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Peacekeeping troops from China, deployed by the United Nations Mission in South Sudan (UNMISS), patrol outside the premises of the UN Protection of Civilians (PoC) site in Juba, South Sudan, on 4 October 2016. AFP/Albert Gonzalez Farran
Report 288 / Africa

China’s Foreign Policy Experiment in South Sudan

China, traditionally averse to intervening abroad, is testing the role of peacebuilder in South Sudan, where it has unique leverage. This could portend a growing global security role, but further Chinese engagement will likely be tempered by self-interest, capacity constraints and aversion to risk.

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Executive Summary

China’s longstanding principle of non-interference in other states’ internal affairs is evolving with its growing global footprint. As Chinese overseas investment and business links grow in scope and depth, Beijing faces increasing threats to its citizens, economic interests and international reputation. That, in turn, has confronted China with the inherent limitations of its traditional hands-off foreign policy posture. How it responds over time will have a profound impact on Beijing’s international role. The most prominent test case appears to be Africa and, within the continent, South Sudan, where Chinese measures to protect its citizens and economic interests, coupled with its support for an end to the war and pursuit of humanitarian objectives, seem a calculated trial run for a more proactive global role.

China first experimented with deeper involvement in Sudan in response to powerful international criticism (culminating in calls to boycott the 2008 Beijing Olympics) of its support for Khartoum, which was fighting a brutal counter-insurgency campaign in Darfur. Using its influence with the Sudanese government and in the UN Security Council, China helped ensure deployment of UN peacekeepers to Darfur in 2008. Later, when Libya’s civil war erupted in 2012, China’s evacuation of its citizens generated national pride and increased both its people’s and its investors’ expectations about Beijing’s global profile. In both instances, China extended the boundaries of its time-honoured diplomacy, suggesting growing willingness to take action when its interests are threatened.

When South Sudan’s civil war broke out in late 2013, Chinese advocates of a more flexible interpretation of the non-intervention policy saw an opportunity to try new approaches to protect their nation’s interests. Several factors were at play. Huge investments made the state-owned China National Petroleum Corporation (CNPC) both an economic and political actor. At the same time, China’s interests were aligned with those of others – mediators and Western powers – seeking to end the conflict. Working together with the Horn of Africa’s regional body – the Intergovernmental Authority on Development (IGAD), charged with mediating South Sudan’s peace process – and Western actors, Chinese policymakers believed they could intervene constructively while managing reputational risks.

This was a step beyond its traditional approach: Beijing could claim broad adherence to the non-interference principle even as it used its influence to bring warring parties together and bridge differences between Western actors and South Sudanese leaders. It engaged in the peace process held in Ethiopia, hosted discreet talks among warring factions in Sudan, shaped UN Security Council action, sent peacekeepers to the UN peacekeeping mission in South Sudan (UNMISS) and joined the August 2015 peace agreement oversight body.

This is a crucial time for peacemaking in South Sudan and a crucial time for China to test its newfound role. It’s important to get both efforts right.

In short, China might still oppose interference in others’ affairs, but its definition has become more elastic. It continues to draw a line at intruding on matters of domestic governance; opposes regime change or unilateral military intervention; and believes that showing respect, rather than exerting pressure or inflicting punishment, is how to elicit cooperation and improvement in governance. Having itself been a victim of sanctions and public opprobrium, it favours more discreet persuasion. But direct involvement can be justified when civil conflicts cross borders, threaten regional security and stability or create large humanitarian crises, and when regional and local authorities and the UN have granted their imprimatur. In such cases, China tends to support political dialogue without imposing outcomes, save when those directly relate to the safety of its citizens or investments.

If China’s steps are tentative, there is good reason. It is aware of its newcomer status to international peace and security efforts, particularly via multilateral institutions, and is careful not to overreach. It is actively learning from its own experiences and the successes and missteps of other would-be peacemakers. Its diplomatic corps is not yet sufficiently staffed or trained. But its considerable economic and political influence mean that, when it steps in, it inevitably brings leverage to the table that traditional mediation efforts – whether in South Sudan or elsewhere – sometimes lack.

Despite differences in approach, so far collaborating in South Sudan has benefited China, Western countries, their African partners and the South Sudanese people. They should continue along this path. This is a crucial time for peacemaking in South Sudan and a crucial time for China to test its newfound role. It’s important to get both efforts right.

Beijing/Nairobi/Juba/Brussels, 10 July 2017

I. Introduction

China’s involvement with Sudan’s southern region began when it forged a partnership with Khartoum to develop its oil industry in the late 1990s. For much of the previous decade the West had worked to isolate the Sudanese government for human rights abuses and support for terrorism.[fn]For previous reporting on China’s involvement in South Sudan, see Africa Reports N°186, China’s New Courtship in South Sudan, 4 April 2012; N°39, God Oil & Country: Changing the Logic of War in Sudan, 10 January 2002. For recent work on South Sudan, see Africa Reports N°236, South Sudan’s South: Conflict in the Equatorias, 25 May 2016; N°243, South Sudan: Rearranging the Chessboard, 20 December 2016.Hide Footnote U.S. sanctions, and the country’s prolonged civil wars (1955-1972 and 1983-2005) – fought in the vicinity of major oil deposits, mostly in the south – deterred investors.[fn]For a summary of U.S. sanctions against Sudan, see “Brief Timeline of Key of Key Sanctions Events in Sudan”, Center for Global Development, 6 October 2011; Crisis Group Africa Briefing N°127, Time to Repeal U.S. Sanctions on Sudan?, 22 June 2017.Hide Footnote

In March 1997, the state-owned China National Petroleum Corporation (CNPC) and a consortium of mostly Asian oil companies signed an oil development deal with the government.[fn]Luke Patey, The New Kings of Crude: China, India, and the Global Struggle for Oil in Sudan and South Sudan (London, 2014).Hide Footnote Then new to overseas investment and operations and less daunted by security and political risks than most companies, CNPC obtained concessions for largely untapped oil reserves with limited competition. Other Chinese companies followed, leading to closer bilateral political and diplomatic ties.

Khartoum’s enemies, particularly the Sudan People’s Liberation Movement/Army (SPLM/A) fighting the government in the South, said China was enabling an autocratic regime and tied the Chinese-financed oil investments to mass displacement, gross human rights violations and environmental degradation.[fn]Crisis Group Report N°39, God, Oil and Country: Changing the Logic of War in SudanGod, Oil and Country: Changing the Logic of War in Sudan, 10 January 2002; “The scorched earth: oil and war in Sudan”, Christian Aid, 13 March 2001; “Sudan: The Human Price of Oil”, Amnesty International, 4 May 2000; “Sudan, Oil, and Human Rights”, Human Rights Watch, 24 November 2003.Hide Footnote The government sought to prevent Chinese contact with Southern rebels, and Beijing largely obliged.

Keen to tap into an underdeveloped market with, at the time, few competitors, Chinese nationals and companies flocked to South Sudan after it achieved formal independence in July 2011.

The 2005 Comprehensive Peace Agreement (CPA), which ended the Second Sudanese Civil War and paved the way for the South’s independence, dramatically changed the situation.[fn]Crisis Group Report, China’s New Courtship in South Sudan, op. cit., p. 2. Also see, The New Kings of Crude, op. cit.Hide Footnote Chinese businesses trickled into the South’s capital, Juba, soon after the CPA was signed, and, unbeknownst to Khartoum, the China National Petroleum Corporation surreptitiously dispatched employees to learn more about the new government. It took the Chinese government longer to adjust.[fn]Crisis Group interview, Chinese businessman, Juba, April 2016.Hide Footnote Salva Kiir, then Sudan’s first vice president and now South Sudan’s president, bluntly reminded Chinese leaders during his 2007 visit to Beijing that most oil fields lie in the South and the CPA guaranteed its right to secede. Beijing opened a consulate in Juba the following year.[fn]Crisis Group Report, China’s New Courtship in South Sudan, op. cit., p. 3.Hide Footnote

Keen to tap into an underdeveloped market with, at the time, few competitors, Chinese nationals and companies flocked to South Sudan after it achieved formal independence in July 2011. But the region soon proved volatile and risky for businesses.[fn]Crisis Group interview, Chinese businessman, Juba, April 2016.Hide Footnote In January 2012, Juba shut down oil production after negotiations over pipeline fees with Khartoum deadlocked. Production did not restart until April 2013.[fn]“Two Sudans’ oil disputes deepens as South shuts down wells”, The Guardian, 26 January 2012; “South Sudan restarts oil production”, Financial Times, 7 April 2013.Hide Footnote Civil war broke out in December that year and disrupted production again. Oil workers had to find shelter in UN bases until companies could airlift them to safety.[fn]Crisis Group Africa Report N°217, South Sudan: A Civil War by Any Other Name, 10 April 2014, pp. 15-17.Hide Footnote Chinese nationals scrambled to flee the war zone; their shops were looted and business projects halted.[fn]Crisis Group interviews, Chinese officials, Juba, Beijing, 2016.Hide Footnote Beijing made the unprecedented decision to step in, with three related aims: (1) protect Chinese citizens and economic interests; (2) support an end to the war; and (3) serve humanitarian objectives.[fn]Crisis Group interviews, Chinese officials, Juba, 2014-2016.Hide Footnote Although this was an emergency response, it also became a calculated trial run for a more proactive role in step with China’s expanding overseas footprint and international stature.

This report begins with a review of the evolution of China’s non-interference principle. It analyses China’s motivation, objectives and methods for supporting the South Sudan peace process, as well as its interaction with warring parties and mediators. It studies how China – a relatively new, albeit influential arrival to international peace processes – reinforces, complements, or contradicts traditional diplomatic approaches. It also analyses lessons from the South Sudan experience about China’s evolving understanding of its role in the world and its interpretation of non-inter­ference. This report is primarily based on interviews with policymakers, diplomats, company executives and academics in Beijing, Shanghai, Juba, Addis Ababa, Nairobi and Washington. Many requested that their names be withheld.

II. Evolution of Non-interference

China’s proactive approach to South Sudan appears to be a significant departure from its longstanding principle of non-interference.[fn]安惠候,“不干涉原则与’新干涉主义’”, 《外交季刊》 [An Huihou, “Non-Interference Principle and ‘neo-interventionism’”, Foreign Policy Journal], vol. 104 no.4 (2012); 王嵎生, “中国外交的变与不变(上)”, 《解放日报》[Wang Yusheng, “Changes and continuation of Chinese diplomacy (First Half)”, PLA Daily, 29 October 2012]. An Huihou is the former Chinese ambassador to Egypt and Wang Yusheng is the former Chinese ambassador to Nigeria.Hide Footnote In fact, despite official rhetoric suggesting an unchanging doctrine, China’s interpretation of non-interference has evolved in a way that mirrors that of its definition of national interests and objectives.[fn]Proponents of a more flexible approach argue that non-interference must evolve along with China’s growing global footprint and expectations it will protect its nationals and investments overseas. Furthermore, if interpreted strictly, non-interference would compel China to accept outcomes deriving from other international actors’ interventions that are ineffective or not in China’s interests. They also argue that China’s “free riding” on global stability supposedly provided by others is neither sufficient nor sustainable. Crisis Group interviews, Chinese officials in the foreign ministry and State Council, diplomats and scholars, Beijing, Shanghai, Juba, and Addis Ababa, February-March 2014, January-April 2016. Also see, 催洪建, “‘不干涉’ 的安全观该更新了” [Cui Hongjian: “The ‘non-interference’ security concept should be updated”], Global Times, 28 July 2012; 王逸舟, 《创造性介入:中国外交新取向》[Wang Yizhou, Creative Involvement: A New Direction in China’s Diplomacy] (Beijing, 2011). For more on the evolution of the Chinese approach to peacekeeping prior to 2000, see Crisis Group Asia Report N°166, China’s Growing Role in UN Peacekeeping, 17 April 2009, pp. 3-5.Hide Footnote Even as the theoretical debate continues, Beijing has charted a middle path maintaining the broad non-interference principle while stretching its interpretation and experimenting with various ways of applying it.[fn]Crisis Group interviews, Chinese diplomats and scholars, Beijing, Juba and Addis Ababa, January-April 2016.Hide Footnote

A. China Goes Out

Beginning in the 1990s, China became rapidly integrated into the world economy. In 1996, then-President Jiang Zemin first called for companies to “Go Out” and invest; in 1999, the Communist Party of China (CPC) formally adopted the “Go Out” strategy, supported by state financial institutions.[fn]Financial institutions supporting the “Go-Out” strategy (走出去战略; Pinyin: Zǒuchūqù  Zhànlüè) include China Development Bank (CDB), the Export Import Bank of China (China Exim Bank), policy banks such as Bank of China, and the China-Africa Development Fund. 陈杨勇,江泽民’走出去’战略的形成及其重要意义,人民网 [Chen Yangyong, “The creation and significance of Jiang Zemin’s ‘Go Out’ strategy”], People’s Daily online, 10 November 2008; “China goes global with development banks,” Bretton Woods Project, 5 April 2016; Karl P. Sauvant and Victor Zitian Chen, “China’s Regulatory Framework for Outward Foreign Direct Investment”, Columbia University, 22 February 2014.Hide Footnote Annual overseas direct investment grew from $2.7 billion in 2002 to $170.11 billion in 2016.[fn]The commerce ministry began recording outbound direct investment statistics in 2002. “2010 Statistical Bulletin of China’s Outward Foreign Direct Investment”, Ministry of Commerce of the People’s Republic of China, 16 September 2011. “MOFCOM Department Official of Outward Investment and Economic Cooperation Comments on China’s Outward Investment and Cooperation in 2016”, Chinese commerce ministry, 18 January 2017. By 2015, nearly 30,000 enterprises had invested overseas. “Report on Development of China’s Outward Investment and Economic Cooperation 2015”, Chinese commerce ministry, December 2015.Hide Footnote In Africa, Chinese direct investment grew from $1 billion in 2004 to $24.5 billion in 2013.[fn]Lihuan Zhou and Denise Leung, “China’s Overseas Investments, Explained in 10 Graphics”, World Resources Institute, 28 January 2015.Hide Footnote Although the over-stretched foreign ministry has no exact tally, the number of citizens residing abroad is believed to be about five million and rising, including some one million in Africa.[fn]Jonas Parello-Plesner and Mathieu Duchâtel, “How Chinese Nationals Abroad Are Transforming Beijing’s Foreign Policy”, East Asia Forum (www.eastasiaforum.org), 16 June 2015.Hide Footnote

Driven by energy needs and backed by the state, national oil companies led the “Go Out” march. Because the most readily accessible oil deposits already had been exploited, Chinese companies often ended up in fragile states, taking on political and security risks to outflank competition from better funded, better equipped, more experienced – but also more cautious – Western oil majors. Mining and construction companies joined in, likewise often operating in underdeveloped and unstable regions.[fn]Crisis Group Asia Report N°153, China’s Thirst for Oil, 9 June 2008.Hide Footnote

Even so, when overseas interests were in jeopardy, “rather than trying to influence outcomes in a crisis overseas, Beijing preferred withdrawal”. [fn]Mathieu Duchâtel, Oliver Bräuner and Zhou Hang, “Protecting China’s Overseas Interests”, Stock­holm International Peace Research Institute, June 2014, p. 47.Hide Footnote From 2006 to 2011, China conducted ten large-scale evacuations of nationals from foreign countries due to riots, wars or natural disasters, typically with minimum military participation.[fn]“近年来中国的重大撤侨行动”, 新华网 [“China’s major operations to evacuate nationals in recent years”], Xinhua News online, 31 March 2015.Hide Footnote The choice to withdraw rather than intervene was dictated by both principle and pragmatism. A former special representative for African affairs said, “Interference has to be backed up with capability. Although China was a big power, its capability to project power was not sufficient”.[fn]Crisis Group interview, Liu Guijin, former Chinese special representative for African affairs and on the Darfur issue, Beijing, September 2014.Hide Footnote

B. Darfur: “Cleaning up the Mess”

China’s initially reluctant engagement with the Sudanese government over the Darfur war represented an early and notable departure from non-intervention and toward engagement with multilateral peace and security efforts.

In 2003, Darfur rebels took up arms against the Sudanese government. Khartoum and allied militia groups responded with a brutal counter-insurgency campaign.[fn]Crisis Group Africa Briefing N°14, Sudan’s Other Wars, 25 June 2003; Crisis Group Africa Reports N°76, Darfur Rising: Sudan’s New Crisis, 25 March 2004; N°80, Sudan: Now or Never in Darfur, 23 May 2004; N°83; Darfur Deadline: A New International Action Plan, 23 August 2004.Hide Footnote Beijing’s close economic and political ties with Khartoum, particularly via the oil industry, led to Western accusations that it was bankrolling and protecting a genocidal regime.[fn]China invested billions of dollars in Sudan’s oil industry and imported 60 per cent of Sudan’s crude oil before 2011. China became Khartoum’s largest arms supplier around 2004 and helped Sudan build its domestic arms manufacturing industry. It was responsible for more than 70 per cent of total small arms and light weapons (SALM) transfers to Sudan between 2001 and 2008. Beijing also was seen as Khartoum’s protector in the UN Security Council. Crisis Group Report, China’s New Courtship in South Sudan, op. cit., p. 20; “Arms, Oil, and Darfur: The Evolution of Relations between China and Sudan”, Small Arms Survey, Sudan Issue Brief, Number 7, July 2007; “Supply and Demand: Arms Flow and Holdings in Sudan”, Small Arms Survey, Sudan Issue Brief, Number 15, December 2009.Hide Footnote Activists called for a boycott of the 2008 Beijing Olympics, China’s purported coming-of-age show. Denying any responsibility for the Darfur war, yet fearing a public relations crisis, Beijing sought to “clean up the mess”.[fn]The foreign ministry argued the Darfur issue dated back to 1916, when it was under British control, and said: “It would be too far-fetched to blame China”. “外交部部长助理翟隽就苏丹达尔富尔问题举行中外媒体吹风会 [“Assistant Foreign Minister Zhai Jun Briefs Chinese and Foreign Media on the Darfur Issue in Sudan”], press release, Chinese foreign ministry, 12 April 2007. Crisis Group interview, Chinese scholar on Africa studies, Shanghai, March 2016.Hide Footnote In May 2007, it appointed Liu Guijin, a seasoned diplomat, as its special representative for African affairs and the Darfur issue.[fn]“China appoints Darfur post”, Associated Press, 10 May 2007.Hide Footnote

In 2007, through public statements and private messaging, Beijing persuaded Sudanese President Omar al-Bashir to accept UN peacekeepers, hinting that Khartoum’s obstinacy could cost it China’s support at the UN.[fn]This was not an empty threat: abstentions by China and the U.S. on a 2005 UN Security Council vote to refer the situation in Darfur to the International Criminal Court allowed it to pass. Crisis Group Africa Briefings N°28, The AU's Mission in Darfur: Bridging the Gaps, 6 July 2005; N°43, Getting the UN into Darfur, 12 October 2006; Crisis Group Africa Reports N°105, To Save Darfur, 17 March 2006; N°134, Darfur’s New Security Reality, 26 November 2007; N°152, Sudan: Justice, Peace and the ICC, 17 July 2009; Crisis Group Report, China’s Growing Role in UN Peacekeeping, op. cit.Hide Footnote Chinese diplomats helped broker agreement for an African Union/UN hybrid mission with peacekeepers from developing nations to allay Bashir’s fear that Western forces would be used in the service of regime change.[fn]Crisis Group interview, Liu Guijin, former Chinese special representative for African affairs and on the Darfur issue, Beijing, March 2016. Former U.S. Special Envoy to Sudan Andrew Natsios said China’s influence was a “critical factor” leading to Sudan relenting. Andrew Natsios, “Statement to the Senate Foreign Relations Committee”, 11 April 2007.Hide Footnote After the International Criminal Court (ICC) ordered Bashir’s arrest in March 2009, the envoy assured him: “China did not support ICC’s decision” but also advised him not to expel humanitarians or condone violent attacks against Westerners.[fn]Crisis Group interview, Liu Guijin, former Chinese special representative for African affairs and on the Darfur issue, Beijing, March 2016.Hide Footnote

During the 2005 CPA’s implementation, Beijing also supported negotiations over the division of oil revenues between Khartoum and the Southern Sudan regional government.[fn]While most oil is in the south, it is exported via a pipeline through Sudan. For detailed analysis of China’s role in the oil negotiations, see Crisis Group Report, China’s New Courtship in South Sudan, op. cit., pp. 26-31.Hide Footnote China acted as an influential party at the table, even as it shied away from full-fledged mediation.[fn]Crisis Group interview, Liu Guijin, former Chinese special representative for African affairs and on the Darfur issue, Beijing, March 2016.Hide Footnote In the process, Beijing accumulated experience, gained regional and international players’ trust and built up capability and confidence in mediation, paving the way for its later engagement in South Sudan.

