICS summit in Johannesburg, agrees. "Africa is unrepresented in the global bodies especially in the international financial system. The global governance needs to change, to fit the changing world."

While BRICS nations proclaim principles of non-interference and loans without strings relative to the West, some experts note the potential for influence remains. Ethiopia's independence from traditional powers allows new opportunities, but possible tradeoffs as it navigates shifting global dynamics also can not be ruled out.

Though many agree that BRICS is the right place for Africa, some experts argue Africa should mold its own power bloc, instead of fitting to other global power structures. But both agree BRICS is crucial to balance the west's quest to create a unipolar system.

Ashenafi Endale

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