Analysis |

With Sissi's Diplomacy Stalling, Egypt's Dam Crisis Could End in Regional War

Egypt’s Sissi is threatening to use force as Ethiopia prepares to fill its Nile dam reservoir. Will anyone intervene?

A photo of Dr. Zvi Bar'el.
Zvi Bar'el
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People hold placards to express their support for Ethiopia's mega-dam on the Blue Nile River n Addis Ababa, Ethiopia, last month.
People hold placards to express their support for Ethiopia's mega-dam on the Blue Nile River n Addis Ababa, Ethiopia, last month.Credit: Amanuel Sileshi / AFP
A photo of Dr. Zvi Bar'el.
Zvi Bar'el

While the Egyptian mediation team came to Israel and Gaza to propose plans for a potential long-term truce between Israel and Hamas, another front was heating up in Egypt. General Tamer al-Refai, the spokesman for Egypt’s armed forces, announced that members of the Egyptian military had arrived in Sudan to participate in a joint exercise. This exercise was dubbed “Guardians of the Nile,” perhaps inspired by name of the Israeli operation “Guardians of the Walls.”

For Egypt, this military display was much more important than the Israel-Gaza fighting, as it touches on what it views as an existential danger: Ethiopia’s intention to begin the second phase of filling the reservoir adjacent to its Grand Ethiopian Renaissance Dam. This joint exercise is the third between Egypt and Sudan in the past two years, most recently in April.

“The Nile waters are a red line,” Sissi warned in March. “Any infringement on Egypt’s waters will be met with a response that will threaten the entire region’s stability.” This is not the first time that Egypt has threatened to use force against the massive dam nearing completion. Ever since the dam-construction agreements were signed in 2011, Egypt has tried to thwart the plan, using every diplomatic means at its disposal. However, three of the states sustained by the Nile – Egypt, Sudan and Ethiopia – have been unable to reach agreement. Egypt is now waiting for assistance from the new U.S. administration, which has yet to solidify its policy on this crisis that runs the risk of erupting into war.

Ethiopia's Grand Renaissance Dam is seen as it undergoes construction work, 2019.Credit: REUTERS/Tiksa Negeri

Egyptian economists calculate that Egypt, which gets most of its water from the Nile, could lose up to 10 billion cubic meters of water annually out of the 50 billion cubic meters it received until 2019. Egypt recognizes that construction of the dam cannot be halted, but it is demanding that the filling of its reservoir be done in stages lasting from 12-21 years.

Ethiopia opposes this demand because it seeks to get its power stations – that would supply electricity to the 60 percent of its population that presently lack it – running as soon as possible. Ethiopia’s water and energy minister says the dam, which has a price tag of $5 billion, is 80-percent completed, and that it is due to produce 15.5 gigawatts of electricity a year, compared to Ethiopia’s current output of 4.5 gigawatts. This dam is Ethiopia’s national vision, one that it forced its citizenry to participate in funding. The state imposed a “dam tax” on civil servants’ salaries from 2012 to 2015; local companies were required to raise donations, the banks were required to grant the government loans on favorable terms that threatened their liquidity and stability. It issued bonds for Ethiopian expats with a tempting 5-6 percent interest rate; it held dam-funding lotteries and even organized sports competitions. But all the money raised in these various ways still fell way short of covering the dam’s cost. In 2015, the government had to halt construction due to a lack of financing.

China had already come to Ethiopia’s aid, pledging in 2013 a $1.2 billion loan for construction of an electrical grid and infrastructure to relay electricity from the dam throughout the country. In 2019, it announced another $1.8 billion loan for the same purposes. China avoided directly investing in the dam’s construction so as not to harm its relations with Egypt, but it is believed that a large portion of the Chinese loan was used to complete the dam construction, with several large Chinese companies winning tenders connected to the dam’s operation.

Abdel Fattah al-Sissi holds a news conference in Khartoum, Sudan, in March.

Ethiopia has been using the dam’s construction as a catalyst for foreign ties that will secure international support, both financial and political, and shield it from any pressure campaigns or attacks on the dam. For instance, the Italian company WEBUILD won a contract to build the dam’s main infrastructure, and the German company Voith Hydro won the contract to install the turbines to operate the power stations in conjunction with American company General Electric and the French company Alstom. Israel is apparently not directly involved in the dam’s construction, but dozens of Israeli companies operate in Ethiopia. Ethiopian media have made unverified reports that Israeli engineers and representatives occupy an entire floor of the country’s Water Ministry and that Israel installed Spyder missiles to defend the dam from aerial attacks. These reports did lead to several discussions between Egypt and Israel, in which Egypt was evidently convinced by the Israeli denials.

China’s deep involvement in Africa in general and Ethiopia in particular prompted the Trump administration to encourage U.S. companies to invest in Ethiopia and to approve a $2.9 billion World Monetary Fund loan to Ethiopia in 2019. This loan was not intended to finance the dam, but it freed up a lot of other state funds slated for development to be used for the dam. Ethiopia also received over $300 million from the United Arab Emirates and $140 million from Saudi Arabia to develop solar energy infrastructure.

Egypt has found it hard to contend with the web of diplomatic and economic ties that Ethiopia has forged in recent years. President Sissi asked Trump and Netanyahu several times to press Ethiopia, but all he was able to obtain was an American effort to convene a summit attended by delegates from Egypt, Sudan and Ethiopia that yielded no real results. Sissi was also unable to extract from China any assistance in its fight against filling the reservoir, while the Gulf States, Egypt’s close allies, have stuck to issuing declarations of support that appear to have no effect on Ethiopia. Saudi Arabia also reported that it plans to build a power line connecting Ethiopia and the kingdom via Yemen as an alternative to using oil and gas to produce electricity in the Gulf States. Saudi billionaire Mohammed Hussein al-Amoudi donated over $8 million in 2011 for the start of the dam’s construction and also persuaded the Saudi rulers to invest billions of dollars in agricultural development in Ethiopia so it can export grain to Saudi Arabia.

With the Biden administration having made the struggle against China its top diplomatic priority and seemingly viewing the Arab Middle East as an unwanted burden, it is doubtful whether Sissi, who only received his first phone call from Biden regarding the fighting in Gaza, can get the U.S. president to adopt a position that would hurt Ethiopia or at least force it to slow down the process of filling the reservoir. Perhaps the threats of military action will ultimately force Biden to put out the fire that could become a major conflagration.

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