C. Libya: Catalyst for Change

In February 2011, conflict in Libya led to a massive operation to evacuate Chinese nationals working in construction and other sectors. The ten-day evacuation was the largest in Chinese history: 35,860 nationals. For transport and escort, the People’s Liberation Army and Navy (PLA/N) dispatched aircraft and frigates that sailed through the Red Sea and the Suez Canal to the Mediterranean for the first time. A dozen government agencies, nine embassies, commercial airlines and state-owned enterprises participated in the operation; multiple countries in Europe, the Middle East and North Africa facilitated the transit.[fn]马利(主编),《国家行动 -利比亚的撤离》 [Ma Li (ed.), National Operation – the great eva­cu­ation from Libya] (Beijing, 2011), pp. 199-201. “外交部:中国撤离在利比亚公民行动实现 ‘四个第一’”, 新华网 [“Foreign Ministry: China’s evacuation of nationals in Libya realises ‘four firsts’”], Xinhua News online, 6 March 2011.Hide Footnote

State media hailed the evacuation as “an unprecedented” display of military might, diplomatic leverage, financial prowess and mobilising skills.[fn]“特写: ‘回家的感觉太好了!’ – 中国撤离在利比亚人员行动圆满结束”, 新华社 [“Special report: ‘It feels too good to be home!’ – Chinese operation to evacuate nationals from Libya ends in perfect success”], Xinhua News, 6 March 2011. 王逸舟, 《创造性介入:中国外交新取向》[Wang Yizhou, Creative Involvement: A New Direction in China’s Diplomacy] (Beijing, 2011), p. 75.Hide Footnote The impressive operation inspired national pride but also raised expectations that China would protect its citizens elsewhere. Later, this would be cited as a factor justifying intervention in South Sudan.[fn]Crisis Group interviews, Chinese diplomats, Beijing, March-April 2016.Hide Footnote

The Libya evacuation also exposed the limits of China’s ability to protect its investments. Although its citizens were brought home safely,[fn]Crisis Group Report, China’s New Courtship in South Sudan, op. cit., p. 9.Hide Footnote Chinese infrastructure projects worth over $18.8 billion were damaged by fighting, NATO airstrikes, looting and vandalism.[fn]马宁, “利比亚动荡 中国企业利益损失几何?”, 新华网, [Ma Ning, “Libya Turmoil: How much did Chinese companies lose?”], Xinhua News, 25 March 2011; “陈德铭:中国在利比亚项目损失严重”, 凤凰网, [“Chen Deming: China’s projects in Libya suffer severe loss”], Ifeng, 7 March 2012.Hide Footnote Oil imports from Libya to China fell from 150,000 barrels per day in 2010 to just 19,000 by 2014.[fn]“China”, U.S. Energy Information Administration, 14 May 2015, p. 10. “Libya is a major energy exporter, especially to Europe”, U.S. Energy Information Administration, 21 March 2011.Hide Footnote Beijing, like many other countries, was convinced that NATO’s Libya campaign exceeded the UN Security Council’s authorisation (which passed with China’s abstention) and resulted in regime change “without any legal or institutional proceedings”.[fn]Crisis Group interview, senior Chinese foreign ministry official, Beijing, February 2014. In May 2011, then-Chinese Ambassador to the UN Li Baodong twice stated China’s opposition to the NATO campaign, saying it was based on an “arbitrary interpretation” of UN resolutions. United Nations Security Council 6528th meeting, UN Document S/PV.6528, 4 May 2011. United Nations Security Council 6531st meeting, UN Document S/PV.6531, 10 May 2011. Chinese scholars spoke of a sense of “deception and betrayal” by the West, and blamed Western military intervention for the ensuing chaos in Libya. Zheng Chen, “China and the responsibility to protect”, Journal of Contemporary China, vol. 25, no. 101 (2016), p. 693. Ruan Zongze, “Responsible Protection: Building a Safer World”, China International Studies, vol. 34 (May/June 2012).Hide Footnote

Libya focused the attention of Chinese foreign policy decision-makers and thinkers and sharpened the debate on the contours of non-interference. Many began to argue that China needed to engage actively in global security affairs to prevent such chaos from arising in the first place and to shape outcomes.

III. South Sudan: The Pilot Project

South Sudan’s civil war began in December 2013 with fighting and ethnically-targeted killings in the capital, Juba.[fn]Crisis Group Report, South Sudan: A Civil War by Any Other Name, op. cit.Hide Footnote Violence soon spread across the country. Rebels with the Sudan People’s Liberation Movement/Army – In Opposition (SPLM/A-IO) targeted and destroyed some oil infrastructure and killed South Sudanese workers on Chinese-owned oil facilities. Chinese workers were evacuated in emergency conditions.[fn]“97 Chinese workers evacuated from South Sudan to Khartoum”, Xinhua, 25 December 2013.Hide Footnote The Horn of Africa regional body, the Intergovernmental Authority on Development (IGAD), immediately launched mediation efforts between the government and the rebels in an attempt to stop the war and prevent neighbouring states from being pulled into a regional conflict. Both China and Western states backed these efforts. IGAD’s chief mediator, Seyoum Mesfin, a former Ethiopian foreign minister and ambassador to China, provided Beijing a known and credible entry into the mediation. China’s interests in South Sudan and strong relations with the regional mediators made South Sudan an ideal testing ground for Beijing’s increasingly nuanced approach to non-interference.

A. Chinese Interests on the Ground

Although South Sudan accounts for only 2 to 5 per cent of China’s annual oil imports, oil is front and centre among Beijing’s concerns.[fn]“China”, U.S. Energy Information Administration, updated 14 May 2015.Hide Footnote While the volume may appear small, its political and geopolitical significance is not.

Sudan was the Chinese oil industry’s first overseas success and retains symbolic importance. It was there that China’s oil corporation and its subsidiaries cut their teeth on international operations, proved their mettle and gained operational experience.[fn]The New Kings of Crude, op. cit., p. 111.Hide Footnote The China National Petroleum Corporation (CNPC) also demonstrated its ability to enhance China’s energy security, winning Beijing’s support for further expansion. As oil prices soared between 1998 and 2003, output from Sudan “contributed significantly to the company’s growth”.[fn]Crisis Group interview, CNCP official, Juba, April 2016.Hide Footnote The Khartoum refinery became a frequent stop for visiting Chinese government and party officials.[fn]The New Kings of Crude, op. cit., pp. 101-102.Hide Footnote

After the 2005 peace agreement, when it appeared likely South Sudan would gain independence, CNPC deepened its engagement with Juba – at first secretly, for fear of offending Khartoum.[fn]Crisis Group interview, Chinese businessman with first-hand knowledge, Juba, April 2016.Hide Footnote But CNPC and its partners found building relations with South Sudan challenging. Juba drove a hard bargain when it came to restructuring contracts and the volatile political environment undercut production.[fn]Crisis Group interviews, officials in the petroleum ministry, businesspeople, Juba, 2013-2016.Hide Footnote As noted, the government shut down operations in January 2012 over deadlocked talks with Sudan on oil transit fees.[fn]Crisis Group Report, China’s New Courtship in South Sudan, op. cit., pp. 20-31.Hide Footnote Boom-time was over and the immediate loss of almost all government revenue was partially covered through loans taken against future oil production whose cost continues to be paid.[fn]Crisis Group Report, South Sudan: A Civil War by Any Other Name, op. cit.Hide Footnote South Sudan’s economic downturn had begun.

Although oil flow resumed in April 2013, the civil war that broke out in December shut down production in three fields in Unity state (the larger Upper Nile state fields remained operational).[fn]Both are near the border with Sudan and near areas where fighting has taken place. “South Sudan restarts oil production”, Financial Times, 7 April 2013. Crisis Group interview, CNPC managers, Juba, April 2016.Hide Footnote The global decline in oil prices in 2014, combined with the war, presented a dual challenge for the oil companies. In January and February 2016, when benchmark crude oil prices dipped to lows below $30 per barrel, CNPC lost nearly $2 million a day, although it still is banking on South Sudan stabilising and oil prices have since increased.[fn]Crisis Group interviews, CNPC managers and Chinese diplomats, Juba, April 2016.Hide Footnote

Although CNPC officials routinely downplay the company’s influence on Beijing’s decision-making, executives of national oil majors are prominent members of the elite decision-making class. The Communist Party’s Central Organisation Department appoints these top executives, who typically hold vice ministerial rank. It is not uncommon for oil company executives to ascend to prominent political positions.[fn]Crisis Group Asia Report N°275, Stirring up the South China Sea (IV): Oil in Troubled Waters, 26 January 2016, p. 5. Zhou Yongkang, CNPC general manager 1996 to 1998, played a crucial role in CNPC’s venturing into Sudan. He became a member of the Politburo Standing Committee in 2007 and security czar. In retirement, he was arrested on corruption charges in 2015. “Profile: China’s fallen security chief Zhou Yongkang”, BBC, 11 June 2015.Hide Footnote Although CNPC is primarily a profit-seeking corporation, it can be called upon by the party to fulfil policy or political goals such as employment and diplomacy. Diplomats said CNPC was asked to absorb the loss and stay put in South Sudan. The company in turn sought and expected protection from the Chinese state.[fn]Crisis Group interviews, Beijing, March 2016; Addis Ababa, April 2016; Chinese scholar, Shanghai, April 2016.Hide Footnote

Operational costs, with cheap rent and labour, were low and profit margins were as high as 50 per cent before the current economic crisis.

Oil companies were not alone in investing in South Sudan. Other companies followed suit, accompanied by Chinese loans.[fn]In January 2012, Kiir received Li Yuanchao, member of the Politburo, in Juba. The two sides discussed additional loans potentially guaranteed against future oil reserves. Crisis Group Report, China’s New Courtship in South Sudan, op. cit., pp. 10-11.Hide Footnote Bilateral trade reached $534 million in 2012; by 2013, roughly 100 Chinese companies were registered in South Sudan, covering energy, engineering, construction, telecommunications, medical services, hotels, restaurants, and retail.[fn]“中国和南苏丹合作简介”[“Brief introduction to China-South Sudan Cooperation”], official website of the Economic and Commercial Counsellor’s Office of the Chinese Embassy in South Sudan, updated 8 December 2013.Hide Footnote Some saw South Sudan as a “paradise for investors”: a country rich in oil income, with huge infrastructure needs, nearly no industry and no Western competition.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016. Zhong retired from the position in August 2016.Hide Footnote Operational costs, with cheap rent and labour, were low and profit margins were as high as 50 per cent before the current economic crisis.[fn]Crisis interviews, Chinese businessmen, Juba, April 2016; correspondence, Chinese businessmen, July 2016.Hide Footnote

Yet risks also are plentiful. Beyond war and political instability, robberies, kidnapping and petty crime threaten property and personal safety. Both government and rebel groups have sought to protect Chinese businesspeople and infrastructure, expecting (and sometimes receiving) financial benefits in exchange.[fn]Crisis Group interviews, South Sudanese government officials and rebel leaders, Juba, Addis Ababa, 2014-2015.Hide Footnote But the government, which has been running a deficit and mortgaging future oil revenue since 2012, is chronically delinquent on contractual and loan payments. Investors are therefore increasingly hesitant to make substantial investments.[fn]Crisis Group interviews, Chinese businessmen in construction, telecommunications, and hospitality, Juba, April 2016.Hide Footnote

B. A Pilot Project for Diplomacy

When civil war broke out in December 2013, CNPC evacuated many employees on company airplanes. Other Chinese citizens fled via self-organised caravans. Although not specifically targeted, Chinese retail shops and restaurants were looted or burned down in the fighting.[fn]Crisis Group interviews, CNPC managers and other Chinese businessmen, Juba, April 2016.Hide Footnote

Chinese officials debated whether to leave or stay with lessons from Libya fresh in their minds. Another withdrawal would mean leaving oil fields and other investments behind, likely to be damaged by war; it also would mean forfeiting economic and political leverage to influence events.[fn]Crisis Group interviews, Chinese diplomats and scholars with state-affiliated think-tanks, Beijing, January-March 2016.Hide Footnote Diplomats said Beijing was also driven by “a sense of responsibility” to preserve South Sudan’s economic future, which lives or dies with the oil industry.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote Zhong Jianhua, who replaced Liu as special representative on African affairs in 2012, arrived in Nairobi as IGAD launched its mediation process. In response to IGAD’s request for China’s engagement, Beijing stepped up its involvement. Between 2014 and the signing of a peace agreement in August 2015, China was consistently engaged and supportive of the mediation process.

For Beijing, South Sudan became a real-world laboratory to test the boundaries of its non-interference principle. It did so in what, domestically, was a relatively less contentious arena: unlike conflicts and disputes in Asia, Africa seldom falls under Beijing’s domestic media spotlight or becomes the subject of nationalist passion. A Chinese scholar on African affairs said:

China can afford to stomach the cost of trial-and-error of new approaches in Africa. China hopes to form “Chinese solutions”. In comparison, Myanmar and the South China Sea are much more sensitive and mistakes there are much more costly to China.[fn]Crisis Group interview, Chinese scholar on African affairs at a government-affiliated think-tank, Beijing, January 2016.Hide Footnote

As a result, the foreign ministry’s Africa Department has more room to manoeuvre, undertake policy initiatives and delegate authority and influence to the field.[fn]Crisis Group interview, Chinese foreign ministry official, Beijing, March 2014.Hide Footnote Diplomats in Juba and Addis Ababa were ready to engage with the South Sudan mediation, which one diplomat described as “a pilot project for Chinese diplomacy”. It was expected that this experience would shape the debate in Beijing about non-interference and thus contribute to formulating “Chinese solutions”.[fn]Crisis Group interview, Chinese diplomat, Addis Ababa, April 2016.Hide Footnote

IV. China in Action

The government sees itself as a newcomer to conflict resolution, and is viewed as such by partners. Though vaguely defined and still evolving, an outline of what “Chinese solutions” might look like is beginning to emerge from its engagement with South Sudan.

A. Chinese Solutions

1. Setting the table, not forcing outcomes

China appears most comfortable in the role of a table-setter, leveraging its political and economic influence to bring parties together. Its flexibility in providing aid has helped ensure the quick release of small in-kind donations covering transportation and accommodation for participants in negotiations.[fn]“During mediation between Darfur and Sudanese government for example, Chinese funding support always came in handy. It allowed people to travel and convene,” said a UN official involved in the process. Crisis Group interview, Addis Ababa, April 2016.Hide Footnote But Beijing, is only slowly becoming comfortable with directly setting agendas, proposing terms in agreements or drafting documents – and even then tends to do so behind the scenes.[fn]Crisis Group interview, UN official, Addis Ababa, April 2016.Hide Footnote

Beijing displayed such table-setting to good effect in January 2015 when Sudan-South Sudan relations were strained over support for one another’s rebels.[fn]Tensions between the two Sudans escalated in December 2014 as Sudan’s defence minister, Abdel Rahim Hussein, and intelligence chief, Mohamed Atta, claimed that Juba had continued to harbour and support Sudanese rebel groups. Atta warned South Sudan that any incursion by rebel forces from its territory would be treated as an “assault”, and threatened to pursue rebels inside South Sudanese territory. In response, SPLA spokesperson Philip Aguer said Khartoum’s comments amounted to a declaration of war. “Khartoum again warns Juba against supporting Sudan’s JEM rebels”, Sudan Tribune, 17 December 2014. “Sudan warns South Sudan against ‘hostile moves’ by rebels in its territory”, Reuters, 17 December 2014.Hide Footnote Leveraging its longstanding ties with the Sudanese government, Beijing sent Foreign Minister Wang Yi to convene a “special consultation meeting” in Khartoum that included South Sudan’s warring parties, Ethiopia, Sudan and IGAD.[fn]Crisis Group interviews, Chinese diplomats, Beijing, March 2016, Juba, April 2016.Hide Footnote Zhong Jianhua, then special representative of the Chinese government on African affairs said:

We hoped to help elevate Sudan’s international status. Choosing Khartoum gave the Sudanese government considerable recognition and encouragement. We acknowledged Sudan’s role in addressing the conflict and believed that it should play an important role. Sudan very much welcomed the decision and felt that we paid enough respect by making it the host.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote

The meeting did not produce concrete resolutions, but Beijing secured renewed commitments to oil infrastructure security, melding its economic interests with those of Sudan and South Sudan. It “put Sudan and South Sudan on notice … China sent a message to the Sudanese government that supporting conflict in South Sudan would go against Chinese interests. Western countries were not in a position to do so”.[fn]Crisis Group interview, senior U.S. official, Washington, May 2016.Hide Footnote The event also “made IGAD refocus its attention and added new momentum to the peace process”.[fn]Crisis Group interview, UN official, Addis Ababa, April 2016.Hide Footnote Chinese influence encouraged Khartoum to exercise restraint in South Sudan, which also helped set the Sudanese government up in 2016 for its negotiations over sanctions relief from Washington, which was counselling the same approach.

Beijing considered this a “ground-breaking” initiative. “It was the first time that we called upon leaders of countries in the region to discuss conflict resolution in another country”.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote Western and African partners increasingly have urged Beijing to take on more responsibility, given its permanent seat on the UN Security Council and leverage over parties concerned.[fn]“South Sudan’s famine is China’s chance to lead”, Bloomberg, editorial, 27 February 2017.Hide Footnote According to one UN official: “It can punch way more weight … China can put its foot down on deadlines. It can be tougher. It can insist on implementation”.[fn]Crisis Group interview, UN official, Addis Ababa, April 2016.Hide Footnote

2. Chinese interests as global interests

China was as surprised as the rest of the world when the civil war began, and scrambled to secure its oil infrastructure in the volatile Greater Upper Nile region. Some installations were destroyed in the first weeks of the war and opposition forces threatened to attack and destroy others.[fn]The war started in Juba and quickly spread throughout Greater Upper Nile. Crisis Group Report, South Sudan: A Civil War by Any Other Name, op. cit.Hide Footnote

China hedged between the government and SPLM/A-IO (the rebel grouping negotiating with the government), providing financial and other support to both parties conditioned upon their guaranteeing the security of oil infrastructure or, in the case of the rebels, not attacking it. Beijing may have overestimated the SPLM/A-IO’s capabilities after the first few months of war; it was in the rebels’ interests to overstate their ability to threaten the fields, a case they continue to make.[fn]Attacking the oil fields again would have put them at odds with Khartoum, which was their primary source of arms. Crisis Group interview, SPLM-IO member, December 2016.Hide Footnote

China, alongside most of the international community, also overestimated SPLM/A-IO leader Riek Machar’s command and control over the forces operating in his name. When Johnson Olony, a rebel turned government general in 2013, defected (again) to the opposition in 2015, his first act was to march on the oil fields – flouting Machar’s agreement with the Chinese.[fn]Crisis Group Africa Report N°228, South Sudan: Keeping Faith with the IGAD Peace Process, 27 July 2015, p. 14.Hide Footnote His forces briefly captured Melut town and were poised to launch an offensive on the well-defended Palioch oil fields nearby. Chinese and Western diplomats rushed to avoid an oil shutdown amid calls to pull out foreign workers.[fn]Crisis Group interviews, U.S. officials, Washington, May 2015.Hide Footnote In the end, Olony’s forces were turned back by South Sudanese government forces. But the incident demonstrated the limits of China’s arrangement with Machar.

