The world’s most reported river is making the news again. Egypt and Ethiopia are locked in a high-stakes dispute over the latter’s construction of the Grand Ethiopian Renaissance Dam (GERD).
Situated on Ethiopia’s Blue Nile (the source of 85 per cent of Egypt’s Nile water) and projected for completion in 2017 or 2018, the GERD — 1,800 metres long, 170 metres high, and with 6,000 megawatts of installed capacity — is Africa’s largest planned hydropower project. Predictably, the GERD has engendered fears in Africa’s driest country, Egypt, which relies on the Nile for 90 per cent or more of its water.
For its part, Ethiopia, which kept the design phase of the project secret until one month prior to the laying of the foundation stone for the project, has produced more rhetoric than facts about the GERD’s impact. It was not until June 2013, a full 30 months after Ethiopia awarded a no-bid contract for the GERD’s construction in December 2010 and 28 months after construction began in April 2011, that an international panel of experts submitted a report on the GERD’s impact on Egypt, Ethiopia and Sudan.
The fact that environmental impact assessments were not provided to Nile states before the GERD’s construction began is highly unusual and falls below prevailing international standards. Importantly, there is no reliable indication that the GERD studies have sufficiently considered the effects of climate change either, which are projected to be most severe in Africa.
To understand the degree to which rhetoric has shaped the GERD project, one need only consider its name (it was previously called the “Millennium Dam” and “Project X”). Unlike most of the world’s dams, named for the rivers or places they occupy or the people that championed their construction, the name “Grand Ethiopian Renaissance Dam” is more evocative than practical. Designed to mobilise domestic and regional support, the name stirs up national aspirations and reinforces a narrative of national victimhood, particularly the story that outside actors, namely Egypt, have impeded Ethiopia’s development of the Nile, and therefore its development more generally. However, this narrative fails to explain why Ethiopia, where reportedly 83 per cent of the population lacks access to electricity, has not generated modern power from non-hydraulic sources.
Ethiopia’s government has touted the GERD as the centrepiece of the ancient country’s modern transition. But the GERD is hardly a modern concept. It is the product of over half-century-old studies conducted by the United States Bureau of Reclamation in the 1950s and 60s at Ethiopia’s request and as part of the Ethiopia-United States Cooperative Programme for the Study of Water Resources. In 1964, the Bureau of Reclamation proposed the construction of four hydroelectric dams on Ethiopia’s Blue Nile, including one near what is now the South Sudan border, the approximate site of the GERD (located some 45km from the South Sudan border).
In other instances, Ethiopian officials have described the GERD as a memorial to the late Ethiopian prime minister Meles Zenawi, who passed away in August 2012. Ethiopia’s Communications Minister Bereket Simon said of the GERD that “this is the brainchild of the late prime minister and we want to show commitment to his vision.” The connection between the former prime minister and Ethiopia’s renaissance project has been made by others, too, including former US ambassador to the UN Susan Rice, who famously eulogised Zenawi as “a son of Ethiopia and father to its rebirth.”
In the light of the political and financial obstacles facing the GERD, this rhetoric has been necessary. Unusually for a project of its kind in a low income country like Ethiopia (or a lower middle income country like Egypt), the GERD lacks institutional financial support from the usual sources, such as the World Bank (which reportedly has revived the funding of dams). Ethiopia’s status as Africa’s largest recipient of foreign aid — $3 billion annually, principally from the United States and the United Kingdom — makes the lack of international support more striking.
The Ethiopian government is financing the GERD from its own coffers and the sale of bonds to Ethiopian banks, which are required by law to purchase the bonds, and Ethiopian citizens at home and abroad. The bonds scheme has a recent precedent in that Ethiopia issued bonds to finance another of its controversial hydroelectric dam projects, the Gilgel Gibe III Dam discussed below. Like the dam they were intended to finance, the Gibe III bonds (“Millennium Corporate Bonds”) made the news since they did not sell as expected and carried risks of “premature call and uncertain currency repatriation rights”. It is not clear if the GERD bonds have performed better, but in any case the absence of steady and sufficient financing could adversely affect the dam’s construction timing and quality, potentially harming downstream states.
