Clashes in Ethiopian Region Put Horn of Africa on Edge
Clashes in Ethiopia’s Tigray Region Put Horn of Africa on Edge
(Bloomberg) -- Almost a year after winning the Nobel Peace Prize for forging an end to two decades of animosity with neighboring Eritrea, Ethiopian Prime Minister Abiy Ahmed has sparked international concern after resorting to force to quell internal dissent.
Accusing the regional government in the northern Tigray state of attacking an army base to steal equipment, Abiy ordered the military to strike back. Heavy fighting between the army and forces loyal to the region’s ruling Tigray People’s Liberation Front claimed dozens of lives this week, according to two foreign diplomats who spoke on condition of anonymity as they’re not authorized to speak to the media.
Air strikes were carried out on arms depots in Mekelle, Tigray’s capital, and rocket launchers and other military hardware were destroyed, Abiy told state television on Friday.
The showdown spurred calls for restraint from United Nations Secretary-General Antonio Guterres, the U.S. and Germany. It also spooked investors, who’ve been pouring money into Ethiopia since Abiy took power in 2018 and began opening up the state-controlled economy.
The yield on Ethiopia’s $1 billion of 2024 Eurobonds has climbed 98 basis points since Tuesday, handing bondholders a 2.8% loss. That compares with a 1.3% average return for African sovereign issuers. Ethiopia was the only one of 15 to post a loss this week.
Economic Reforms
The conflict could distract the government from implementing plans to open telecommunications and other state-dominated industries to outside investors. Negotiations with China for a debt-service moratorium, potentially deferring $2.1 billion in payments in 2020-23 may be at risk, while $2.2 billion in World Bank loans that were projected to be disbursed between 2021 and 2023 may also be in jeopardy, said Mark Bohlund, senior credit research analyst at REDD Intelligence.
Relations between Tigray and the federal government have frayed since Abiy took office and sidelined the TPLF, once Ethiopia’s pre-eminent power broker.
Abiy blamed the violence on the “criminal hubris and intransigence” of the TPLF leadership, while indicating that military operations would be limited in scope. A state of emergency came into effect in the region on Friday that will give a military task force the authority to disarm the security personnel in Tigray, impose curfews and use “proportionate force” to maintain order.
“The federal defense forces are determined to bring an end to this criminal enterprise, with the least possible cost to the civilian population in Tigray and the rest of Ethiopia,” Abiy’s office said in a statement on Twitter.
The odds of an escalation in hostilities nonetheless remain high, with Debretsion Gebremichael, Tigray’s president, warning that the region has the capacity and resolve to destroy those who attack it.
This week’s air strikes caused no damage and there were no civilian casualties, said Wondimu Asamnew, director-general of the Tigray Friendship Liaison Office, a diplomatic branch of the regional government.
More than half of Ethiopia’s armed forces and mechanized divisions are situated in Tigray, according to the International Crisis Group -- a presence that was built up during Ethiopia’s conflict with Eritrea, which border on Tigray. Wondimu said all of Ethiopia’s military depots, along with all of its missiles and anti-aircraft equipment are situated in the Tigray region, while about 70% of military equipment in Tigray is in TPLF hands.
“Hopes for a surgical in and out are probably misplaced,” said Connor Vasey, an East Africa analyst with the Eurasia Group. “Tigray is among the most militarily organized and equipped regions, and the TPLF has gained a lot of grassroots support which could come into play as the conflict evolves.”
Restive Regions
There’s also a risk that turbulence could spill over into other restive regions that have been dogged by protests and violence this year, or into neighboring states including Eritrea, whose relationship with Tigray has remained frosty despite the peace deal it reached with Abiy.
Sudan, Djibouti and Eritrea have all shut their borders with Ethiopia, citing fears of a widening conflict.
“We are monitoring several potential conflict escalation pathways,” said Robert Besseling, executive director of political risk advisory firm EXX Africa. “One is the prospect of the powerful Northern Command of hardened and elite fighters defecting to Tigray, where these soldiers are based. Another one is the potential of cross-border Eritrean military incursions in support of the Ethiopian federal offensive, which would potentially destabilize the entire Horn of Africa region.”
©2020 Bloomberg L.P.