The wider international community supported China’s efforts to protect oil infrastructure; few could envision war-ravaged South Sudan rebuilding without oil revenue.[fn]Crisis Group interviews, Western and regional diplomats, Addis Ababa, 2014-2015.Hide Footnote However, China was the only actor prepared to provide direct help to keep the oil flowing. Quiet understandings with both the government and rebels offered China the prospect of benefits beyond wartime security – good relations with Juba and, on the ground, with the leadership of oil-producing states that former rebels would have governed had the peace agreement been fully implemented.[fn]Crisis Group Report, South Sudan: Rearranging the Chessboard, op. cit. The 2015 IGAD peace agreement provided that the two major oil-producing states of South Sudan were to be governed by Machar’s rebels. “Agreement on the Resolution of Conflict in the Republic of South Sudan”, IGAD, 17 August 2015, pp. 17-18.Hide Footnote

3. African solutions to African problems

China has called for “African solutions to African problems”, an approach that gives Beijing’s policy considerable room to evolve.[fn]Premier Li Keqiang debuted China’s commitment to the concept in May 2014. “第十五届’蓝厅论坛’在外交部举行, 外交部长王毅发表主旨演讲” [“The 15th ‘Lanting Forum’ takes place in the foreign ministry; foreign minister Wang Yi delivers keynote speech”], press release, Chinese foreign ministry, 26 November 2015; Crisis Group interviews, Beijing, Juba and Addis Ababa, January-April 2016.Hide Footnote In South Sudan, it insists on IGAD’s lead role and is reluctant to reach for the reins even when the process falters. “We have to let local people decide their own fate, even though they might end up with nothing”, said a senior diplomat.[fn]Crisis Group interview, Beijing, March 2016.Hide Footnote It also can be swayed by African endorsements. In May 2011, following fighting in Abyei, a region disputed between Sudan and South Sudan, an African Union (AU) Peace and Security Council communiqué helped put an end to Beijing’s resistance to the idea of intervention by external actors. China subsequently voted at the Security Council in June to authorise peacekeepers for Abyei.[fn]As one diplomat said: “When China and Russia saw it was African text, they were okay”. Crisis Group interview, EU diplomat, Addis Ababa, April 2016; “Communiqué: The Peace and Security Council of the African Union (AU), at its 280th meeting held on 20 May 2011, in Addis Ababa, considered the implementation status of the Comprehensive Peace Agreement (CPA) in Sudan”, PSC/PR/BR (CCLXXX), 20 May 2011; “Communiqué of the Consultative Meeting between Member of the Council of the United Nations and the Peace and Security Council of the African Union”, United Nations, 21 May 2011. “Resolution 1990 (2011)”, S/RES/1990 (2011), 27 June 2011.Hide Footnote

Western diplomats found that the most effective way to win China’s (and Russia’s) approval of – or acquiescence to – Africa-related UN Security Council resolutions is to obtain backing from the body’s African members.[fn]Crisis Group interview, Western diplomat, Addis Ababa, April 2016.Hide Footnote When African council members are divided, for instance over whether to support an arms embargo for South Sudan, China has urged the bloc to find a common position it can support.[fn]Crisis Group interview, Western diplomat, Juba, June 2016.Hide Footnote

That said, there are signs China’s approach is evolving. As it becomes more familiar with, and invested in, international peace and security mechanisms, it has begun to try to shape regional positions behind the scenes rather than passively follow them. This has been most notable with respect to Sudan and South Sudan.

4. Persuasion not punishment

China typically resists sanctions, shuns open criticism and prefers behind-the-scene persuasion. Itself once a target of sanctions, Beijing retains an ideological aversion to them, seeing them as instruments of Western coercion.[fn]Crisis Group interview, Chinese scholar, Beijing, 26 January 2016.Hide Footnote It also argues sanctions rarely achieve the intended effect and often backfire.[fn]Crisis Group interview, Chinese diplomat, 21 April 2016.Hide Footnote In practice, however, China has often adopted a more nuanced approach.

When sanctions are discussed, China occasionally mediates between the government and Western powers. “The Troika often raised the threat of sanctions”, a Chinese diplomat recounted, “China would play the role of ‘good cop’ to ease tensions”, urging patience from Western partners while counselling the targeted party to make concessions.[fn]Crisis Group interviews, Chinese diplomats, April 2016. The U.S., UK and Norway, have operated as one unit when mediating conflicts in and between the two Sudans, coordinating policymaking and speaking with one voice. The term “Troika” first surfaced in early 2001 as the three countries began to pursue concerted efforts in the Sudan peace process.Hide Footnote Functioning as messenger rather than enforcer allows Beijing to leverage its political influence without risking it.[fn]Other governments – including Ethiopia, Japan and Uganda, among others – have played this role with the South Sudanese government in recent years. Crisis Group interviews, Juba, Addis Ababa, 2014-2016.Hide Footnote China has used this approach on several occasions in recent years, including in efforts to secure the release of some of the thirteen senior SPLM members Kiir arrested and accused of plotting a coup in 2013.[fn]“S. Sudan releases two political detainees, calls for ceasefire”, Sudan Tribune, 27 December 2013; “Communiqué of the 23rd extra-ordinary session of the IGAD assembly of heads of state and government on the situation in South Sudan”, communiqué, IGAD, Nairobi, 27 December 2013; “Direct talks on South Sudan open in Ethiopia”, BBC, 5 January 2014; “South Sudan rejects call to free detainees as troops defect”, Bloomberg, 6 January 2014.Hide Footnote

On 3 April 2014, with four still in custody (and as war and atrocities continued) the U.S. announced a sanctions regime on South Sudan.[fn]“Executive Order – Blocking Property of Certain Persons With Respect to South Sudan”, the White House, 3 April 2014.Hide Footnote Chinese diplomats subsequently met with senior South Sudanese officials, including Kiir, advising flexibility and pragmatism rather than “taking the West head-on”.[fn]Crisis Group interview, Chinese diplomat, April 2016.Hide Footnote Juba announced the remaining detainees’ release on 25 April “to promote peace and reconciliation”.[fn]“South Sudan frees alleged rebel leaders”, Al Jazeera, 25 April 2014.Hide Footnote Although the U.S. imposed individual sanctions the following month due to alleged involvement in atrocities and for undermining peace negotiations, they targeted lower ranking individuals than initially envisaged.[fn]“John Kerry visits South Sudan, warns gov’t and rebels to avert ‘genocide’”, Associated Press, 2 May 2014; “U.S. sanctions both sides of South Sudan conflict”, Reuters, 6 May 2014. The U.S. had threatened to sanction top leaders on both sides but instead sanctioned two operational generals. The number later rose to six, the most senior sector commander.Hide Footnote

China’s somewhat ambivalent relationship to sanctions is evidenced by its record at the Security Council. On 3 March, China voted in favour of a U.S.-sponsored resolution laying the groundwork for targeted sanctions in advance of a 5 March peace process deadline.[fn]UNSC S/2015/2206, 3 March 2015.Hide Footnote Initially, China objected, due to ongoing negotiations, but it ultimately voted in favour, to “send a unified message”.[fn]“中国反对通过联合国南苏丹制裁决议” [“China opposes passing UN resolution imposing sanction on South Sudan”], BBC, 27 February 2015; “UN sets up sanctions regime for S. Sudan”, VOA News, 3 March 2015. The resolution also established a UN Panel of Experts to provide regular reporting to the Security Council on South Sudan.Hide Footnote Subsequently activists called for sanctioning both Kiir and Machar. In talks with the U.S., Beijing agreed not to block Washington’s efforts to sanction moderately high-ranking commanders in July 2015 in return for taking more senior officials off the sanctions list.[fn]Crisis Group interview, Addis Ababa, 22 April 2016.Hide Footnote This allowed Beijing to both stand with the international community and mollify Juba. Before the vote, South Sudan’s Vice President James Wani relayed Kiir’s “high regards and sincere gratitude” for Beijing’s “objective stance” to the Chinese ambassador.[fn]“南苏丹副总统瓦尼紧急约见马强大使” [“South Sudanese Vice President Wani requests emergency meeting with Ambassador Ma Qiang”], Chinese embassy in Juba, 3 March 2015.Hide Footnote

The flexibility also reflects back-and-forth between the capital, more concerned about principles, and the field, more preoccupied with influencing developments on the ground. With intimate knowledge of the conflict, peace process and parties involved and influenced by daily interactions with other international players, frontline diplomats may see the utility of sanctions. “Sometimes in order to have the process moving, you need to show teeth. Ultimately you need some leverage”.[fn]Crisis Group interview, Chinese diplomat, Addis Ababa, April 2016.Hide Footnote While never quite identical, the diplomats’ views also began to converge with those of counterparts in Beijing in seeing sanctions, or their threat, “as leverage to influence future behaviour instead of punishment for past behaviour”.[fn]The first round of U.S. and UN sanctions were for past human rights abuses and ceasefire violations, and not designed to shape future behaviour. Crisis Group interview, senior U.S. official, Washington, May 2016.Hide Footnote

5. Development-focused governance vs. liberal democratic governance

Beijing generally sees underdevelopment as the root cause of instability and believes its governance model better suited to cure this than Western democracy.[fn]Crisis Group interviews, Chinese diplomats, Juba and Addis Ababa, April 2016. Liu Guijin, speech, “Protecting Interests and Nationals in Africa: Chinese and European Approaches and Experiences”, CICIR-SIPRI, Beijing, 12 September 2014. Also see, “Peacekeeping, Mediation, Assistance, Escort, Development – Wang Yi Talks about Five Keywords of China’s Assistance to Peace and Security in Africa”, Chinese foreign ministry, 11 August 2016.Hide Footnote As one diplomat said: “People don’t have enough to eat. Most are illiterate. Does Western democracy really work [in South Sudan]?”[fn]Crisis Group interview, Juba, April 2016.Hide Footnote Some Chinese analysts believe the West places “too much emphasis” on “procedural legitimacy” at the cost of stability, which they argue requires a strong regime, especially in nation-building’s early stage.[fn]Crisis Group interview, Chinese analysts of African affairs at a state-affiliated think-tank, Beijing, January 2016.Hide Footnote

China believes its own post-Mao model of governance and development – a hybrid of planned and market economy under one-party rule – fits the Horn of Africa and is more appealing than Western democracy.[fn]Crisis Group interview, senior Chinese diplomat, Juba, April 2016.Hide Footnote As one scholar put it, African nations (or at least their leaders) are attracted to the Communist Party’s ability to make decisions, mobilise resources and speedily launch ambitious endeavours thanks to its concentration of power and absence of effective dissent.[fn]Crisis Group interview, Chinese scholar on Africa Studies, Beijing, January 2016. The Ethiopian People’s Revolutionary Democratic Front is among the most enthusiastic African adherents to aspects of the Chinese model. Others include ruling parties in South Africa, Zimbabwe and Namibia. Yun Sun, “Political Party Training: China’s Ideological Push in Africa?”, Africa in Focus, Brookings Institute, 5 July 2016.Hide Footnote

Rather than pushing its model, Beijing soft-sells it. An official said: “We don’t have slogans like the West does. We only share experiences”.[fn]Crisis Group interview, Liu Guijin, former special representative for African affairs and on the Darfur issue, Beijing, March 2016.Hide Footnote Between 2010 and 2013, the Communist Party organised workshops for senior SPLM cadres in Juba and Beijing on topics including poverty alleviation, social and economic development, public opinion guidance and party-building.[fn]Zeng Aiping, “China-Africa Governance Exchanges and Experiences”, Chinese Institute of International Studies (www.ciis.org.cn), 3 December 2015.Hide Footnote The embassy also “explained China’s governance principle and practice” to South Sudanese officials.[fn]Crisis Group interview, Chinese diplomat, Juba, April 2016.Hide Footnote

B. China’s Assets

Chinese diplomats and African officials also say Beijing has gained the trust of parties because it is seen as the most neutral among mediators.[fn]Crisis Group interviews, Beijing, Juba, Addis Ababa, January-April 2016.Hide Footnote Its interests are clear and, rather than pushing particular paths, it is more focused on the end state of peace and economic stability. Beijing assiduously avoids the appearance of taking sides, shuns public denunciation and is reluctant to resort to pressure or punishment. As its primary concern appears to be protecting its commercial interests, maintaining amicable relations with all sides constitutes a hedge against risks: “keeping a low profile” helps ensure it “makes no enemies”.[fn]Crisis Group interviews, Chinese diplomats and scholars, Beijing, January-March 2016.Hide Footnote Moreover, loans and assistance typically come with no strings attached, which governments see as welcome alternatives to Western donations that are tied to human rights conditions or governance standards.

There are historical affinities as well. China shares with many African countries “painful memories” of humiliation and oppression by Western powers,[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote a similarity that both helps guide Beijing’s approach and appeals to its African counterparts. All in all, this combination of factors provides Chinese diplomats with access to important players, access often appreciated by its Western partners, who are frustrated and concerned about their own lack of leverage.[fn]Crisis Group interviews, Beijing, Juba and Addis Ababa, January-April 2016.Hide Footnote

Even as it deepened ties with Juba, Beijing maintained close relations with Khartoum. Its access to both sides was valuable to the IGAD mediation.

South Sudan is a case in point. Initially, its leaders viewed Beijing with suspicion and resentment due to its support for Khartoum. However, after the 2005 peace agreement, pragmatism drove both Beijing and Juba to establish and solidify political, economic and party ties. Kiir visited Beijing in 2005 and 2007. Even as it deepened ties with Juba, Beijing maintained close relations with Khartoum. Its access to both sides was valuable to the IGAD mediation.[fn]Crisis Group interview, U.S. official, Washington, May 2016.Hide Footnote

1. Economic leverage

Oil accounts for almost all South Sudan’s exports.[fn]At independence, oil accounted for 98 per cent of government revenue. “South Sudan – Over­view”, World Bank, updated 9 April 2016.Hide Footnote The consortium led by China’s oil corporation accounts for most of the investment in its oil industry; its withdrawal would render it impossible to maintain production levels and could prompt a collapse of the formal economy. Therefore, Beijing’s message to Juba was relatively clear-cut, “if you want us to stay, you have to keep us safe …. In the short run, you must ask the troops to safeguard our oil fields. In the long run, you have to stop fighting and implement the ceasefire”.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, March 2016.Hide Footnote

Beijing delivered a similar message to the opposition, and secured an unwritten promise that it would not attack the oil fields.[fn]The promise was cemented through ongoing engagement with senior rebel leaders and financial inducements. Crisis Group interviews, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, March 2016; SPLM/A-IO officials, Addis Ababa, 2014-2015; Nairobi, 2016.Hide Footnote China’s National Petroleum Corporation “at the Chinese government’s behest” continued production and, at some points, paid Juba higher-than-market prices, even when running a loss.[fn]Crisis Group interviews, Chinese diplomats, Juba and Addis Ababa, April 2016. China was granting such terms in hopes of renewing its contracts and winning future concessions.Hide Footnote

In the same spirit, Beijing leveraged its loan policy. Before the civil war, the Ex-Im Bank had pledged loans and credit for at least three projects; it subsequently held off from disbursing the money because of the conflict and related economic challenges.[fn]Crisis Group interview, Chinese businessman, Juba, 12 April 2016; Peter Bashir Gbandi, South Sudanese acting foreign minister, Juba, 13 April 2016. See also, “进出口银行与南苏丹签署融资合作文件” [“Ex-Im bank and South Sudan sign financing cooperation document”], China Ex-Im Bank, 28 July 2014; “Republic of South Sudan Staff Report for 2014 Article IV: Debt Sustainability Analysis”, International Monetary Fund (IMF), 2 December 2014; “Even China has second thoughts on South Sudan after violence”, Los Angeles Times, 20 February 2014.Hide Footnote Other loans and investments also are on hold. China insists that: “Without peace, our money would go down the drain”.[fn]Crisis Group interview, Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote

Ultimately, Beijing’s economic clout translates into political influence, and both Juba and the opposition have learned to respect China’s interests and messaging.[fn]Crisis Group interviews, Chinese, Western and African diplomats, Juba and Addis Ababa, April 2016.Hide Footnote This extends to Khartoum, according to one UN official: “Whatever China said was listened to very carefully [by] both Sudan and South Sudan”.[fn]Crisis Group interview, UN official, Addis Ababa, April 2016.Hide Footnote

2. Humanitarian assistance

Beijing has skilfully tailored the timing and manner of delivery of modest donations to produce maximum impact. Since the outbreak of civil war, China has provided at least $49 million in humanitarian assistance, with $10 million going to the World Food Programme (WFP), other in-kind aid and occasionally as emergency cash.[fn]For a breakdown of major pledges totalling $21 million between December 2013 and July 2014, see Zhou Hang, “China’s emergency relief to South Sudan”, The Diplomat (http://thediplomat.com), 26 October 2014. Additionally, China has pledged or delivered humanitarian assistance of at least $29 million and 8,750 tons of food since then. “China pledges 10 mln USD aid to South Sudan”, Xinhua, 24 August 2016; “China to provide S. Sudan with financial, food aid amid famine; envoy”, Xinhua, 26 April 2017; “China contributes US$5 million to WFP’s emergency operation in South Sudan”, press release, World Food Programme, 6 June 2017.Hide Footnote

While comparatively small,[fn]By comparison, the U.S. – the single largest contributor – has pledged $2.4 billion in humanitarian assistance since late 2013 for aid to South Sudanese in-country and in refugee camps in neighbouring countries. “South Sudan – Crisis: Fact Sheet #8 Fiscal Year (2017)”, United States Agency for International Development 25 May 2017.Hide Footnote assistance tends to be free from restrictive regulations, conditionality, or domestic media scrutiny, affording Beijing flexibility and manoeuvring room that OECD Development Assistance Committee member states typically lack; by the same token, China can be more responsive to Juba’s requests. For example, China provided food, shelter and water for the temporary SPLA-IO military assembly areas used when its members returned to Juba to form the transitional government. It worked in coordination with Western countries that could not provide such assistance to a military encampment but could transport soldiers to Juba.[fn]This was permissible in-line with the Troika’s approved mandate to spend funds in support of implementation of the August 2015 peace agreement.Hide Footnote “The embassy drew a list of things needed worth about $1 million. We built prefabricated houses, provided generators, mosquito nets … [which were] in place just in time for the return of the 1,300 soldiers”.[fn]Crisis Group interview, Chinese diplomat, April 2016.Hide Footnote

Juba has been more likely to listen to China – which has turned a blind eye to human rights violations – than to Western countries, whose relationships with the government dramatically deteriorated in recent years. This appears to have been the case with regards to ensuring continued humanitarian access; access to rebel-held areas. The Chinese ambassador secured Juba’s consent for China to support UN WFP operations and its agreement to the WFP’s sensitive cross-line food deliveries to rebel-held areas. A Chinese diplomat said:

I went to talk with the foreign minister and the minister of humanitarian affairs. I told them that China was going to give the government $8 million in humanitarian assistance. I also said we can’t neglect people in the three northern states and that China wanted to provide them $5 million of food assistance.[fn]Crisis Group interview, Chinese diplomat, April 2016.Hide Footnote

