A Possible Ethiopia-Somaliland Corridor?

by Sebastien GOULARD

At the beginning of 2024, an agreement was announced between Ethiopia and the unrecognized government of Somaliland, outlining the leasing of a 20 km stretch of Somaliland’s coastline to Ethiopia. In exchange, Somaliland would receive a stake in the capital of Ethiopian Airlines, the leading airline in Africa in terms of network and fleet. Although not confirmed, there is speculation that Ethiopia may recognize Somaliland, a secessionist region of Somalia, as a sovereign state. Somaliland’s Ministry of Foreign Affairs has stated that this agreement could pave the way for international recognition of Somaliland.

This non-binding agreement has triggered reactions from the Somali government and the international community, including the European Union, which emphasized the need to respect the sovereignty and territorial integrity of Somalia.

With a population of 123 million, Ethiopia is currently the second most populous country in Africa after Nigeria, and its population is expected to reach 205 million by 2050. Despite being predominantly rural, with approximately 80% inhabitants living in the countryside, Ethiopia is rapidly urbanizing. The country faces the dual challenge of building infrastructure and providing employment in the industry and services sectors for the growing urban population. Ethiopia is seeking to develop new routes, including alternatives or complements to Djibouti.

The Port of Assab in Eritrea

By seeking closer ties with Somaliland, Addis Ababa expresses its desire to integrate more effectively into global trade, even if it comes at the expense of its neighbor, Somalia. Ethiopia is a landlocked country, and after World War II, Eritrea was federated with the Kingdom of Ethiopia in 1952, providing it with maritime access. However, in 1961, Eritrea seceded, creating a prolonged conflict with Ethiopia that lasted until 1991. Despite the peace established, tensions persisted in the 90’s, particularly around the port of Assab in Eritrea, which has historically served as a maritime entry point for Ethiopia. Since 2018, Asmara and Addis Ababa have cooperated on the use of the Assab port, and Ethiopia has begun rehabilitating the road leading to the port. However, due to insufficient investments, the port has yet to reach its full potential.

Djibouti, Ethiopia’s Main Port

Following the second war with Eritrea (1998-2000), Ethiopia turned to Djibouti for its foreign trade, and the former French colony has become crucial in Ethiopia’s external trade, partly due to the Chinese Belt and Road Initiative. China has heavily invested in Ethiopia’s industry, particularly in the textile sector, and its infrastructure. In 2018, the Addis Ababa-Djibouti railway was revived. Operated jointly by the China Railway Group Limited (CREC) and the China Civil Engineering Construction Corporation until 2023, it will be administered by the Ethiopian Railways Corporation from 2024. Chinese companies are also involved in the Djibouti port, operated by China Merchants Group, which also hosts China’s first overseas naval base. Modernizing this port allows Ethiopia to expand its trade.

In addition to the port and railway, the road network between the two countries is expected to be modernized, with the support of the World Bank to strengthen the Addis-Djibouti corridor.

Ethiopia seeks to further strengthen its ties with Djibouti to access the Red Sea, considered by its Prime Minister as the natural border of the country. Ethiopia requested direct access to Djibouti’s ports (as well as those of Eritrea and Somalia), but this was denied by the Djiboutian government in October 2023. It is noteworthy that Ethiopia pays over a billion dollars annually to Djibouti for port access. This dependence has prompted Addis Ababa to explore alternatives, possibly explaining the recent agreement with neighboring Somaliland.

Construction of a Corridor in Somaliland

Somaliland, eager for international recognition, is best positioned to meet Ethiopia’s demands. By capturing a portion of Ethiopia’s foreign trade, Somaliland could become more attractive to international investors, and the port of Berbera could be better integrated into global maritime trade.

Ethiopia and Somaliland share common interests in strengthening their relations, particularly in building a new corridor. For this, new connections need to be established between Berbera and Ethiopian regions. For several years, Ethiopia has been considering the construction of a new railway connecting its network to the port of Berbera in Somaliland. The project involves building a new 310 km railway line between Ayisha, already connected to the Ethio-Djibouti network, and Berbera, with a minimum budget of $1.5 billion. An alternative line starting from Dire Dawa appears in the Ethiopian Transport Master Plan 2022-2052. This project would increase Ethiopian exports and reduce dependence on the Ethio-Djibouti line. The challenge now is to build this new network, and for this, both Ethiopia and Somaliland need new partners.

Ethiopia is not the only state showing keen interest in Somaliland, a strategically located and relatively stable region bordering the Gulf of Aden. The United Arab Emirates (UAE) had considered building a military base in Berbera, the capital of Somaliland’s semi-independent region, before abandoning the plan in 2019. Since then, the UAE has remained active in both Somalia and Somaliland. In Somalia, the Emirati military conducted airstrikes against the jihadist group al-Shabaab in coordination with the government in Mogadishu. In Somaliland, the UAE is involved in training local troops and is active in the economy and infrastructure. DP World, the world’s third-largest port operator and owned by the Dubai government, has been operating in the port of Berbera since 2016, holding a 30-year concession. In March 2023, DP World inaugurated a Special Economic Zone in Berbera, aiming to integrate Somaliland further into the global economy.

The UAE might be interested in the construction of a new road connecting Somaliland to Ethiopia, as discussed during officials’ visit to Abu Dhabi in December 2023. This would contribute to the development of the port of Berbera, where Emirati interests are significant.

The recent agreement between Ethiopia and Somaliland has the potential to disrupt a region already suffering from some instability. For Ethiopia, it presents an opportunity to secure access to the Red Sea and facilitate international trade. New investments, driven by both Ethiopia and the UAE, are likely to be channeled along this new Ethiopia-Somaliland corridor. However, caution must be exercised to ensure that geopolitical tensions in the Horn of Africa do not hinder a new economic upswing.