Ethiopia blames Egypt for the lack of institutional financial support. But the claim seems doubtful. The GERD is not the only Ethiopian dam project that has failed to garner institutional financing. Like the GERD, the Gilgel Gibe III Dam, a 240-metre high, 1,870-megawatt hydroelectric dam in Ethiopia’s Omo River basin, drew criticism for its lack of transparency and a flawed environmental impact assessment, which Ethiopia furnished two years after construction began.
According to one source, the “report was regarded as so flawed that the World Bank, the European Investment Bank, and the African Development Bank abandoned the project.” A 2009 feasibility study of Gibe III submitted to the African Development Bank warned that “the risk of catastrophic failure of the dam at Gibe III is not insignificant.” In 2011, UNESCO’s World Heritage Committee urged Ethiopia to “immediately halt” construction of Gibe III, fearing (based on an African Development Bank report) its potential to reduce water flow to Kenya’s Lake Turkana (dependent on the Omo River Basin for 90 per cent of its water) and damage Kenya’s Lake Turkana National Parks (a World Heritage Site), in violation of the World Cultural and Natural Heritage Convention, to which Ethiopia and Kenya (and Egypt) are parties.
Notwithstanding the controversy surrounding its hydropower projects and its relative cash limitations (the IMF has urged Ethiopia to slow GERD construction to preserve funds for other uses), Ethiopia is proceeding with numerous dams on the Blue Nile and elsewhere. Salini Costruttori, the Italian contractor building the GERD, has alone completed or is constructing nine other hydroelectric dams and systems in Ethiopia. The Ethiopian Electric Power Corporation’s 25-year master plan, introduced in 2000 and revised last year, provides for 37,000 megawatts of generating capacity by 2037, mostly via hydropower.
Even for a country in need of modern power sources, Ethiopia’s hydropower binge raises questions about the nature of its objectives and their legitimacy, particularly where its plans involve the commercialisation of a trans-boundary waterway and carry potentially adverse consequences for co-riparian states.
Ethiopia’s hydropower programme has significant commercial objectives, in at least two principal areas: electric power and agriculture. Ethiopia intends to export power to neighbouring East African states, to generate revenue and secure much-needed hard currency. There is good reason to believe that Ethiopia’s hydropower projects, including the GERD, will bolster the country’s massive agriculture land-leasing enterprise, under which Ethiopia is believed to have leased (long term) or “made available” three to four million hectares of “fertile and unutilised” agricultural land to foreign companies and sovereigns who lease agricultural land overseas for the sole purpose of shoring up food supplies for their own populations.
In 2012, Zenawi told an international investment forum that “there has been significant flow into large-scale state-type commercial farming in our country and we seek even more in the future.” According to International Rivers, a US-based NGO, “water for irrigation from large reservoirs is mostly earmarked for large-scale agricultural producers, and, increasingly, for foreign agricultural developments taking advantage of a government-sponsored land leasing programme.”
Ethiopia’s agricultural land commercialisation programme is not just a domestic issue (the government has forcibly “resettled” hundreds of thousands of Ethiopians to accommodate foreign parties), it is also an issue for Egypt and other downstream states. As one expert wrote, Egypt’s Nile access is threatened “as wealthy foreign governments and international agribusinesses snatch up large swaths of arable land along the Upper Nile. While these deals are typically described as land acquisitions, they are also, in effect, water acquisitions.”
Without question, Ethiopia, like all sovereign states, has the right to develop its natural resources for its national benefit. But under international law that right is not unlimited, particularly where development activities cause cross-border environmental damage or significantly harm states that share trans-boundary waterways. The balance of rights and responsibilities is further complicated by Ethiopia’s commercialisation of the Nile, an activity that is distinct from development.
Over two years after its construction began, questions about the GERD’s potential impact on the environment and the rights of co-riparian states remain unanswered. Rhetoric has triumphed over facts, to the detriment of both Ethiopia and Egypt.
The writer is a Washington DC-based lawyer who focuses on international and emerging markets transactions and disputes, including in the Middle East and Africa.