C. China’s Limitations

1. Experience and capability

Compared with its Western counterparts, the Chinese foreign ministry is only in the early stages of building institutional infrastructure, acquiring expertise and establishing its authority on matters related to conflict resolution. “The British and French have been here more than 100 years. We are learning. For many years we were very careful and only interested in economic and trade issues” said a senior diplomat in Addis Ababa.[fn]Crisis Group interview, Addis Ababa, April 2016.Hide Footnote

Beijing also is handicapped by a shortage of field capacity. Embassies across Africa face a dramatic increase in their workload as the number of nationals and companies grows, but without a concomitant increase in staff or resources.[fn]Crisis Group interview, Liu Haifang, Associate Professor, Peking University, Beijing, January 2016.Hide Footnote When the civil war broke out in 2013, the Chinese embassy in Juba had about twenty staff, compared with about 300 American and local employees in the U.S. embassy.[fn]Crisis Group interview, Chinese diplomat, Beijing, March 2016. U.S. figure is from “Report of Inspection Embassy Juba, South Sudan, Report Number ISP-I-13-29A”, United States Department of State and the Broadcasting Board of Governors Office of Inspector General, May 2013.Hide Footnote Supporting South Sudan’s peace efforts placed additional demands on the mission, but it was not given supplementary resources. The Chinese special envoy does not have a dedicated support team; instead, he relies on desk officers at the Western Asia and North Africa Department when in Beijing, and on embassies while in the field.[fn]Crisis Group interviews, Chinese diplomats, Beijing, March 2016, Addis Ababa, April 2016. For a sense of the scope of the U.S. diplomatic effort, see Princeton N. Lyman and Robert M. Beecroft, “Using Special Envoys in High-Stakes Conflict Diplomacy”, Special Report 353, United States Institute of Peace, October 2014.Hide Footnote

2. Expertise

Chinese diplomats also suffer from a relative paucity of first-hand information. The foreign ministry is one of the very few reservoirs of expertise and field intelligence, yet positions in Africa are less coveted than those in Europe or North America, resulting in a comparatively shallow bench for talent. Diplomats rarely have the freedom, time or authority, to go on fact-finding trips.[fn]Crisis Group interviews, foreign ministry officials, Beijing, March 2014, Addis Ababa, April 2016.Hide Footnote Nor does China possess a network of field-based NGOs to complement diplomats’ knowledge.[fn]Crisis Group interviews, Chinese diplomats, Beijing, March 2016, Addis Ababa, 22 April 2016. Ambassador Liu Guijin said early in his involvement in Darfur he had read everything China had produced on Sudan, but was “shocked” that his Western counterparts “even knew how many concubines each of them [rebel leaders] had and which one was pretty”. Crisis Group interview, Beijing, March 2016.Hide Footnote Western NGOs on the ground are often nervous about engaging China, fearful that sensitive information could be passed on to Juba (a concern many also express about IGAD member states).[fn]Crisis Group interviews, NGO staff, Juba, 2014-2016.Hide Footnote

Outside the foreign ministry, conflict resolution is a nascent discipline and country-specific expertise remains underdeveloped. Although African studies has gained prominence in recent years in think-tanks, most are state-affiliated and the field is underfunded and overlooked compared with U.S.-China relations or hot-button issues in Asia. African studies have tended to focus on broad cross-cutting subjects, rather than country-specific analysis. Moreover, field research by scholars faces both funding constraints and bureaucratic hurdles – a trip abroad of more than five days requires special approval.[fn]Crisis Group interviews, scholars in think-tanks and universities, Beijing, January 2016 and March 2017.Hide Footnote “China has increasing political will but feels constrained …. It doesn’t have many experts who truly understand South Sudan. The reservoir of expertise in China is small”.[fn]Crisis Group interview, scholar in a state-affiliated think-tank who specialises in Sudan and South Sudan, Beijing, January 2016.Hide Footnote

3. The costs of peacemaking

China has paid a price – both economic and in terms of human lives – as a result of its greater role in peacemaking in South Sudan. In 2014, a $38 million, multi-year arms contract between the South Sudanese government and the China North Industries Corporation (NORINCO) was made public.[fn]“China halts arms sales to South Sudan after NORINCO shipment”, Bloomberg, 30 September 2014.Hide Footnote Senior diplomats said the contract was signed before the war began and that NORINCO, although a state-owned enterprise, was seeking profit rather than advancing any state agenda.[fn]Crisis Group interviews, Beijing, March-April 2016. China’s ministry of foreign affairs (MFA) does not have formal authority over state-owned enterprises. The largest, including China North Industries Corporation (NORINCO), are overseen by the State-owned Assets Supervision and Administration Commission (SASAC), which is of equal bureaucratic rank with the MFA.Hide Footnote The embarrassment caused by the publicity led China to halt the remainder of the contract on grounds it was “inappropriate”.[fn]“China halts arms sales to South Sudan after NORINCO shipment”, Bloomberg, 30 September 2014.Hide Footnote It was the first public indication that China was willing to sacrifice economic gains – in this case a relatively small contract – in the interest of its peacemaker role. Whether this becomes more standard policy remains to be seen.

China’s peacekeeping role also has security implications. Following rushed evacuations and fearful for its workers’ safety, China included protection of workers on oil installations in the UN peacekeeping mission’s mandate in 2014.[fn]S/RES/2155 (2014), 27 May 2014.Hide Footnote Backing this up with action, China deployed its first-ever peacekeeping infantry battalion to South Sudan in January 2015.[fn]Previously, China had 350 engineers, medical and other non-combatant personnel in the mission. The additional 700-strong battalion made UNMISS home to the largest number of Chinese peacekeepers. “Chinese peacekeepers start deployment in South Sudan”, Reuters, 16 January 2015. “UN Mission’s Contributions by Country”, United Nations, 31 July 2016.Hide Footnote But when fighting broke out in Juba in July 2016, Chinese peacekeepers were caught in the crossfire. Five were wounded and two eventually died.[fn]Luo Zheng, “艰难一日,我南苏丹维和步战车遇袭事件始末” [“A hard day: recount of the attack on Chinese peacekeeping infantry fighting vehicle in South Sudan”], China Military, 19 July 2016.Hide Footnote The deaths shocked the nation and the soldiers were publicly mourned.[fn]“维和英雄李磊忠魂归乡 万余群众冒雨相送” [“Peacekeeping hero Li Lei’s soul returns home, thousands brave rain to attend funeral ceremony”], Xinhua, 22 July 2016; “南苏丹维和士兵中秋为两位牺牲战友摆碗筷” [“Peacekeepers in South Sudan set the table for two deceased comrades for Mid-Autumn Festival dinner”], China Central Television, 16 September 2016.Hide Footnote Nonetheless, Beijing subsequently reaffirmed its growing commitment to multidimensional peacekeeping operations.[fn]“综述:中国愿为联合国维和事业作出更大贡献” [“Review: China is willing to make greater contribution to UN peacekeeping”], Xinhua, 28 July 2016.Hide Footnote China is expanding the peacekeeping categories in which it is deploying troops and making multi-year commitments to seven missions.[fn]Crisis Group interview, Chinese diplomat, New York, February 2017.Hide Footnote It also is exploring how it can further develop its role and has set up a task force supported by the $1 billion UN Peace and Development Fund that President Xi announced in September 2015.[fn]Remarks by H.E. Xi Jinping President of the People’s Republic of China at the United Nations Peacekeeping Summit, 28 September 2015; “China to set up $1b peace fund”, China Daily, 29 September 2015.Hide Footnote

V. Road Ahead: Collaboration and Competition

China and the West have largely worked collaboratively on South Sudan and their approaches broadly have complemented each other – providing a model for future cooperation. Beijing’s softer, more private forms of persuasion benefit from the contrast with the Troika’s (the U.S., UK and Norway) harder line. Both Chinese and U.S. diplomats express optimism regarding prospects for coordinated and complementary efforts and are in close contact. Yet overarching U.S.-China tensions colour this engagement and IGAD and its member states must also ensure they do not get dragged into geopolitical rivalries that could undermine their peace efforts.

A. Different Approaches on Economic Issues

Coordination likely will prove more challenging on questions of governance and accountability, and collaboration will coexist with competition. On economic issues, challenge likely will intensify as South Sudan faces a politically-induced economic crisis (prolonged instability has cut oil production by nearly half; international oil prices have fallen; the country experiences hyper-inflation; and corruption is rife)[fn]“Press Release: IMF staff completes 2016 Article IV Mission to South Sudan”, International Monetary Fund, 1 June 2016.Hide Footnote and needs budget support to cover a $300 million fiscal gap in FY 2016-17.[fn]Before the civil war, donors almost never provided direct budget support and development aid was administered through the UN, NGOs or private contractors. Very little of this proved effective, making donors even more wary. “South Sudan seeks $300 mln in external support for budget”, Reuters, 29 August 2016.Hide Footnote Western donors seek to leverage Juba’s requirement for a fiscal bailout to extract commitments to economic reform and fiscal responsibility.[fn]There are questions as to whether the new U.S. administration will pursue the same policy. In 2012, it was reported that South Sudan’s elite had stolen $4 billion. “South Sudan officials have stolen $4 billion: president”, Reuters, 4 June 2012.Hide Footnote While Western nations insist any rescue package “will come with extremely intrusive demands” (which Juba rejects),[fn]Crisis Group interview, EU official, Addis Ababa, April 2016. These conditions include revenue and spending transparency to ensure a bailout does not line the pockets of corrupt officials or finance more violence. “What we want to see is real-time information on how much the government is getting, how much and where it is spending. We do not want to tell it where to spend. We want to ensure that money is not going into some elite’s bank accounts. We can’t justify spending our taxpayer dollars that way”. Crisis Group interview, senior U.S. official, Washington DC, May 2016.Hide Footnote Beijing is uncomfortable with what it deems direct interference in South Sudan’s domestic affairs and demurs on demanding fiscal transparency.[fn]In this, it is shaped by its own unhappy experience, having faced its share of Western criticism over its lack of transparency on military spending. Crisis Group interviews, Chinese diplomats and scholars, Beijing, January-March 2016; Chinese analyst at a state-affiliated think-tank, Beijing, January 2016; senior U.S. official, Washington, May 2016.Hide Footnote For now, China generally has hewed the Western line, echoing the IMF’s advice to the government and refrained from pledging more credit or loans.[fn]Crisis Group interview, senior U.S. official, Washington DC, May 2016.Hide Footnote But some Western countries fear China could unilaterally help Juba, weakening their leverage.

B. Strategic Cooperation on Political and Security Issues

On political and security issues, China prefers to work through regional actors rather than directly with the West. That is the case with South Sudan’s Joint Monitoring and Evaluation Committee (JMEC), for instance, which oversees the peace agreement and embodies “three-party [China-Africa-West] cooperation under a multilateral framework” that Beijing feels “comfortable with”.[fn]Crisis Group interviews, Chinese diplomats, Juba, April 2016.Hide Footnote A Chinese representative is present at JMEC meetings, but “only listens”, one African diplomat noted.[fn]Crisis Group interview, African JMEC member, Juba, April 2016.Hide Footnote At the same time, China has calibrated its contribution to maintain sway, providing financial and material support, and ensuring Chinese personnel are in influential positions.[fn]Crisis Group interview, senior African diplomat and senior Chinese diplomat, Juba, April 2016. “中国政府向JMEC提供30万美元资金支持” [“Chinese government offers $300,000 financial support to JMEC”], Chinese embassy in Juba, 18 April 2016. Crisis Group interview, UN official, Addis Ababa, April 2016; Chinese diplomat, Juba, April 2016.Hide Footnote

Mechanisms like JMEC allow China to justify a form of intervention under the mantra of “African solutions for African problems”. It likely will continue insisting on IGAD’s lead role, even as Western diplomats express doubt about the regional grouping’s commitment.[fn]China is comfortable working through IGAD, particularly given its close relations with Ethiopia, the organisation’s chair. Crisis Group interview, UN official, Addis Ababa, April 2016.Hide Footnote This approach enables China to both secure its influence within boundaries acceptable to its African partners and cooperate with the U.S. While this offers prospects for cooperation, it also carries the risk that South Sudan could suffer from any broader deterioration in U.S.-China relations.

VI. Conclusion: Engagement with Chinese Characteristics

Although China remains largely risk-averse, the degree of its involvement in South Sudan would have been “beyond imagination” even a few years ago.[fn]Chinese diplomats and scholars, Beijing, Juba and Addis Ababa, January-April 2016.Hide Footnote Its experience in the field will continue to inform the debate in Beijing about what level and kind of policy approach is possible, consistent with the non-interference principle.

The new boundaries of Beijing’s interpretation of this principle are yet to be officially delineated, but its rhetoric and actions in South Sudan suggest a rough outline. Specifically, Beijing appears to see direct involvement as legitimate when:

  • Civil conflicts threaten to spill over across borders, jeopardise regional security and stability and cause large-scale humanitarian crises. They are then “no longer internal political affairs but regional security affairs”.[fn]Crisis Group interviews, Chinese scholar, Beijing, 26 January 2016; Liu Guijin, former special representative of the Chinese government on African affairs, Beijing, March 2016. Also see 王逸舟, “创新不干涉原则,加大保护海外利益的力度”, 《国际政治研究》 [“Introduce new ideas on the non-interference principle, increase efforts to protect overseas interests”], International Political Studies, (Feb. 2013), p. 3.Hide Footnote
     
  • UN authorisation, regional approval and local consent are obtained.[fn]For instance, during the Darfur crisis, Beijing conditioned its involvement on “AU approval, UN resolution, and the Sudanese government’s acceptance”. Crisis Group interviews, Liu Guijin, former special representative of the Chinese government on African affairs, Beijing, March 2016; Zhang Chun, Senior Fellow, Centre for Africa and Middle East Studies, Shanghai Institutes of International Studies, Shanghai, March 2016. Also see Wang Yizhou, “New Direction for China’s Diplomacy”, Beijing Review, 8 March 2012.Hide Footnote
     
  • Actions are taken to facilitate political dialogue without imposing outcomes. “We would not meddle with … who should be the president and who should not. We only care about achieving a ceasefire and getting everyone to the table”.[fn]Crisis Group interview, Zhong Jiahua, then special representative of the Chinese government on African affairs, Beijing, 8 March 2016.Hide Footnote

In contrast, Beijing sees intervention as illegitimate interference when:

  • Attempts are made to influence domestic politics, such as dictating regime types, siding with political parties or figures or shaping political outcomes.[fn]Crisis Group interviews, Chinese scholar, Beijing, January 2016; Zhong Jianhua, then special representative of the Chinese government on African affairs, Beijing, March 2016; Also see Lu Shaye, “中非新型战略伙伴关系的几点思考” [“Some Thoughts on the New Strategic Partnership between China and Africa”], speech given at the Institute of International Strategy at the Party School of the Central Committee of the CPC, Beijing, 19 September 2012.Hide Footnote
     
  • Demands are made on governance issues, such as revenue, spending, political freedom and accountability.[fn]Crisis Group interviews, Chinese diplomats and scholars, Beijing, January-March 2016.Hide Footnote
     
  • Intervention is made unilaterally or with a minority group of nations without UN authorisation or regional consent.
     

Finally, China considers that a “red line” is crossed with the initiation of:

  • Unilateral military intervention in a country’s domestic affairs.
     
  • Regime change.[fn]Crisis Group interview, Chinese foreign ministry official, Beijing, March 2014.Hide Footnote

For the most part, China’s engagement is driven by self-interest although to a lesser degree it has taken into account the desire to export its own governance and development model and shape global norms. Such a distinction increasingly may blur if Beijing comes to see cultivating local political allies who share its views as the most effective means to protect Chinese interests and if it gains the confidence and capability to do so. In South Sudan and the wider Horn of Africa, where Beijing senses political affinity with governments, China has been discreetly promoting its model of governance and development through exchanges and training while resisting actions advancing Western values and political models.

Rather than the hard-edged doctrine its official rhetoric may suggest, non-inter­ference is likely to remain elastic and will continue evolving as China balances newfound activism and traditional risk-avoidance and maintains theoretical flexibility to accommodate experimentation.

China increasingly is being called upon to act, perhaps more than it would like.

As this evolution occurs, contradictions and tensions are bound to surface, in South Sudan and elsewhere, among competing Chinese interests, but also between China’s approach and values and those espoused by the West. At a minimum, Beijing will need more sophisticated expertise on peace and security issues, including peacebuilding and complex emergencies. China has a ready-made rationale and means for doing so – its increased engagement in UN peacekeeping as well as the China-UN Peace and Development Trust Fund, which could be accompanied by funding for more training, research and international exchange opportunities for Chinese practitioners and scholars.[fn]President Xi announced on 28 September 2015 that China would establish a $1 billion China-UN peace and development fund. Subsequently, on 7 May 2016 representatives of China and the UN signed an agreement China would provide $200 million in annual funding over ten years for a UN Peace and Development Trust Fund. “China signs agreement with UN to finance peace, security activities”, Xinhua, 7 May 2016.Hide Footnote China increasingly is being called upon to act, perhaps more than it would like. South Sudan is a first test case and, so far, it has illustrated a simple point: that, by working together and melding their at times distinct approaches, China and the West can form a more effective force for stability than either could separately.  

Beijing/Nairobi/Juba/Brussels, 10 July 2017

Appendix A: Map of South Sudan

Map of South Sudan. International Crisis Group/KO, July 2017.
Building site machines stand on the construction site of the Grand Ethiopian Renaissance Dam in Guba in the North West of Ethiopia on 24 November 2017. Gioia Forster/DPA
Report 271 / Africa

Bridging the Gap in the Nile Waters Dispute

Ethiopia is building a mighty dam on the Blue Nile, promising economic benefits for both itself and Sudan. But Egypt fears for its freshwater supply. The parties should agree on how fast to fill the dam’s reservoir and how to share river waters going forward.

What’s new? Ethiopia is moving ahead with construction of Africa’s largest dam, despite Egypt’s worry that it will reduce the downstream flow of the Nile, the source of around 90 per cent of its freshwater supply. It is crucial that the parties resolve their dispute before the dam begins operating.

Why does it matter? The Nile basin countries could be drawn into conflict because the stakes are so high: Ethiopia sees the hydroelectric dam as a defining national development project; Sudan covets the cheap electricity and expanded agricultural production that it promises; and Egypt perceives the possible loss of water as an existential threat.

What should be done? The three countries should adopt a two-step approach: first, they should build confidence by agreeing upon terms for filling the dam’s reservoir that do not harm downstream countries. Next, they should negotiate a new, transboundary framework for resource sharing to avert future conflicts.

Executive Summary

The three-way dispute among Ethiopia, Egypt and Sudan over the sharing of the Nile waters remains deadlocked. An April 2018 leadership transition in Ethiopia eased tensions between Cairo and Addis Ababa. But the parties have made little headway in resolving the crisis triggered by Ethiopia’s 2011 decision to build the Grand Ethiopian Renaissance Dam (GERD), expected to be the largest hydropower plant in Africa. Egypt fears that the dam will drastically reduce water flow downstream and thus imperil its national security. Ethiopia and Sudan assert their right to exploit the Nile waters to further develop their economies. The three countries need to act now to avert a graver crisis when the dam comes online. They should accede to immediate steps to mitigate damage, particularly during the filling of the dam’s reservoir, when water flow to downstream countries could decline. Next, they and other riparian states should seek a long-term transboundary agreement on resource sharing that balances the needs of countries up and down the Nile basin and offers a framework for averting conflict over future projects.

The stakes in the dispute are high. Egypt relies on the Nile for about 90 per cent of its freshwater needs. Its government argues that tampering with the river’s flow would put millions of farmers out of work and threaten the country’s food supply. In Ethiopia, engineers estimate that the GERD will produce about 6,450 megawatts of electricity, a hydropower jackpot that would boost the country’s aspirations to attain middle-income status by 2025. Authorities have sold the dam as a defining national endeavour: millions of Ethiopians bought bonds to finance its construction, helping implant the initiative in the national psyche. Fervent public support for the dam has recently cooled, however, following allegations of financial mismanagement.

