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Shockwaves continue to reverberate in the Horn of Africa following the signing of a memorandum of understanding between Ethiopia and the self-declared Somaliland Republic, a breakaway region of Somalia, on January 1 allowing for the leasing of a 20-km stretch of Somaliland’s sea coast to landlocked Ethiopia in exchange for shares in its neighbor’s flagship carrier, Ethiopian Airlines, and formal recognition as an independent state sometime in the future. The deal, which enables Ethiopia to establish a military base as well as a commercial maritime zone in Somaliland, has predictably elicited strong reactions. Although the governments of Ethiopia and Somaliland have sung the praises of the deal, the Somali Federal Government (SFG) has rejected it as “null and void”, saying it has no legal basis and violates Somali sovereignty and international law. In fact, it has threatened to retaliate if Ethiopia followed through on the deal and recalled its ambassador to Ethiopia for consultations.

For Ethiopia, which has relied on Djibouti for international trade since 1991 when it was cut off from the sea following the secession of Eritrea in 1991and is charged at least USD 1.5 billion to use the latter’s ports, the deal is undoubtedly a boon for it. As a nation which has long sought to secure access to the sea and diversify its access to seaports, the considerable saving that the deal affords it can go some way towards alleviating the debilitating woes its economy has been struggling from due to the COVID-19 pandemic, the two-year civil war that ended in 2022, and the burden of servicing its large debts. Djibouti’s reluctance to consider Ethiopia’s request to lower its port fees to avert the toll the resulting revenue shortfall will have on its economy reinforces the critical importance for Ethiopia of concluding pacts that confer on it the right to utilize a range of economically feasible sea outlets.

The establishment of a naval base from which Ethiopia’s fledgling navy can operate is of immense value when it comes to securing the country’s access to the vital Red Sea shipping lanes via the Bab-al-Mandab strait between Djibouti and Yemen that connects the Red Sea and the Gulf of Aden. The Bab-al-Mandab strait holds immense strategic importance for Ethiopia’s security due to its location as a key maritime chokepoint. Ethiopia heavily relies on the strait for its imports and exports, particularly for goods that pass through the Red Sea. Any disruption in the security and stability of this vital waterway could severely impact its economy and access to essential resources. Additionally, the strait is situated near the volatile region of the Horn of Africa, making it crucial for Ethiopia to ensure the safety and control of this maritime passage to safeguard its national security interests. Even though Ethiopia may lack the capability to secure it on its own, it has a vested interest in in collaborating with international partners to maintain peace and security in this critical maritime corridor. The Ethiopian navy can play a key role in this regard.

Needless to say, the memorandum of understanding does not have upsides only. Somalia’s vehement opposition to it as well as the expressed position of other countries and international/regional organizations point to the hot button nature of the controversy it has stirred. The Horn of Africa is a region where a host of geopolitical rivals engage in an intense competition to advance their interests. The Arab League, Egypt, and the Organization of Islamic Cooperation (OIC) have issued statements echoing Somalia’s position while the African Union (AU), EU, Turkey, and U.S. urged de-escalation and respect for Somalia’s sovereignty, seemingly sounding support for the SFG without explicitly rejecting the deal. IGAD, meanwhile, has adopted a more neutral stance, only calling for a peaceful resolution that “upholds shared values.” While the deal has obviously had immediate effects in terms of straining diplomatic ties between the different entities invested in the matter, at this stage it’s too early to speculate about its long-term implications for the Horn and beyond.

Going forward there are two issues Ethiopia and Somaliland must address as they breathe life into the memorandum of understanding. First, both must speed up the ratification of the different set of binding agreements required to undertake the measures necessary to give legal effect to the essentially gentleman’s agreement they have reached. This will enable both parties to have recourse to an international dispute resolution forum in the event of breaches of their respective obligations. In tandem with this, they need to embark on a diplomatic charm offensive to drum up support for the deal they have forged. True, it’s extremely difficult to persuade Somalia and its allies to abandon their positions or give their blessing. Nevertheless, it’s incumbent on them to thread the needle carefully and bring about a win-win solution through a dialogue involving all stakeholders. It’s only then that the powder keg that the Horn of Africa will not go off.

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