Ethiopia to end boundary row with Eritrea, open for foreign investment

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ADDIS ABABA: The Ethiopian government led by new premier Abiy Ahmed announced a slew of reforms on Tuesday, including ending its border dispute with Eritrea and opening key economic sectors, among them Ethiopian Airlines, to foreign investment.

Both steps represent major policy changes by Abiy, the first prime minister in modern Ethiopia from the country’s largest ethnicity the Oromo who took office in April after years of anti-government protests and political turmoil.

A former province, Eritrea became Ethiopia’s bitter foe after a 1998-2000 border conflict followed by Ethiopia’s refusal to accept the ruling of a UN-backed boundary commission that divided up contested territory between the two countries.

In a surprise announcement that came on the same day as parliament’s repeal of a nationwide state of emergency, the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) said it would “fully implement” the boundary commission’s 2002 decision.

“The Eritrean government should take the same stand without any prerequisite and accept our call to bring back the long-lost peace of the two brother nations as it was before,” the EPRDF wrote on Facebook.

Since the formal end of the border conflict, Ethiopia and Eritrea have taken starkly different paths, with Eritrea growing increasingly isolated while Ethiopia has exerted power across the region, fuelled by an economy that has expanded at one of the fastest rates in Africa.

But a shortage of foreign currency is seen as threatening that economic growth, which dropped to 8.5 percent this year from 10.9 percent in 2017, according to the International Monetary Fund.

Looking to increase the players in the economy, the ruling party said it would sell minority stakes in Ethiopian Airlines and the sole telecom company Ethio Telecom to foreign investors — a reversal of years of policy that closed those sectors to outsiders.

The move would “enable Ethiopia-born citizens living abroad who’ve long wished to work on the development of their country, and… foreigners who have the knowledge and foreign currency, to play a positive role in our growth,” said the statement issued after a meeting of top EPRDF officials.

– Challenges on both sides –

Ethiopia became landlocked in 1993 after Eritrea, which comprised the country’s entire Red Sea coast, voted to leave.

But the neighbours were soon at war over the demarcation of their shared border, a conflict that would leave 80,000 people dead and degenerate into a stalemate after the impasse over the UN ruling.

Hundreds would die in subsequent years in periodic border clashes as the two countries would try to undermine each other elsewhere.

The UN Security Council sanctioned Eritrea in 2006 for supporting Al-Shabaab extremists in Somalia, the same year Ethiopia invaded to battle the group.

Ethiopia faced its own challenges starting in late 2015 when the Oromos and later the country’s second-largest ethnicity the Amharas protested against the one-party EPRDF government.

Hundreds died and tens of thousands were arrested in the revolt that pushed Ethiopia to declare a nationwide state of emergency for 10 months starting in October 2016.

The unrest was seen as a key reason why Hailemariam Desalegn made the unprecedented move to resign as prime minister in February, which the government followed by declaring another state of emergency for six months.

He was replaced by Abiy, who took office amid high hopes he would move the EPRDF away from its authoritarian past.