Between 2011 and 2017, Egyptian and Ethiopian leaders framed the GERD dispute in stark, hyper-nationalist terms and exchanged belligerent threats. Politicians in Cairo called for sabotaging the dam. Media outlets in both countries compared the two sides’ military strength in anticipation of hostilities.

A recent rapprochement has quieted the row. Ethiopia’s new prime minister, Abiy Ahmed, visited Cairo in June 2018 and promised to ensure that Ethiopia’s development projects do not harm Egypt. In turn, Egyptian President Abdel Fattah al-Sisi said his country recognises that the dispute has no military solution. But despite the warming relations, there has been little substantive progress toward a resolution.

Political upheaval in all three countries complicates this task to varying degrees. In Sudan, President Omar al-Bashir, in power since 1989, is clinging precariously to his job amid the most sustained wave of protest the country has seen in decades. In Ethiopia, Abiy, while enormously popular with the public, is struggling to consolidate his hold on power. Egypt’s Sisi is relatively secure in his position, but his drive to extend his stay in office until at least 2034 has divided the military establishment, his key domestic constituency. These internal dynamics mean that the leaders dedicate less time to the Nile dam issue than they should. They could blunder into a crisis if they do not strike a bargain before the GERD begins operation.

Egyptian, Ethiopian and Sudanese authorities should consider a phased approach to agreeing on a way forward. Most urgent is the question of how quickly to fill the dam’s reservoir. At first, Ethiopia proposed filling it in three years, while Egypt suggested a process lasting up to fifteen. To achieve a breakthrough on this question, Ethiopia should fully cooperate with its downstream partners and support studies seeking to outline an optimal fill rate timeline. If necessary, the three countries should seek third-party support from a mutually agreed-upon partner to break the impasse. Ethiopia should also agree to stagger the fill rate so that it picks up pace in years with plentiful rains, which would minimise disruption of water flows.

To reduce mutual suspicion, leaders should take a number of confidence-building measures. Prime Minister Abiy should invite his Egyptian and Sudanese counterparts to tour the GERD construction site, thus highlighting Ethiopia’s willingness to address downstream countries’ concerns. Such a demonstration of Ethiopian good-will could afford the Egyptian authorities the space to make necessary adjustments, notably improving inefficient water management systems. For its part, Cairo should declare that it will not support armed Ethiopian opposition groups, to allay Addis Ababa’s fears.

Outside partners should encourage Egypt, Ethiopia and Sudan to approach the dispute not as an existential conflict but as a chance to establish a resource-sharing partnership.

Outside partners could help build confidence. The European Investment Bank, which the Ethiopians perceive as less pro-Egyptian than the World Bank, might offer Addis funding for the last phase of dam construction. Such funding could be conditional on Ethiopia cooperating on sticking points such as the fill rate. The EU should continue its talks with downstream countries on potential guarantees (including loans) and other instruments to support those countries in years in which drought or other shocks endanger food security. Saudi Arabia and the United Arab Emirates (UAE), as well as Qatar and Turkey, could offer bilateral or trilateral investment in agriculture in Ethiopia and/or Sudan that afford Egypt a discounted and reliable supply of staples, notably wheat and rice. The U.S. and China, which enjoy close ties to some Nile basin governments, could also encourage parties to resolve their disputes before the GERD is completed.

Next, authorities in Addis Ababa, Cairo and Khartoum should lay the ground for more substantive discussions of a long-term framework for Nile basin management to avert similar crises in the future. Egypt should rejoin the Nile Basin Initiative, the only forum that brings together all riparian countries and the best venue available for discussing mutually beneficial resource sharing. Such talks would consider Egyptian proposals that, in the future, upstream countries carry out major development projects in consultation with downstream nations. A permanent institutional framework could also help the countries prepare for challenges down the road, including climate change-induced environmental shocks, notably variable rainfall patterns, which could cause greater water stress.

Outside partners should encourage Egypt, Ethiopia and Sudan to approach the dispute not as an existential conflict but as a chance to establish a resource-sharing partnership. Delays in the GERD’s completion and the improved mood following Prime Minister Abiy’s ascent make this moment propitious for negotiating a way forward. Waiting until the dam is operational – when its impact on downstream countries is clearer – would raise the risk of violent conflict.

Nairobi/Abu Dhabi/Istanbul/Brussels, 20 March 2019

I. Introduction

One of the world’s longest rivers, the Nile cuts through eleven African countries with a combined population of 437 million.[fn]For a good profile of the river, see, Robert O. Collins, The Nile (New Haven, 2002).Hide Footnote From headwaters in the Ethiopian highlands (for the Blue Nile) and the Great Lakes countries of Rwanda and Burundi (White Nile), the river’s two main branches merge at Khartoum, the Sudanese capital, before flowing north through Egypt and finally into the Mediterranean Sea. The Blue Nile, the larger of the two branches, accounts for most of the river’s water flow into Sudan and Egypt, with two other branches, the Tekeze-Atbara and the Baro-Akobo-Sobat, also draining the Ethiopian highlands. In total, some 84 per cent of the Nile’s water flow originates in Ethiopia. For centuries, the Nile basin’s inhabitants have tapped the river for hydropower, fish and drinking water, as well as used it for recreation and tourism. Most critically, though, they have drawn upon it to irrigate farmland.

The Nile carries relatively little water compared to the world’s major rivers. Its volume is only 5 per cent of the Congo River’s, for example.[fn]See “Cooperation on the Nile”, Nile Basin Initiative, November 2013.Hide Footnote As populations grow and climate change makes water supply increasingly erratic, geopolitical battles for control of its waters, always a factor in shaping relations among riparian countries, have grown fiercer.

For centuries, Egypt has enjoyed virtually unrestricted use of all the river’s water. British colonial authorities helped codify its status as the Nile waters’ principal beneficiary in treaties they negotiated on behalf of Egypt and Sudan in 1902 and 1929.[fn]With these treaties, the British authorities also claimed to be representing the interests of Kenya, Uganda and Tanganyika (now Tanzania), all at the time British colonies in the riparian basin.Hide Footnote In 1959, Egypt and newly independent Sudan concluded a bilateral agreement that essentially ratified the terms of the previous two. As a desert agricultural country – the Greek historian Herodotus famously called it “the gift of the Nile” – Egypt is heavily reliant on these waters. For years, it has assumed an aggressive posture to protect the security of its water supply and to prevent projects upstream that could hinder water flow. As former Egyptian president Anwar al-Sadat said in 1978: “We depend upon the Nile 100 per cent in our life, so if anyone, at any moment, thinks of depriving us of our life we shall never hesitate to go to war”.[fn]Christopher L. Kukk and David A. Deese, “At the Water’s Edge: Regional Conflict and Cooperation over Fresh Water”, UCLA Journal of International Law and Foreign Affairs, vol. 1 (1996-1997), pp. 21-64.Hide Footnote Sudan also depends on the Nile, albeit to a lesser degree.

Ethiopia has long objected to this state of affairs, seeing the colonial-era treaties as lopsided, and aspired to exploit the river to expand its own economy. Ethiopia disowns the 1902 treaty as a relic of its monarchical past, and has never recognised the latter two agreements, about which it was not consulted.

In this light, Ethiopia’s surprise announcement, on 30 March 2011, that it planned to construct a large dam, the Grand Ethiopian Renaissance Dam (GERD), on the Blue Nile caused considerable consternation in Cairo and Khartoum.[fn]“Ethiopia moves forward with massive Nile dam project”, National Geographic, 14 July 2011. 
 Hide Footnote
Both downstream countries reacted immediately and furiously, demanding that the project be frozen.[fn]See “Struggle over the Nile: Masters no more”, Al Jazeera, 6 June 2011. One former Egyptian general said the country should pull out all the stops to halt the project: “We don’t have hostile intentions against anyone. We don’t want to go to war just for the sake of fighting. But if someone is going to stop the water, Egypt will die of thirst”.Hide Footnote Since then, the GERD has been the centrepiece of the Nile waters dispute. The three parties’ relative geopolitical heft has shifted, and Sudan has reversed its opposition to the dam, but the basic dynamic remains the same: Ethiopia wants the GERD for hydroelectric power and industrial development, while Egypt fears the project will reduce its water supply. Sudan, on the other hand, hopes the dam can help it substantially expand agricultural production by better regulating annual floods. As the GERD’s construction continues apace, reaching agreement on the management of Nile waters, particularly on how quickly Ethiopia will fill the project’s reservoir, is critical.

This report outlines the main actors’ perspectives on the dispute and explores how they can reach such an agreement. It proposes that parties focus first on settling the GERD crisis to defuse tensions before the dam comes online. It suggests that the parties go on to negotiate a comprehensive transboundary resource management agreement, involving other riparian states, that could both ease tensions over the dam and include a lasting basin-wide settlement for resource sharing. The report is based on interviews conducted from April to November 2018 with a wide range of water experts, political and security analysts, government officials and diplomats in Addis Ababa, Cairo and Khartoum, as well as Nairobi, Kampala, Abu Dhabi, Riyadh, Doha, Ankara, Istanbul, New York and Washington.

II. Ethiopia and the GERD

The Nile Waters Dispute: The Ethiopian Position

In this video, Crisis Group's Horn of Africa Deputy Project Director Murithi Mutiga reflects upon Ethiopia's position about the dam.
Addis Ababa has long contested Egypt’s claims of hegemony to the Nile waters, which were outlined in the series of treaties brokered by the British.

Addis Ababa has long contested Egypt’s claims of hegemony to the Nile waters, which were outlined in the series of treaties brokered by the British.[fn]For the full text of the first treaty, see “The 1902 Treaty between Ethiopia and Great Britain”, Horn Affairs, 8 June 2011. This deal between Emperor Menelik II and the British government required Ethiopia “not to construct, or allow to be constructed, any work across the Blue Nile, Lake Tana or the Sobat [a major tributary of the Nile] which would arrest the flow of their waters into the Nile except in agreement with His Britannic Majesty’s Government and the Government of Sudan”. Britain considered control of the Nile essential to protecting its imperial interests. It needed its Egyptian colony to keep access to the strategically important Suez Canal. See Arthur Okoth-Owiro, The Nile Treaty: State Succession and International Treaty Commitments – A Case Study of the Nile Water Treaties (Nairobi, 2004).Hide Footnote A statement Ethiopian authorities sent to the Egyptian government in 1958 summed up their view. Ethiopia, it said, “may be prepared to share this tremendous God-given wealth of hers with friendly neighbour nations [but] it is Ethiopia’s sacred duty to develop the resources it possesses in the interest of its own rapidly expanding population and economy”.[fn]Yacob Arsano, “Progress and Prospects of Cooperation in the Nile Basin”, Chatham House, 5 October 2012.Hide Footnote

Plans for a dam on the Blue Nile date from around the same time. The United States Bureau of Reclamation identified a site in geological surveys conducted between 1956 and 1964.[fn]Ibid.Hide Footnote Decades of strife including a long civil war and wars with neighbouring Somalia and Eritrea – as well as Egypt’s strength on the world stage – made it impossible for Ethiopia to advance this objective for almost a half-century. Only with the extended period of economic development and relative political stability under Prime Minister Meles Zenawi could planning for such a dam proceed. His government made plans in secret for some years before going public with the announcement in 2011. Most Ethiopians regard the project as a source of national prestige and millions have invested their own funds in its construction. It “brings together all the diverse sections of society”, said a think-tank official. “The haves and the have-nots, the young and the old, women and men, locals and those in the diaspora; all came together to mobilise financing for the dam”.[fn]Crisis Group phone interview, think-tank official, Addis Ababa, November 2018.
 Hide Footnote

Still a work in progress, the dam is located approximately 700km north west of the capital Addis Ababa and 40km from the border with Sudan. It is sandwiched between two hills, with its twin power stations positioned on either side. Upon completion, the GERD is expected to be the largest dam in Africa, 1,800m long and 145m high, with a capacity to generate 6,450 megawatts of hydropower. At the height of construction about 12,000 people were employed at the site, working in shifts around the clock.

In the third week of February 2019, Ethiopia Electric Power, Ethiopia’s power utility, announced that it had contracted two Chinese firms to handle the pre-commissioning phase of construction, which is expected to be completed by 2022.[fn]“Ethiopia contracts two Chinese firms to complete Nile dam construction”, Africa News, 19 February 2019; and “Ethiopia says GERD needs four years to be completed”, Ethiopian News Agency, 13 December 2018.
 Hide Footnote
According to the country’s water minister, the dam will first be able to generate electricity at the end of 2020.[fn]“Ethiopia to start producing energy at dam by end of 2020”, Middle East Monitor, 3 January 2019.
 Hide Footnote
Past Ethiopian projections of when the dam will come online, however, have proven overly optimistic. At first, the dam was slated to begin operations in 2017, but administrative and financial problems delayed its completion. The current delay offers a window of opportunity for parties to reach some form of agreement on how to manage the dam’s impact on water flows. Waiting until the GERD is operational will raise the risk of conflict due to the high stakes at play, particularly for Egypt, with its heavy dependency on the Nile for freshwater.

A. Meles Zenawi and Ethiopia’s Project X

Planning for the GERD in Meles’s inner circle began around 2006.[fn]Crisis Group interviews, Ethiopian academics, analysts and officials, Addis Ababa, May-September 2018.Hide Footnote The government ordered updated site surveys, which were conducted between 2009 and 2010, and engineers submitted a dam design in November 2010.[fn]“Grand Ethiopian Renaissance Dam Project, Benishangul-Gumuz”, project overview, Water Technology (www.water-technology.net).Hide Footnote The prime minister’s office directly coordinated preparation for what was then known as Project X, carrying it out in extreme secrecy. Ethiopia handed the leading role in the dam’s construction to the Italian firm Salini Impregilo. The project was partially coordinated by the Metals and Engineering Corporation (METEC), a military-led industrial conglomerate, thus classifying the endeavour as a matter of national security.

A number of factors informed Meles’s decision to build the dam. The project was an integral part of his 2010-2015 Growth and Transformation Plan, which aimed to create large-scale foreign investment opportunities, quintuple power generation from 2,000 to 10,000 megawatts, cultivate a more dynamic manufacturing sector, and significantly expand road and rail infrastructure.[fn] The GERD was a natural outgrowth of Meles’s vision to shape a state for which economic growth was an “absolute and overriding priority. Development should be a matter of national survival; the ideology should be that growth is survival”.[fn]

In this light, Meles saw the GERD as an ambitious project that would symbolise Ethiopia’s efforts to achieve middle-income status.[fn]Crisis Group interviews, Ethiopian academics, analysts and officials, Addis Ababa, May-September 2018.Hide Footnote Sales of electricity produced by the GERD would be a key source of hard currency. Despite Meles’s huge efforts to establish industrial parks and create enabling infrastructure, exports lagged – and still lag – behind imports by a large margin. Ethiopia has long struggled to obtain enough hard currency to buy the imports that it needs.

Meles’s motives were also political. After the contested 2005 election, in which the opposition made impressive gains, he increasingly relied on repression to sustain his grip on power. The government thought that uniting the public behind a grand national endeavour would strengthen its hand. When Meles announced the GERD’s ground-breaking in March 2011, he added that Ethiopia would seek no external finance for the initiative. The government launched a massive nationwide fundraising campaign. Millions, including many peasant farmers, contributed, as the project attracted widespread support.[fn]The campaign included marathons and regional competitions to raise money as part of a Renaissance Trophy tour. The initiative raised millions of dollars.Hide Footnote “Every country must have one large defining project. This is our Hoover Dam”, said one Meles adviser, citing the giant American dam.[fn]Crisis Group interview, former senior Ethiopian official, Nairobi, February 2019.Hide Footnote The project drew widespread support from the masses, though many elites at home and in the diaspora were more sceptical.[fn]The Ethiopian government launched a massive nationwide campaign to mobilise funding for the project. Thousands contributed, including peasant farmers. Some in the diaspora urged Ethiopians not to put their money in, citing the administration’s poor human rights record. Many professionals, including thousands of government workers and staff at state-owned enterprises such as Ethiopian Airlines, also chafed at being forced (in effect) to give up a month’s or two months’ wages to buy bonds to support the project.Hide Footnote

Lastly, the prime minister saw the project as crucial for gaining leverage in the region. Ethiopia had lost direct access to the sea after Eritrea became independent, and it had frozen relations with Asmara since fighting a bitter war with Eritrea from 1998 to 2000. Addis perceived exporting electricity to countries with insufficient generation capacity of their own as a way to wield regional clout. Controlling the Nile’s flow would be another unspoken source of influence. Most critically, Meles viewed the GERD as fulfilling long-nursed Ethiopian ambitions to upend Egypt’s historic position as Nile basin hegemon. By gaining control of the flow of the river, his team calculated, Addis Ababa would gain considerable geopolitical clout. To cultivate greater continent-wide support for the dam project, Meles lobbied African leaders to endorse the initiative. The African Union adopted the dam as a flagship project and assigned its infrastructure unit, the Program for Infrastructure Development in Africa, to support the dam’s construction.[fn]See “GERD – iconic project for the realisation of AU aspirations”, The Ethiopian Herald, 8 March 2017.Hide Footnote

While no one faults Ethiopia for desiring to use its hydrological resources to further expand its economy, some experts assert that the Meles administration made a number of mistakes in its conception and execution of the project. Looking to achieve geostrategic goals, notably ending Egypt’s hegemony over the Nile, Ethiopia settled on a dam design featuring a huge reservoir, bigger, some experts contend, than what was needed for a dam intended to generate hydropower rather than to store water for irrigation.[fn]For a summary of academic papers criticising the dam design, see Rawia Tawfik, “Revisiting Hydro-Hegemony from a Benefit-Sharing Perspective: The Case of the Grand Ethiopian Renaissance Dam”, discussion paper, German Development Institute, May 2015.Hide Footnote The large reservoir gives Ethiopia the capacity to regulate the river’s downstream flow to Egypt and Sudan, but this control comes at a cost. The dam’s design means that the GERD can operate at peak capacity only during the few months in the year when rainfall is highest in the Ethiopian highlands. Some experts estimate that the dam will attain peak capacity only 28 per cent of the time.[fn]Aydagne Zelleke, an Ethiopian civil engineer, says the dam was designed as a “peak-power plant with low efficiency”, because the government at the time was playing a “political numbers game” – designed to underline the GERD’s status as a milestone marking the end of Egyptian dominance of the basin. See “Shock death intensifies dam debate: was Abiy pessimistic or realistic about the GERD?”, Ethiopia Insight, 31 July 2018.Hide Footnote Also, the extreme secrecy with which the project was managed meant that Ethiopia could not benefit sufficiently from external technical support, resulting in both a sub-optimal design and a more expensive project.

For some time after Meles made the GERD public in 2011, its construction proceeded undisturbed; Egypt and Sudan both initially resisted the project, but each was embroiled in domestic turmoil (see Sections III and IV). In August 2012, however, Meles died, prompting a period of upheaval in Ethiopia itself that intruded upon construction.[fn]Crisis Group Africa Briefing N°89, Ethiopia after Meles, 22 August 2012. The post-Meles transition left power in the hands of a small, feuding establishment, mostly Tigrayans. The report warned that the most likely outcome would be “a much weaker government, a more influential security apparatus and endangered internal stability”. It also predicted correctly that in Meles’s absence, the regime would depend more and more on repression to maintain power over other ethnic elites.Hide Footnote The late premier had dominated all branches of government. His passing ushered in a power struggle that distracted policymakers from the single-minded focus he had maintained upon the dam’s construction.[fn]Ibid. Hide Footnote Accompanying this political upheaval was growing corruption, including within the security sector, which was leading dam construction. METEC, the military-run conglomerate and lead domestic contractor for the GERD, became a focus of controversy amid allegations of graft and mismanagement.[fn]“Dozens of top security officials arrested”, All Africa, 13 November 2018. At a press briefing in the second week of November, Ethiopia’s attorney general accused METEC officials of lining their pockets with funds raised by the public for the GERD project. The officials deny all claims of embezzlement and defence lawyers call on judges to halt the prosecution, claiming there is no evidence to support the charges. See “Police partially wind down investigation of Ex-METEC CEO”, Addis Fortune, 5 January 2019.
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The power vacuum created by Meles’s death, perceptions of ethnic exclusion particularly among the Oromo, the country’s biggest ethnic group, and frustration over an economy unable to absorb millions of unemployed youth contributed to social unrest. Increasingly, the regime had to focus on self-preservation rather than projects such as the GERD. Street protests began in 2015, and lasted until the resignation of Meles’s successor, Hailemariam Desalegn, in February 2018. At no point did dam construction stop during the period of political upheaval, but it did proceed at an uneven pace.

