Monday,25 March, 2019
Current issue | Issue 1393, (10 - 16 May 2018)
Monday,25 March, 2019
Issue 1393, (10 - 16 May 2018)

Ahram Weekly

Ethiopia: Open economy and politics

Ethiopia’s new premier is talking political and economic reform. But the extent to which he can achieve either remains an open question, writes Haitham Nouri


 Ethiopia: Open economy and politics
Ethiopia: Open economy and politics

The actions of Ethiopia’s new Prime Minister Abiy Ahmed Ali, appear more democratic than his predecessor as he tries to build strong relations with his neighbours in the tense Horn of Africa region. After rare meetings with opposition figures and businessmen, Ali also announced he will limit to the post of prime minister to two terms. This would require the constitution to be amended since it currently allows limitless terms for the top job in the country.

“No one will remain prime minister for more than two terms,” declared the new premier. “Staying in office for a lifetime is over in Ethiopia.”

Limiting the term of prime minister is in line with Ali’s statement that Ethiopia is on the verge of “a new political beginning” after his predecessor Hailemariam Desalegn resigned in the wake of political turmoil. Ali is not the first to propose limited terms; in October 2016 President Mulatu Teshome, who holds an honourary position, said limiting the term of prime minister is on the agenda of reform discussions sponsored by the state.

Ali did not indicate when or what articles will be amended, although parliamentary elections are slated for 2020. While meeting with Ethiopian businessmen, he insisted on honest discussion and said the liquidity crisis could continue for another 15 years.

Ali also held a rare meeting with the opposition in an unprecedented move since this regime came to power in Ethiopia in 1991 led by late prime minister Meles Zenawi. Many international media believe the step to integrate the opposition, especially Oromia region, would reduce political clashes in a country of nearly 100 million people.

Ali is also trying to forge strong and stable relations with Ethiopia’s neighbours in this troubled region. Ethiopia, the fastest developing country in Africa, suffers from its neighbour Somalia which has been unstable since its last ruler Sayed Berri was deposed in 1991. Between 2006-2009, Ethiopian troops went to Somalia to fight radical Islamic movements, particularly the Union of Islamic Courts (UIC), in partnership with allies from Somaliland and Puntland.

The UIC fragmented into several groups, most notably Shebab Mujahideen which is listed as a terrorist group by the US and several neighbouring countries.

Somalia is not the only problem for Ethiopia; South Sudan is unstable, shares a long border with Ethiopia and is at the heart of suppressed disputes between Addis Ababa and Khartoum. South Sudan accuses Sudan of fanning tensions in the nascent state which seceded from Sudan in 2011, but President Omar Al-Bashir’s government denies this.

Ethiopia believes tensions in South Sudan adversely affect stability in the region and distract from its own economic development, where it has been very successful (the fastest growth rate on the continent for 12 years).

Addis Ababa is facing other problems too; it is still at war with neighbour Eritrea which broke off from Ethiopia in 1991. That war, waged between 1998-2000 and that killed tens of thousands, did not resolve the border dispute between the two.

Aul Alu, professor of law at Keele University in the UK, believes peace between the two neighbours is likely. “Both sides are exhausted by the conflict and have had a taste of stability and economic progress, especially Ethiopia,” said Alu. “They are both ready for peace. Negotiations will be difficult as they try to work through their many disagreements, but in the end, they have no option other than peace.”

Asmara benefits from the war launched by Gulf countries against the Houthis in Yemen since 2015 because its ports and airports are used by the Saudi-led Arab coalition. The UAE and Saudi Arabia are renting the inactive port of Assab as well as an old military airport. Eritrea’s support of the 30 June Revolution in Egypt and quick support of the Arab quartet against Qatar finally ended its regional isolation and now it awaits reconciliation with the West.

Lifting Asmara’s years-long isolation could pressure Addis Ababa to reach peace with its rival neighbour sooner.

The main challenge facing Ali is reviving the economy to prepare for more investment, but he said economic conditions were not ready for openness in the fields of communications and banking. These are the areas Western investors want to open up and reform. Desalegn had proposed overhauling the financial sector and the national communications carrier in the past.

Desalegn was in power between 2011-2017, which were the best years for Western and Asian investments in Ethiopia. Direct foreign investment jumped from $1 billion to $4 billion, mostly from manufacturing, primarily clothes and textiles. The Central Bank of Ethiopia devalued the local currency by 15 per cent to support exports, since the government adopted a strategy of “manufacture for export”.

Over the past five years, the government allocated large sums for improving the country’s negligible infrastructure, especially electricity and transportation. Ali also vowed to continue his predecessor’s anti-corruption policies, which have resulted in the arrest of dozens of officials, including the finance minister last year.

Western investors welcomed the anti-corruption campaign which has improved Ethiopia’s image around the world. Fighting corruption has in fact improved the economic performance of many emerging markets, most notably China.

A key question now, however, is whether Ali’s proposal for political reform will impact economic progress. Alu believes political openness is based on “bribing society” which is practised in many developing countries and based on distributing development benefits by preparing unstable provinces to receive large investments.

“The five-year plan for 2020 will be Ali’s brainchild and will reveal his real policies,” he said. “Currently, there is a temporary plan to absorb the anger of the masses, which are amendments on the current plan.”

Whatever the declared plan, the people of Ethiopia and the world community are keenly watching the next political and economic moves by the country’s young and charismatic new leader.

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