B. Prime Minister Abiy Ahmed and the GERD

Ethiopia’s new prime minister, Abiy Ahmed, has striven to put the dam project back on track, though some in the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) question his commitment to it.[fn]Abiy has appointed new project managers and tapped Chinese firms to conclude the installation of turbines and other electrical works. Yet his critics inside the ruling party say he has shown less enthusiasm for the project than his predecessors, particularly Meles. The perception is that Abiy wants to channel his energies into a project he himself has initiated, such as a $1 billion revitalisation of the capital – but cannot abandon the GERD due to the sunken costs, the popular support it has and the danger of domestic blowback. In the first week of March 2019, Abiy’s office announced a crowdfunding initiative – set to kick off with a $175,000-per-plate dinner for investors at a date to be announced later – for the urban renewal plan. See “Ethiopia is launching a global crowd-funding campaign to give its capital a green facelift”, Quartz, 5 March 2019. Critics note that Abiy often refers to the GERD’s downsides, particularly the allegations of corruption among officials in charge of construction, rather than to its potential benefits. Crisis Group interviews, former senior EPRDF officials, Nairobi and Addis Ababa, August 2018-February 2019.Hide Footnote Abiy was elected head of the EPRDF in April 2018 at the conclusion of a two-month party congress. Since then, he has governed boldly, striking a peace deal with Eritrea, releasing political prisoners, welcoming back exiled opposition leaders, appointing a slew of women to key positions and vowing to open up political space. But he faces enormous challenges. Ethnic tensions are mounting in much of the country, with militias proliferating, violence reaching levels not seen in decades and leaders in ethnic federal states demanding greater autonomy.[fn]See Crisis Group Africa Report N°269, Managing Ethiopia’s Unsettled Transition, 21 February 2019.Hide Footnote How Abiy will keep these forces in check, particularly with elections looming in 2020, remains unclear. Moreover, his replacement of leaders in the security forces and crackdowns on old-guard figures accused of corruption appear to have generated hostility to his rule among elements of the bureaucracy and security establishment.[fn]Ibid. Hide Footnote

Many Ethiopians view the GERD as a critical plank of such an economic revival platform.

Abiy also needs reforms that can breathe new life into the economy and create jobs for millions of unemployed youths whose frustrations have spilled into the streets.[fn]“A problem for Ethiopia’s leader: the young men who helped him to power”, Reuters, 2 November 2018.Hide Footnote Many Ethiopians view the GERD as a critical plank of such an economic revival platform. Upon completion, the dam would go some way toward addressing chronic energy shortages, particularly in the industrial sector, and earning hard currency for the treasury. It would help many rural households switch to cleaner forms of energy.[fn]“While Egypt Struggles, Ethiopia Builds over the Blue Nile: Controversies and the Way Forward”, The Brookings Institution, 25 July 2013.Hide Footnote

Abiy signalled the dam’s ongoing importance when he toured the construction site just weeks after taking office in the company of Simegnew Bekele, the lead engineer.[fn]“Ethiopia PM visits GERD site, heads to Sudan on official visit”, Africa News, 1 May 2018.Hide Footnote On 26 July, however, the project suffered a fresh setback when Simegnew was found dead of a gunshot wound in his car in the capital’s busy Meskel Square. Simegnew was the figure most closely associated with the dam, and his impassioned media appearances explaining the GERD’s potential benefits had made him a much-loved figure across the political spectrum. Hundreds took to the streets in his hometown Gondar, as well as in Addis Ababa, to mourn him.[fn]“Why Ethiopia is grieving for ‘hero’ dam engineer Simegnew Bekele”, BBC, 29 July 2018.Hide Footnote The media speculated feverishly about possible foul play, but police eventually ruled his death a suicide.[fn]“Ethiopia says Blue Nile Dam engineer’s death a suicide”, The East African, 7 September 2018. Hide Footnote In late August, at his first press conference, Abiy fielded questions about the state of the GERD project. He accused METEC of failing the country and announced that the firm would play no further role in dam construction.[fn]“PM meets the press”, The Reporter, 25 August 2018. Hide Footnote On 12 November, police arrested 63 METEC officials for alleged involvement in corruption.[fn]“Ethiopia also arrested 27 METEC employees, police officials”, Reuters, 12 November 2018; and “Ethiopia: Over 40 officials of corruption-riddled METEC, members of intelligence under arrest”, ESAT News, 10 November 2018.Hide Footnote

It is unclear whether METEC’s removal from the project will speed up work on the dam, or how much work remains, because construction still proceeds in secret. Ethiopian authorities claim that the dam is 60 per cent complete, and Western diplomats who have visited the site say much of the physical infrastructure is finished.[fn]Crisis Group interview, Western diplomat, Addis Ababa, August 2018.Hide Footnote That said, complex tasks remain pending, particularly the construction and installation of the turbines and generators, which Ethiopia has outsourced to Chinese firms China Gezhouba Group and Voith Hydro Shanghai.[fn]See fn 11.Hide Footnote In addition, due to foreign currency shortages at home, Ethiopia badly needs extra funding to pay for the final phases of construction and to settle bills owed to the main contractor.[fn]Abiy said the delays have left the government with huge contractor bills. The government reportedly owes the main contractor, Salini, tens of millions of dollars. “PM meets the press”, op. cit. Hide Footnote

Abroad, Abiy has shown greater sensitivity than his predecessors to the concerns of downstream countries Egypt and Sudan. He is notably friendlier to Egypt, at least in public. Cairo cheered his June 2018 decision to send the two most powerful figures in the security forces – intelligence head Getachew Assefa and armed forces chief Samora Yunus – into retirement; it viewed both men as harbouring hardline positions on the Nile waters dispute. Abiy has also repaired ties with Saudi Arabia and the United Arab Emirates (UAE). Riyadh and Abu Dhabi are among his most prominent external supporters and both have supplied funding to help stabilise Ethiopia’s struggling economy.

Abiy enjoys a number of advantages over his predecessors in GERD-related diplomacy. First, the project is identified with the Tigray People’s Liberation Front, the component of the ruling party that dominated previous administrations. Since he took office Abiy has tried to distance himself from this group’s legacy, for instance criticising aspects of their management of the dam project. In doing so, he has created wiggle room for compromises with downstream partners, which he can sell as correction of his predecessors’ mistakes. Secondly, Abiy has cultivated better ties with Cairo, Addis Ababa’s historical rival, and its allies in Riyadh and Abu Dhabi. To this end, he might be better placed to ask Egypt to offer concessions of its own in exchange for greater Ethiopian cooperation.

The more convivial environment notwithstanding, Abiy clearly intends to complete the GERD. Indeed, he has little choice but to do so, if only because many Ethiopians regard the dam as indispensable for national development. If Abiy has changed the tone of Ethiopia’s Nile diplomacy, he has not altered the bottom line.[fn]Crisis Group interviews, Ethiopian analysts and officials, Addis Ababa and Nairobi, May-November 2018. It is noteworthy that Abiy has dropped many senior officials but retained Foreign Minister Workneh Gebeyehu, who led negotiations with Egypt and Sudan under the previous government. The Ethiopians have yet to offer substantive concessions to the Egyptians, though they no longer exchange harsh words with them in public, instead promising to take Cairo’s concerns on board.Hide Footnote

C. Cooperation Mechanisms

Given that dam construction continues apace, it is urgent that the three main parties seek agreement on how to manage its impact. They should also pursue long-term accords for sharing the Nile waters. A venue is already in place for the two sets of negotiations – but each needs an infusion of diplomatic energy.

The most active negotiations over the GERD have taken place in tripartite talks involving Egypt, Ethiopia and Sudan. The talks kicked off in 2011, soon after the announcement of the GERD, when the parties formed a trilateral joint technical committee to discuss a way forward. The parties notched an important achievement on 23 March 2015, when they endorsed a “declaration of principles” for resolving the dam crisis. The document calls on all sides to “cooperate based on common understanding, mutual benefit and good faith” and to take steps that prevent “significant harm” in using the Blue Nile.[fn]Agreement on Declaration of Principles between the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia and the Republic of the Sudan on the Grand Ethiopian Renaissance Dam Project, Khartoum, 23 March 2015.Hide Footnote

This language, anodyne as it sounds, represented a significant compromise by all sides. In accepting that the three countries should share the Nile waters on the basis of “mutual benefit”, Egypt dropped its wholesale opposition to major upstream projects on the Nile and its demand that Ethiopia halt the dam’s construction. Sudan likewise signalled a more flexible position on upstream water use. And by committing to prevent “significant harm” with the dam project, Ethiopia, too, made a notable concession, namely that it needed to take the concerns of downstream countries into account.

Negotiators have made little headway since the declaration of principles, however, despite regular meetings. In 2011, Ethiopia rejected an Egyptian proposal that it suspend dam construction pending impact studies. Ethiopia also turned down an Egyptian request that it revise the dam’s design to incorporate four extra spillways that would guarantee the continuous flow of water in the event that the primary floodgates malfunctioned.[fn]For a good overview of the diplomatic back-and-forth since the dam dispute broke out, see Fred H. Lawson, “Egypt versus Ethiopia: The Conflict over the Nile Metastasizes”, The International Spectator, vol. 52, no. 4 (2017).Hide Footnote Ethiopia, in turn, accused Egypt of negotiating in bad faith while forging alliances with its erstwhile nemesis Eritrea and hostile elements in Somalia and South Sudan.[fn]Crisis Group interview, Ethiopian analyst, Addis Ababa, May 2018.Hide Footnote

Egypt blames the Ethiopian authorities’ persistent refusal to cooperate with requests for independent studies of the dam’s impact for the lack of progress. In Cairo’s eyes, Addis Ababa has consistently played for time, stringing talks along even as it continues with construction.[fn]According to an Egyptian official, Ethiopia at one stage dragged out discussions for months demanding the Egyptians offer a clear definition of the terms “significant harm” and “adversely affect”, concepts which Cairo wanted included in the terms of reference for an external study. The Egyptians saw this demand as an effort to block progress. Crisis Group interview, Egyptian diplomat, Cairo, June 2018.Hide Footnote Egypt claims that this attitude reflects Ethiopian fears that an independent study would fault Addis Ababa’s approach to the GERD project’s management and thus tie its hands. “Ethiopia doesn’t want anything that publicly endorses our position to come to light. They will block anything that proves our position, and our concerns”.[fn]Crisis Group interview, Egyptian foreign ministry official, Cairo, June 2018.Hide Footnote Ethiopia disputes this and accuses the Egyptians of seeking to block the project from the start.[fn]Crisis Group interviews, Ethiopian officials, Addis Ababa, August 2018.Hide Footnote

The gap between what Ethiopia hopes for and what Egypt in particular would accept remains wide.

With Abiy in power, the tripartite talks could be more fruitful, as Ethiopia is displaying greater flexibility than in the past. When the three countries signed the declaration of principles, their respective security agencies had no open lines of communication, despite wielding great influence over policy (Ethiopian and Egyptian military and intelligence agencies had essentially cut off contact in 1995, following an assassination attempt on then President Mubarak in Addis Ababa). Throughout 2017, European diplomats strove to remedy this problem, pressing all sides to send security officials to talks. They achieved partial success with the January 2018 round: Egypt sent high-ranking security chiefs, even as Ethiopia delegated junior security officials.[fn]Crisis Group interview, Egyptian foreign ministry official, Cairo, June 2018.Hide Footnote Abiy has changed this practice. He assigns senior security officials to take part in talks alongside officials from the foreign and water ministries.

The gap between what Ethiopia hopes for and what Egypt in particular would accept – particularly on the immediate issue of the pace at which Ethiopia fills the dam’s reservoir – remains wide. But it nonetheless appears bridgeable. All parties reportedly accept the need to strike a compromise between Ethiopia’s initial desire to fill the dam in three years and an Egyptian proposal that the reservoir be filled in fifteen.[fn]Crisis Group interviews, Egyptian, Sudanese and Ethiopian officials, Cairo, Khartoum, Addis Ababa and Nairobi, June-December 2018.Hide Footnote

In the second week of May 2018, the intelligence agency heads of the three countries, along with the foreign and water ministers, held talks on this subject and set up a committee including experts from the three countries to agree upon a way forward.[fn]“Egypt, Ethiopia and Sudan reach agreement on Nile dispute”, Middle East Monitor, 16 May 2018.Hide Footnote The National Independent Research Study Group, as the team they formed was called, mirrors a 2013 attempt to determine a mutually acceptable fill rate. Cairo, Addis Ababa and Khartoum should take steps to ensure that whatever decision emerges from this latest round sticks. Ethiopia should accept that the findings of the study should be binding. To build confidence, the three parties should appoint a third party to help guide the process and formulate technical proposals for both the fill rate and the plant’s operation that balance the needs of all parties. With Ethiopia aiming to begin power generation at the dam by the end of 2020, time is of the essence.

Difficult as it will be to resolve these immediate issues, the risk of future clashes could be severe if the parties do not also reach agreement on a longer-term basin-wide river management framework. Indeed, as populations grow and climate change renders annual rainfall more erratic, Ethiopia could seek to further exploit the Nile waters to expand its economy; for its part, Egypt – already worried that its volumetric share of the Nile waters is insufficient – could become even more alarmed about the national security implications of reduced water flow. While Cairo’s short-term focus is on the implications for water flow during reservoir filling in Ethiopia, in the medium term, Egypt worries acutely that Sudan could take advantage of better regulated flows of water from the GERD to substantially expand irrigation, a development that might be damaging for Egypt because Sudanese farming would consume significant amounts of water and thus reduce further Egypt’s volumetric share of the Nile waters.[fn]For analysis of the parties’ perspectives of the GERD and prospects for a resolution to the dispute, see Ana Elisa Cascão, “To Change or Not to Change? The Transboundary Water Question in the Nile Basin”, in Gunilla Almered Olsson and Pernille Gooch (eds.), Natural Resource Conflicts and Sustainable Development (London, forthcoming May 2019).Hide Footnote

External actors have long encouraged riparian countries to forge an updated transboundary agreement for sharing the Nile waters.[fn]Scott O. McKenzie, “Egypt’s Choice: From the Nile Basin Treaty to the Cooperative Framework Agreement – An International Legal Analysis”, Transnational Law and Contemporary Problems, vol. 21 (2012).Hide Footnote One platform for such cooperation is the Nile Basin Initiative (NBI), a multilateral forum for all eleven riparian states – Egypt, Ethiopia, Sudan, Uganda, Kenya, Rwanda, Burundi, the Democratic Republic of Congo, Tanzania, South Sudan and Eritrea, which has observer status. The NBI was established in 1999, with support from a number of bilateral and multilateral partners, notably the World Bank.[fn]“The Nile Basin Initiative: Building a Cooperative Future”, World Bank, February 2009.Hide Footnote

The platform has been weakened due to tensions among Egypt, Ethiopia and Sudan. At its founding, member states agreed to pursue cooperation along two tracks. The NBI secretariat was to champion a technical track, outlining measures for sustainable development of the basin. The political leaders of all riparian countries, meanwhile, were to pursue a political-legal track, whose conclusions were to be spelled out in a Cooperative Framework Agreement that would outline mechanisms of cooperation between all parties. If the parties achieved consensus, the plan was to convert the NBI into a permanent commission to promote basin-wide cooperation.

Talks broke down after Addis Ababa rallied the upstream riparian states to endorse the Cooperative Framework Agreement without waiting for the backing of downstream partners. Ethiopia was particularly supportive of the framework’s call for “equitable utilisation” of the Nile waters, which satisfied its longstanding demand for upstream countries to benefit more from the river through development projects.[fn]For background and the negotiating positions of parties, see “The Nile Basin Cooperative Framework Agreement: The impasse is breakable!”, Sudan Tribune, 22 June 2017.Hide Footnote Egypt and Sudan both objected, perceiving the text as rewriting the 1959 agreement that allocated 100 per cent of the Nile waters to the two countries furthest downstream.

Cairo and Khartoum pressed for the document to clearly stipulate the need to protect water security for all countries and demanded that member states be explicitly required to offer prior notification of all major development projects in the basin. They lost the argument. Upstream countries baulked at what they perceived as a demand by their downstream counterparts for an effective veto over projects. Egypt and Sudan suspended their participation in the NBI shortly afterward (Sudan subsequently rejoined).[fn]Egypt objected to upstream countries’ decision to go ahead without achieving consensus, which it says violated the spirit of basin-wide cooperation and building of mutual trust that should guide the NBI’s operations, according to the NBI’s founding charter. “They [NBI members] went ahead and decided to sign without addressing our concerns, and we made the decision not to be a part of the framework”. Crisis Group interview, Egyptian foreign ministry official, Cairo, June 2018.Hide Footnote Addis Ababa’s announcement of the GERD the following year only added to those tensions.

Today, the EU and Germany are the NBI’s principal remaining external funders. The World Bank, having initially reduced its participation amid heightened tensions among parties, also eventually resumed support through the Cooperation in International Waters in Africa program. Though the initiative has been undermined, it still undertakes research and maps out scenarios for future options in terms of water use, besides focusing on the effects of climate change and other pressures, including population growth. The NBI cannot, however, be effective without the participation of Egypt, a key player on the basin. Considering the warmer relations between Addis Ababa and Cairo, it would make sense for Egypt to rejoin this initiative, which remains the best available forum for discussions on a basin-wide settlement.

The wider forum enjoys two principal advantages over the trilateral discussions. The talks among Cairo, Khartoum and Addis Ababa are project-specific and focused only on the GERD issue. The NBI, on the other hand, can craft a more forward-looking basin-wide consensus to govern resource use and avert conflict down the road. Also, the initiative would involve all the countries up and down the basin and could produce a consensus that goes beyond Ethiopian, Egyptian and Sudanese interests.[fn]See Cascão, op. cit. Hide Footnote

Beyond such questions, Egyptian, Sudanese and Ethiopian leaders need to tackle the political issue of how to sell any compromise – on both the GERD and long-term water sharing – at home. So far none has mustered the political courage to embrace deals that risk exposing them to domestic criticism.

III. High Anxiety in Egypt

The Nile Waters Dispute: The Egyptian Position

In this video, Crisis Group's former North Africa Project Director Issandr El Amrani reflects upon Egypt's position about the dam. CRISISGROUP

For Egyptian authorities, the first-order priority is to shield the country from potentially drastically reduced water flow when the GERD is completed. Egyptian media outlets close to the security forces, echoing the country’s leadership, regularly portray the dam as a major threat to Egypt.[fn]See “Ethiopia’s catastrophic dam”, al-Ahram Weekly, 1 August 2013; and “Ethiopia’s game plan on the dam”, al-Ahram Weekly, 28 January 2016. Articles on the subject routinely claim that the dam is part of a conspiracy against Egypt by “enemy states” and also portray Ethiopia as stringing along talks on the GERD so that it can present Egypt with a fait accompli when the dam is built.Hide Footnote Likewise, assessing how the country was blindsided by Ethiopia’s plans to construct the GERD is a popular topic for discussions in online chats. In an otherwise subdued campaign, all candidates in Egypt’s March 2018 presidential election declared their intention to protect the country’s Nile interests. A new constitution adopted in 2014 requires the state to preserve Egypt’s “historical rights” to the Nile.[fn]Article 44 of the new constitution states: “The State shall protect the River Nile, preserve Egypt’s historical rights thereto, rationalise and maximise its use, and refrain from wasting or polluting its water. The State shall also protect groundwater; adopt necessary means for ensuring water security; and support scientific research in that regard”. “Constitution of the Arab Republic of Egypt 2014” (unofficial translation), 18 January 2014.Hide Footnote

As the country most dependent on the Nile, and the dominant power in the region, Egypt was traditionally most active in river-related diplomacy.

As the country most dependent on the Nile, and the dominant power in the region, Egypt was traditionally most active in river-related diplomacy, particularly during Gamal Abdel Nasser’s time in office (1954-1970). During the decades of anti-colonial struggle after World War II, Nasser built close relations with counterparts across Africa, an investment that earned the country’s positions sympathy.

Under Nasser’s successors, however, Egyptian ties with the continent frayed. Of particular note, Anwar al-Sadat ran afoul of Ethiopia when he took Somalia’s side in the Ogaden War (1977-1978). It was the first of several moves leading Addis Ababa to accuse Cairo of backing its foes as part of a policy of encirclement.[fn]An Egyptian diplomat said Ethiopia tends to overstate allegations of Egyptian meddling. He said Egypt supported Somalia’s Siad Barre during the Ogaden War, and in subsequent proxy conflicts, as part of Cold War geopolitical rivalries. (At the time, a Soviet-backed Marxist government ran Ethiopia, while Sadat had aligned Egypt with the U.S. in the early 1970s.) An Ethiopian official, however, said Egypt had refused to drop what he described as a longstanding policy of spreading conflict in the Horn to keep Ethiopia weak. Crisis Group interviews, Addis Ababa, May 2018.Hide Footnote Hosni Mubarak, who assumed power after Sadat’s assassination in October 1981, showed no interest in recovering Egypt’s position on the continent.[fn]Mubarak “deprioritised” relations with the rest of Africa, according to Harry Verhoeven, author of several papers on elite politics on the continent. These days, Verhoeven says, Egyptian officials begin their meetings with dignitaries from Horn of Africa countries such as Kenya and Tanzania with some sort of (implicit) apology for the fact that Egypt ignored the continent for so long. He says most in the region appreciate the change in rhetoric, which is “less arrogant and moralising than in the past, less assuming that Egyptian supremacy or dominance is a natural thing”. Crisis Group interview, Nairobi, May 2018.Hide Footnote Cairo cut off relations with Ethiopia after the 1995 assassination attempt against Mubarak in Addis, claimed by Egyptian Islamist militants but which he accused Ethiopian authorities of abetting.[fn]“Egyptian group says it tried to kill Mubarak”, The New York Times, 5 July 1995.Hide Footnote Egypt later backed Eritrea’s war of secession. The resulting rancour coincided with the period of Ethiopian economic growth under Meles which, in turn, helped pave the way for the GERD. The 2011 announcement of the dam’s construction came at a time of tense Cairo-Addis relations when Egypt was largely disengaged from regional diplomacy and after it had frozen its participation in the NBI.

At the time, the country also was grappling with the turbulence that followed Mubarak’s ouster in February 2011. Otherwise preoccupied, Cairo was blindsided by Ethiopia’s proclamation about the dam and could muster only weak opposition.[fn]Crisis Group interviews, Egyptian diplomats and officials, Addis Ababa and Cairo, April-June 2018. The Egyptian officials said turmoil in Egypt between 2011 and 2013 robbed the state of the capacity to mount a coordinated diplomatic response to Ethiopia’s plans for the GERD.Hide Footnote “Egypt did not have a state at that time”, said an Addis Ababa-based Egyptian diplomat, who argues that Meles took advantage of instability in Cairo to pursue a much larger dam than initially envisioned: “They doubled, tripled and then quadrupled the size of the reservoir”.[fn] Demanding that Ethiopia halt construction, Cairo struggled to put together a coherent policy response during the short-lived presidency of Mohamed Morsi. Though some Egyptian politicians called for military action, Morsi was in no position to back up such bluster.[fn]Egypt’s diplomatic disarray, meanwhile, came at the cost of Ethiopia making substantial progress on the GERD while disregarding the possible downstream impact.

Since coming to power in 2014, President Abdel Fattah al-Sisi has reinvigorated Egypt’s Nile waters diplomacy. The Egyptian security and diplomatic apparatus threw its weight behind efforts to secure a deal with Addis Ababa and Khartoum after Sisi took office. Repeated rounds of talks yielded the aforementioned March 2015 declaration of principles, in which Ethiopia acknowledged the need to shield downstream countries from “significant harm” from the GERD. Sisi has cautiously welcomed Abiy’s ascension to office and hopes to use warmer ties with Addis Ababa to secure an agreement on the GERD that clearly protects water flow downstream.[fn]During Abiy’s visit to Cairo in June 2018, Sisi implored the Ethiopian prime minister to swear to God, in Arabic, that Egypt will not be harmed in any way by the dam. Abiy complied, and the message resonated across the country with video of that moment going viral on social media. It was aired on television for days. See “President Sisi asks Ethiopian to ‘swear to God’ over Nile crisis”, Al Bawaba, 11 June 2018. Despite the more positive public posture in recent months, Egyptian officials remain wary of Ethiopian intentions, noting that the Ethiopian bureaucracy and system heavily backs the GERD and that Abiy has authorised construction to continue apace. Crisis Group interviews, Egyptian officials, Cairo, June 2018.Hide Footnote In pursuing this deal, he is partly motivated by domestic political considerations: he has been intent on shoring up his authority and support for his controversial attempt to lift the Egyptian constitution’s two-term limit on the presidency at a time of waning popularity.[fn]The president’s popularity has been declining amid biting austerity measures and severe repression of dissent. In what could be interpreted as a sign of insecurity on his part, Sisi reshuffled the security apparatus leadership three times in the past year. “Egypt changes defence, interior ministers in cabinet reshuffle”, Xinhua, 15 June 2018.Hide Footnote The Nile issue gives him an opportunity to rally nationalist sentiment. Sisi now also has a prime regional perch from which to make Egypt’s case: in February 2019, he assumed the rotating AU chairmanship.

Sisi’s government has thrown considerable energy into the tripartite talks. Though Egyptian diplomats privately concede it is too late to stop the dam, they have sought to persuade their Ethiopian and Sudanese counterparts of the need to abide by the terms of the 23 March 2015 “declaration of principles” – notably its provision that all parties ensure that the GERD causes no significant harm to downstream countries.[fn]Agreement on Declaration of Principles between the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia and the Republic of the Sudan on the Grand Ethiopian Renaissance Dam Project, Khartoum, 23 March 2015.Hide Footnote They are thus eager to strike a deal on the GERD’s operations that does not sharply reduce water flow downstream. They worry about precedent: Ethiopia is estimated to have hydropower capacity of up to 45,000 megawatts and it might unilaterally pursue other hydropower projects down the line.[fn]See “Ethiopia’s Small Hydro-Power Market”, GTZ, December 2009.Hide Footnote Cairo would vigorously object if Addis Ababa undertook major new projects.[fn]Crisis Group interviews, Egyptian diplomats and security officials, Addis Ababa and Cairo, June-August 2018.Hide Footnote Egypt also needs an arrangement with Sudan, which, in the words of an European diplomat, “Cairo views as a long, dry sponge that could soak up all the water”.[fn]Crisis Group interview, European diplomat, Nairobi, September 2018.Hide Footnote

As seen, a principal hurdle is the absence of mutually agreed-upon studies of the dam’s impact. According to an Egyptian diplomat, “There are no [good] empirical or mathematical models for the actual effect on water flows as a result of the dam, and no exact numbers for what will be affected and how, and for how long”.[fn]Crisis Group interview, retired Egyptian official, Cairo, June 2018.Hide Footnote It is not for lack of trying. In 2015, the Nile basin countries agreed to commission two firms, one French and one Dutch, to study the GERD’s potential effects. But the Dutch firm, nominated by Cairo, walked away; Egyptian authorities complain that the Ethiopians did not fully cooperate. The French firm continued its work, producing an inception report, a preliminary document laying out the terms for further evaluation of the project, but the parties could not agree on a way forward. In December 2017, Egypt proposed that the World Bank step in to conduct an independent study, an offer Ethiopia rejected.[fn]“Egypt concerned over discords with Ethiopia in dam talks”, Xinhua, 22 January 2018.Hide Footnote

A third effort at reaching consensus came on 15 May 2018, when the water and foreign ministers of Egypt, Sudan and Ethiopia met in Addis Ababa and agreed to form a panel of experts to conduct studies. Yet despite initial enthusiasm, little progress has been made insofar as the agreement allows each country to employ its own experts and provide its own non-binding reports.[fn]In effect, a retired Egyptian official said, this arrangement only “keeps everyone busy, and allows Ethiopia to waste more time as it gets closer to completing construction”. Crisis Group interview, Cairo, June 2018. Ethiopian analysts push back against this interpretation. “The Egyptians are simply unable to live with the fact that the ship has sailed – the dam will be a reality”. Crisis Group interview, analyst close to the Ethiopian prime minister’s office, Addis Ababa, August 2018. A diplomat who has followed efforts to conduct impact assessments said both sides were to blame. “Neither the Egyptians nor the Ethiopians provide data for the surveys. It shows a lack of commitment across the board, despite media reports that suggest only the Ethiopians don't cooperate”. Crisis Group interview, European diplomat, Addis Ababa, May 2018.Hide Footnote

Whoever is to blame for the paucity of information, it creates a real problem for all parties as they try to plan for the expected disruptions from reductions in water flow. A former senior Egyptian agriculture ministry official said:

We do not seek to sabotage the dam. But we need clear information on its impact. We need mathematical models to determine what percentage of water will be lost. That way, we can gauge the impact on lost farmland and water losses at home. We need to confirm the threat level to Egypt.[fn]Crisis Group interview, former Egyptian agriculture ministry official, Cairo, June 2018.
 Hide Footnote

That sentiment attracts sympathy outside the region. Western officials, for example, are generally critical of the Egyptian authorities’ handling of the dam crisis (particularly their early posture suggesting that they could stop the project unilaterally) and of the country’s water use practices.[fn]Crisis Group interview, European diplomat, Addis Ababa, June 2018. The diplomat said Ethiopia boasted the most “consistent game plan” throughout the dispute, while Egypt squandered time early on trying to halt the dam project entirely.Hide Footnote But they support the core Egyptian demand for transparent, comprehensive studies to understand the GERD’s full impact.[fn]Some European diplomats say there is no political will for transforming farming culture, for instance. One diplomat argues, “water pricing in Egypt will never happen. Farmers believe in their divine right to water … ‘You can take away my gas subsidy, but don’t touch my water’”. Still, these Western diplomats argue that Egypt, already a water-scarce country, is right to demand studies on potential impact to water flow by projects in upstream countries. Crisis Group interview, European diplomat, Cairo, July 2018.Hide Footnote

Until recently, Cairo’s poor relations with Addis Ababa and Khartoum were an obstacle to reaching any agreement on the dam. Several events exacerbated tensions: in 2016, Ethiopian authorities condemned Cairo’s decision to host Ethiopian Oromo rebels;[fn]“Cairo-Khartoum dispute over Oromo could derail dam talks”, Al-Monitor, 25 October 2016.Hide Footnote in January 2018, Ethiopia accused Egypt of sending troops to Eritrea, reportedly as a show of force aimed at both Ethiopia and Sudan, claims that Eritrea disputed.[fn]Eritrean President Isaias Afwerki denied that any Egyptian troops were at the Sawa base or anywhere else along the border with Sudan. “Sudan deploys troops to Eritrea border amid tension with Egypt”, The East African, 16 July 2018; and “Eritrean president denies presence of Egyptian troops in his country”, Sudan Tribune, 15 January 2018.Hide Footnote Sudan, in turn, massed troops near the border with Eritrea.

Though Prime Minister Abiy’s more recent outreach to Egypt has eased bilateral tensions somewhat, the two countries’ authorities eye each other suspiciously. Egypt appears to have adopted a wait-and-see attitude toward Abiy and his administration, unsure of the new prime minister’s staying power and not fully trusting his assurances that Ethiopia will protect Egypt’s interests regarding Nile waters.[fn]Crisis Group interviews, Egyptian serving and retired security officials, Cairo, June 2018.Hide Footnote

Egypt’s relations with other relevant countries are also evolving. Sisi embarked on concerted diplomatic efforts with the other seven Nile basin countries, not so much to win immediate support for Egypt’s positions on the GERD as to line up allies for later negotiations over basin-wide water management. He offered Burundi and the Democratic Republic of Congo diplomatic support, including during Cairo’s recent term on the UN Security Council, rejecting calls for sanctions targeting their leaders’ attempted extra-constitutional power grabs.[fn]See “Egypt reiterates support to Burundi in various fields”, Egypt Today, 15 November 2018; and “Sisi stresses Egypt’s support for political agreement, security in DRC”, Egyptian State Information Service, 23 April 2017. The DRC’s President Joseph Kabila eventually left office, after a controversial December 2018 election. See Crisis Group Statement, DR Congo Elections: Reversing a Dangerous Decision, 28 December 2018. Hide Footnote He cultivated an especially close relationship with President Yoweri Museveni of Uganda, traditionally a rival of Sudan and to a lesser degree Ethiopia.[fn]Though Uganda initially backed Ethiopia’s position and asserted upstream countries’ rights to develop the river, it has since cooled its support in the face of intense Egyptian diplomacy. A Ugandan official said his government had taken a more cautious approach because Yoweri Museveni is the longest-serving president in the Nile basin and sees himself as a “big brother” who can mediate among parties. Crisis Group interview, Ugandan government official, Kampala, July 2018. As part of its outreach, Egypt has offered Uganda substantial financial and technical support to help curb the invasive hyacinth weed on Lake Victoria, which impedes fishing.Hide Footnote Several senior Egyptian intelligence and military officials have taken up diplomatic posts in the Nile basin capitals.[fn]Major General (Rtd.) Tarek Salam, Egypt’s ambassador to Kampala, for example, was General Intelligence Services deputy director and a security adviser to President Sisi. Several other figures with security backgrounds have been appointed to embassies of riparian countries. See Asmahan Soliman, “A diplomatic shakeup with a taste of security”, Mada Masr, 12 September 2017.Hide Footnote Sisi also traded visits with his Kenyan counterpart Uhuru Kenyatta, seeking to counterbalance Nairobi’s defence pact and close relationship with Addis Ababa.

Cairo’s growing role vis-à-vis South Sudan is part of a broader attempt to reassert itself as a Horn power after years of absence under Sadat, Mubarak and Morsi.

Egyptian re-engagement has been particularly striking in South Sudan. Since at least 2015, Egyptian officials and security agencies have built close ties with their counterparts in Juba, inviting several South Sudanese delegations to Cairo.[fn]“Egypt says ready to enhance security in South Sudan”, Sudan Tribune, 22 February 2018.Hide Footnote Egypt also lobbied on South Sudan’s behalf at the UN Security Council, prompting South Sudan’s President, Salva Kiir, and his allies to describe Egypt as a treasured ally.[fn]See “South Sudan’s Kiir praises Egypt’s Sisi support for stability in his country”, al-Ahram Online, 10 January 2017.Hide Footnote In March 2018, Egypt supported South Sudan’s request to join the Arab League. Cairo’s growing role vis-à-vis South Sudan is part of a broader attempt to reassert itself as a Horn power after years of absence under Sadat, Mubarak and Morsi.[fn]Egyptian re-engagement with South Sudan might also be related to long-nursed Egyptian ambitions to construct the Jonglei canal, a project aimed at draining the Sudd, a vast swamp in South Sudan – with the aim of increasing the White Nile’s flow into Sudan and from there into Egypt. South Sudanese rebels destroyed equipment sent for the construction effort in 1984. They said the project would cause environmental damage in South Sudan, including the collapse of fisheries and the desiccation of grazing land. Sudan and Egypt resolved to restart the project in 2008 but halted the effort after South Sudan’s independence in 2011.Hide Footnote

Gaining external backing is one thing; preparing Egypt’s public for inevitable adjustments when the dam is completed is another.[fn]Crisis Group interview, former Egyptian cabinet minister, Cairo, June 2018.Hide Footnote Though officials acknowledge the GERD is a reality, they have done little to sensitise Egyptians to this fact. Egypt’s media – policed by the military and security apparatus – continue to suggest that military action could stop the dam’s completion. Opinion pieces regularly appear in the Egyptian press and on social media boasting of the size of the nation’s military and its ability to project force upstream, while amplifying the national security threat posed by the GERD.[fn]See “Scenarios of military intervention to resolve the Ennahda dam crisis”, Ida2at, 20 December 2017 (Arabic).Hide Footnote

In reality, as many analysts warn, the dam will compel Egypt to accelerate long overdue reforms in water consumption, rolled out haltingly in recent years.[fn]Egypt has taken a number of steps to improve its water use in the last two years. In June 2018, authorities announced they would import more rice and limit the amount of land used to grow this water-intensive crop. See “Egypt to begin importing rice after slashing its own cultivation”, Reuters, 5 June 2018. Authorities have also moved to expand alternative freshwater sources to complement the Nile, including desalination, wastewater treatment and expanded tapping of groundwater. The problem is that authorities are loath to publicly link any of these changes to expected reductions in Nile water flow, meaning that there is no public debate and no coherent national plan for improving water use. A British journalist who has reported on the crisis said Egypt “needs to start acting like a desert country”, pointing to countries such as Iraq and Jordan where people are far more conservative in their water use than Egyptians are. “The fact that the population is so concentrated within the Nile Valley has deluded many Egyptians and the state into thinking the country is a lot more water-rich than it is. While officials have paid lip service to the need to address water scarcity, they must take action soon because the status quo won’t last, and things will get worse”. Crisis Group interviews, Cairo, May-July 2018.Hide Footnote The country uses about 85 per cent of its water for its thirsty crops, with the main method being highly inefficient open-field irrigation. Studies show that this surface irrigation method “causes high water losses, decline in land productivity and salinity problems”.[fn]Rehab Osman, Emanuele Ferrari and Scott McDonald, “Water Scarcity and Irrigation Efficiency in Egypt”, Water Economics and Policy, vol. 2 (2016).Hide Footnote And yet, to date, officials have not publicly laid out what the GERD would mean for Egypt’s water use patterns.[fn]Crisis Group interviews, Egyptian analysts, June 2018.Hide Footnote

External actors could help Egypt undertake adjustments that will be needed in the early years of GERD implementation. The EU already has offered to explore guarantees (including loans) and use other instruments to support downstream countries in years in which drought or other shocks jeopardise food security.[fn]Crisis Group interviews, European diplomats, Addis Ababa, May-June 2018.Hide Footnote Local private-sector actors argue that with outside help, notably from the Netherlands – a world leader in sustainable agriculture and efficient water use – Egypt could put in place measures to mitigate harm from reduced water flow.[fn]Crisis Group interview, Egyptian businessman, Cairo, June 2018.Hide Footnote

IV. Sudan: Angling for Benefits

Poorer and less populous than Egypt, Sudan historically has been a weaker player in the Nile basin. For decades prior to South Sudan’s 2011 independence, it was embroiled in its own civil wars. Still, it has long asserted what it considers to be its rights under the 1959 agreement. Like Egypt, Sudan froze its participation in the NBI in 2010, believing that upstream countries had disregarded the interests of downstream countries in endorsing the Cooperative Framework Agreement and, once Ethiopia announced the GERD in 2011, expressed opposition to the project it feared would limit water supply downstream.

Khartoum was doubly caught off guard by the GERD announcement, of which it had no advance notice. It came at a time of domestic unrest. Khartoum was also bracing itself for the shock of South Sudan’s impending independence in July. Its opposition to the GERD was thus relatively muted. In 2012, however, President Omar al-Bashir’s government shifted its stance on the dam entirely, having been persuaded by Sudanese water experts and Ethiopian leaders that the GERD would help Sudan. Signalling its acquiescence in Ethiopia’s plans, Khartoum rejoined the NBI that November.[fn]“Sudan’s Bashir supports Ethiopia’s Nile dam project”, Sudan Tribune, 5 April 2012.Hide Footnote

Indeed, it appears that Sudan stands to significantly benefit from the dam. Its abundance of arable land and water gives the country enormous potential for the development of commercial agriculture. Once completed, the GERD could curtail the Nile’s flooding in Sudan and thus reduce sedimentation, saving the country millions of dollars it spends annually clearing silt from agricultural fields. By offering Sudan more regulated water flow throughout the year, the dam could allow for several harvests annually and greater crop yields. If the country adapts quickly when the GERD’s reservoir is filled, it could irrigate millions of acres of new farmland.[fn]Crisis Group interviews, senior government officials, Khartoum, Abu Dhabi and Ankara, May-September 2018.Hide Footnote

Sudan hopes to benefit from foreign interest in its agricultural potential, particularly from Gulf states and Turkey, to boost investment. Saudi Arabia, for example, sees Sudan as contributing to its long-term food security; Port Sudan is located less than 400km from Jeddah and would be a ready transfer point for Sudanese produce. Riyadh has a long track record of investment in Sudanese agriculture, and though the results have been disappointing, its interest is undiminished.[fn]Crisis Group Skype interview, Sudanese agro-investor in Saudi Arabia, June 2018. He noted that many Gulf countries see Sudan as the “ultimate destination” for investment dollars to secure their long-term food security. “The numbers are just insane”, he explained, but he added that private investors are loath to rush in until the investment climate improves.Hide Footnote Qatar, Turkey and the UAE likewise all wish to expand their investments in Sudan’s agriculture sector. Ankara is contemplating a joint farm scheme in Sudan. Already, Gulf monarchies are said to have bought thousands of acres of arable land for long-term use when Sudan’s business environment improves.[fn]“Gulf States are buying land, but gradually and cautiously so as not to scare the Egyptians”. Crisis Group telephone interview, academic researcher, Khartoum, June 2018. Many of these investments are made for political reasons, to boost Gulf monarchies influence and presence in the country and not with an eye to immediate profit. For a good resource mapping out the stakes, see Jos Meester, Willem van den Berg and Harry Verhoeven, “Riyal Politik: The Political Economy of Gulf Investments in the Horn of Africa,” Clingendael Report, April 2018.Hide Footnote Even Egypt has discussed plans to grow some of its staples (particularly wheat, of which it is the world’s largest importer) in Sudan. The two countries have formed a bilateral commission to push the proposal forward.[fn]“Egyptian-Sudanese relations witness massive development”, Egypt Today, 30 August 2018.Hide Footnote

The GERD could yield other benefits for Sudan. Purchasing hydro-electricity from Ethiopia will likely be cheaper than producing it domestically. Better-controlled water flow likewise would enable it to boost its hydropower production.[fn]According to an MIT study, more regulated, year-round water flow into Sudan will lead to increased power production at the country’s main dams – Roseires, Sennar and Merowe – in the basin. See “The Grand Ethiopian Renaissance Dam: An Opportunity for Collaboration and Shared Benefits in the Eastern Nile Basin”, MIT, Abdul Latif Jameel World Water and Food Security Lab, November 2014.Hide Footnote

As a result, Sudan has largely supported the GERD project in the course of the tripartite talks. It has downplayed concerns that the dam could sharply reduce water flow downstream and urged Cairo to accept that the dam could yield basin-wide benefits, including expanded agricultural production in Sudan and, potentially, hydropower exports to Egypt.[fn]Crisis Group interviews, Sudanese water experts and officials, Khartoum, June-August 2018.Hide Footnote Sudan’s primary demand of the Ethiopians, which accords with an Egyptian one, has been that Addis Ababa should accede to a transparent study of the project. Its main concern on this score is that any structural defects in the dam would be a disaster for Sudan; the dam is located near its border, and flood waters would submerge swathes of its territory if the structure were to collapse. Still, Sudan has played a constructive role in pushing the trilateral talks forward. Most significantly, its representatives have indicated to Egypt that even after the GERD is completed, they will not tap water for agriculture so aggressively as to threaten water supply downstream. Egypt does not fully trust those promises.[fn]Crisis Group interview, Western diplomat who has spoken to officials in Cairo and Khartoum on the status of the trilateral discussions, Nairobi, January 2019.Hide Footnote

Khartoum’s pro-GERD stance has worsened its already strained relations with Egypt. At odds with Cairo for decades over Halayeb, a triangle of land on the Red Sea coast claimed by both countries, Khartoum over recent years has also incurred the Egyptian government’s wrath by sheltering members of the Muslim Brotherhood, which was outlawed under both Sadat and Mubarak and now, after its brief stint in power in 2012-2013, is again proscribed and the target of repression. Bashir’s about-face on the dam only further angered Cairo. More broadly, Egypt’s government has long viewed Sudan as a potential base for the spread of Islamism in the region, a development it perceives as a threat to its hold on power.

As outlined, Egypt’s primary concern is that Sudan might expand its water use to Cairo’s detriment. So far, though Khartoum is entitled to 18.5 million cubic metres annually under the 1959 Nile agreement, it taps only about 12 to 14 billion cubic metres a year because it is under-developed.[fn]See Cascão, op. cit.Hide Footnote Sudan is citing its current light consumption as justification for unilateral expansion of its Nile water use down the line, saying it would remain within treaty obligations.[fn]A Sudanese academic with knowledge of official records told Crisis Group that Sudan uses an estimated 12 billion cubic metres of water annually, well below the 18 billion cubic metres allotted in the 1959 Nile agreement. Sudan’s water use has been declining due to incompetent handling of its major agricultural projects. Crisis Group interview, Sudanese academic, Khartoum, June 2018.Hide Footnote If the GERD enables Sudan to expand agricultural production, it would use more water, on top of Ethiopia’s own increased use. Such extra consumption would strain Egypt’s own supply. Bashir irritated Cairo further by offering to “donate” some of Sudan’s Nile treaty allotment to Ethiopia for the purpose of filling the dam’s reservoir.[fn]Crisis Group interview, Ethiopian analyst, Addis Ababa, August 2018.Hide Footnote In turn, Sudanese officials accuse Egypt of arrogance and wilful blindness to the merits of Khartoum’s position.[fn]Reflecting on Sudanese elite attitudes toward what they view as Egyptian haughtiness, one former Egyptian ambassador (who has served in the region) said: “What can we expect? After years of treating them [Sudan] as if they are beneath us, an inconvenient and stupid neighbour, they are now throwing it back in our faces, while holding all the cards”. Crisis Group interview, retired Egyptian ambassador, Cairo, June 2018.Hide Footnote A Sudanese water expert said:

There are huge benefits [to Sudan] and trying to deny them is absurd. Egypt’s attempt has been to scare Sudan away by circulating stories that [the GERD] might collapse [and flood Sudan]. But Egyptian specialists actually admit that it is going to benefit Sudan, and this is why they are worried![fn]Crisis Group telephone interview, Salman Salman, Sudanese international water law expert and academic researcher, June 2018.Hide Footnote

Khartoum’s relations with Addis Ababa historically have been warmer than with Cairo. Bashir’s government cultivated lasting ties with men who would become senior figures in Meles Zenawi’s government by supporting them when they were leading the armed insurrection against Ethiopia’s former Marxist regime in the late 1980s and early 1990s. Relations hit a rough patch at the turn of the millennium due to Meles’s support for South Sudanese independence, but endured nonetheless. Until Addis Ababa’s recent peace deal with Asmara, Sudan and Ethiopia shared a common enemy in the Eritrean government, which Khartoum long accused of supporting rebels in eastern Sudan.[fn]John Young, “Eastern Sudan: Caught in a Web of External Interests”, Review of African Political Economy, vol. 33, no. 109 (September 2006), pp. 594-601.Hide Footnote This dynamic helps explain why Khartoum took the risk of upsetting Cairo by backing the GERD.

The U.S. government’s continued designation of Sudan as a state sponsor of terrorism, along with the poor business environment, keeps foreign investors away.

The burning question is whether President Bashir will be in power long enough to enjoy the GERD’s putative bounty. Entering his third decade in office, he faces dissent inside and outside the ruling National Congress Party (NCP).[fn]Crisis Group interview, African diplomat who tracks developments in Khartoum, Nairobi, September 2018.Hide Footnote Some in the NCP, particularly younger officials but also others with whom he has fallen out, blame the president for a major economic crisis characterised by spiralling costs of living. Bashir’s critics – within the NCP and outside it – also view him as a liability in terms of relations with the West. The U.S. government’s continued designation of Sudan as a state sponsor of terrorism, along with the poor business environment, keeps foreign investors away and blocks Sudan’s access to the international debt relief or bailouts necessary to salvage its economy. The International Criminal Court’s indictment of Bashir for atrocities committed in Darfur also makes it hard for Western donors to engage with Khartoum, though they maintain contact on efforts to curb migration to Europe and on counter-terrorism. Bashir’s fear of a palace coup explains his cabinet reshuffles, which interrupt efforts at reform.

Beyond that, popular discontent runs deep. In late December 2018, the government’s decision to raise the price of bread sparked demonstrations in cities throughout the country, with chants escalating rapidly from complaints about prices to calls for Bashir’s downfall during marches on the presidential palace.[fn]At first, media coverage of these protests was scant. But cell phone video posted to Twitter showed a crowd in Khartoum echoing the iconic slogan of the 2011 Arab uprisings, “The people want the fall of the regime (al-sha‘b yurid isqat al-nizam)!”, Tweet by Tobias Schneider, @tobiasschneider, Middle East analyst, 5:09 pm, 22 December 2018. See Crisis Group Africa Briefing Nº143, Improving Prospects for a Peaceful Transition in Sudan, 14 January 2019.Hide Footnote On 22 February, Bashir declared a state of emergency for a year, sacked the national and provincial governments, and replaced all regional state governors with security officials. The move, seen as a desperate gambit to survive the protest movement, did little to stop the demonstrations.[fn]See Crisis Group Statement, Bashir Moves Sudan to Dangerous New Ground, 26 February 2019.Hide Footnote

The protest movement against Bashir has brought a further twist in relations between Cairo and Khartoum. Despite Egyptian authorities’ irritation with Bashir’s positions on various issues, including the GERD, they have lent him unwavering support as he battles to save his political life in the face of the most sustained protest campaign Sudan has seen in decades. Bashir travelled to Cairo in the second week of January and received Sisi’s unequivocal backing.[fn]“Bashir thanks Egypt for supporting Sudan’s security, stability”, Egypt Today, 14 January 2019.Hide Footnote The embattled Sudanese president requested Egyptian support in lobbying for financial assistance from the Gulf monarchies to stabilise Sudan’s economy.[fn]Crisis Group interview, Western diplomat with good access to officials in Cairo, Nairobi, February 2019.Hide Footnote If Bashir survives, it is possible his stance on the GERD may shift yet again to align more closely with Cairo than with Addis.[fn]A European diplomat quoted an Egyptian official saying that Bashir, on his latest visit to Cairo, adopted positions on the GERD “that are very close to ours”. Crisis Group interview, Nairobi, February 2019.Hide Footnote Ethiopia has issued no public statement on the uprising in Sudan. Abiy abruptly cancelled a planned 4 March visit to Khartoum, but neither his office nor the Sudanese president’s offered an explanation.[fn]“Ethiopian premier cancels visit to Sudan”, Sudan Tribune, 5 March 2019.Hide Footnote

Another important question, whether Bashir survives or not, is how Sudan will pay for the infrastructure upgrades and other improvements it needs to reap the GERD’s promised benefits. Finding donors or investors will not be easy. The private investment climate in Sudan is poor and many foreigners who have expressed a theoretical interest are waiting. Bashir has long privileged the security sector and paid little heed to economic needs. The military’s control of economic management underpins the country’s chronic foreign exchange shortages, which contribute to the inflation and other economic problems that have helped bring protesters into the streets. It also alienates investors, who complain of byzantine regulations enforced by an inflexible bureaucracy. Sanctions and Bashir’s troubled relations with Western powers and international financial institutions make matters worse. For many foreign investors, the key issue is how long Bashir stays in power and how his eventual succession will be managed.

The GERD’s economic boons for Sudan are only likely to show up sometime in the future. The year-long state of emergency, repression of protesters and uncertainty over when – or if – Bashir will fall makes it even more unlikely that substantial foreign investment will flow into Sudan anytime soon.

V. Reaching Agreement on the Nile Waters

Though mutual suspicion among Egypt, Ethiopia and Sudan has stymied diplomatic efforts to resolve the dispute, in principle all sides stand to gain from greater cooperation in sharing the Nile’s water.

Ethiopia needs external consumers for the hydroelectric power it will generate and thus needs good relations with its neighbours, particularly Sudan, a potential top export market. Given foreign currency shortages at home, it could also benefit from outside funding to complete the GERD and knows it would face diplomatic blowback if it dramatically slowed the water flow to Egypt. Sudan stands to gain enormously from the dam, provided it can attract the necessary investment in its agricultural sector. It also has an interest in ensuring that the dam’s construction is solid: any breach of water would inundate its crops and low-lying towns and villages. As for Egypt, the downstream country most dependent on Nile waters, it sorely needs the upstream countries’ cooperation. In return, Egypt could offer access to markets in its more advanced economy and also joint investment, including in agricultural ventures, with Sudan and Ethiopia.

Beyond reducing risks of confrontation, there are many arguments for a compact to ensure better management of Nile waters. Water stress will weigh ever more heavily upon Nile basin countries in the years ahead.[fn]See Tazebe Beyene, Dennis P. Lettenmaier and Pavel Kabat, “Hydrologic Impacts of Climate Change on the Nile River Basin: Implications of the 2007 IPCC Scenarios”, Climatic Change, vol. 100, no. 3 (2006), pp. 433-461.Hide Footnote Recurring drought has already made rain-fed agriculture, upon which millions depend, increasingly difficult to sustain without modifications to antiquated agricultural practices. Climate change will likely contribute to more erratic water supply and stream flows. Population growth up and down the basin also underlines the need for more sustainable water use. In 1960, the total population of Egypt, Ethiopia (including Eritrea) and Sudan (including South Sudan) was 113 million. This number rose to 487 million in 2016.[fn]See “Estimated and projected total population in Nile basin countries”, Nile Basin Initiative, 2016-2017.Hide Footnote The UN estimates that, together, these countries will add another 200 million people before 2050. Per capita water use will also rise, amid greater urbanisation and industrialisation in each country.[fn]Diplomats say the various parties have used these demographic pressures to press the EU, in particular, to play a greater role in finding a resolution to the Nile waters dispute. Crisis Group interview, European diplomat, Addis Ababa, May 2018. A breakdown of the numbers can be found in Timothy Adams, Eltahir Group, Civil and Environmental Engineering, “Population Growth in the Nile Basin”, MIT Future of the Nile Water Workshop, 26 April 2018.Hide Footnote

An expert assessment of the GERD’s design by a Massachusetts Institute of Technology working group, using the limited data available, has identified three flashpoints if Nile basin countries cannot agree on cooperative water management.[fn]See “The Grand Ethiopian Renaissance Dam: An Opportunity for Collaboration and Shared Benefits in the Eastern Nile Basin”, op. cit.Hide Footnote First, the GERD will create an unparalleled resource management problem-in-waiting. Egypt’s Aswan Dam, completed in 1970, can store up to 169 billion cubic metres of water in its reservoir.[fn]See “Egypt marks completion of Aswan Dam project”, The New York Times, 22 July 1970. As the Ethiopians have done with the GERD, Egyptian authorities sold the Aswan Dam as a game-changing national development project.Hide Footnote The GERD’s reservoir can hold 74 billion cubic metres. Thus, there will be two major storage reservoirs in the same international river basin, each with a huge capacity compared to annual river flow, but with no institutional or legal arrangement for managing both together.[fn]See Dale Whittington, John Waterbury and Marc Jeuland, “The Grand Renaissance Dam and Prospects for Cooperation on the Eastern Nile”, Water Policy, 10 February 2014. Despite the GERD’s huge reservoir, the Ethiopians would not need to hold the water in the reservoir consistently as they will want to use the water to generate power and then release it downstream. To that extent, the GERD is not regarded as a “water-consumptive” project since it is not designed for irrigation, which would typically require storing water. See Cascão, op. cit. Still, Egypt worries that in years when there is low rainfall, Ethiopia will hold more water back to guarantee year-long electricity generation, highlighting the need for a cooperative management framework for the river.Hide Footnote The danger is that both countries could seek to simultaneously fill up their reservoirs in anticipation of drought, for example, fostering conflict because there would be insufficient water to fill up both dams. Without a cooperative management framework, and particularly if Egypt feels that its water supply is threatened, chances for conflict would be high.[fn]Experts note that there are few international rivers with large storage facilities in both an upstream and downstream country. In general, there is a large dam in an upstream country and a smaller one downstream, as is the case in the Senegal River basin. In cases where more than one large dam sits in the same river basin, there are cooperative frameworks for operating the storage facilities. See “The Grand Ethiopian Renaissance Dam: An Opportunity for Collaboration and Shared Benefits in the Eastern Nile Basin”, MIT, op. cit.Hide Footnote

Secondly, any sudden major reduction of water flow could trigger an ecological disaster. At present, excess water in the Nile flushes salts out of Egypt’s agricultural land into the Mediterranean. Diminished water supplies could lead to rapid salinisation and dramatic declines in agricultural productivity, throwing millions of farmers out of work, driving up food prices and provoking a political crisis. Technical solutions exist, but to implement them the parties will need clarity about the GERD’s effect on water flow and the timetable for filling its reservoirs.[fn]Ibid. Crisis Group interview, Egyptian agriculture ministry official, Cairo, June 2018.Hide Footnote

Thirdly, Ethiopia and Egypt could disagree about how to manage water flow during years of light rainfall. In those periods, Ethiopia will still want to store water for power generation while Egypt and Sudan will want extra water for agricultural and municipal use.[fn]Crisis Group interview, European water expert, Kampala, July 2018. The analyst noted that it was essential to implement safeguards and outline protocols in case of “extreme hydrological events” such as droughts. These measures might include offering guaranteed funding for food imports to downstream countries and encouraging Ethiopia not to store more water than it needs in its reservoirs, to prevent downstream shortages.Hide Footnote

None of these potential problems presents an insurmountable engineering challenge, though the three countries would need to set aside their mutual distrust. They also need to surmount complications related to the secrecy with which public policy is crafted in all three countries. Addis in particular conceals its Nile waters deliberations, partly because it worries about Egyptian sabotage in part due to statements by Egyptian authorities threatening to take military action to stop the dam.[fn]“Egypt: ‘All options open’ in Nile dam row with Ethiopia”, The Telegraph, 12 June 2013.Hide Footnote Ethiopian authorities reported that they foiled an attempt by Ethiopian rebels operating out of Eritrea to attack the GERD site in March 2017.[fn]“Ethiopia thwarts attack on Nile dam, Sudan apprehended 7 attackers”, Sudan Tribune, 3 March 2017.Hide Footnote Addis Ababa has allegedly hidden details of other dams from the downstream countries in the past.[fn]A senior Sudanese official said downstream countries were blindsided by Ethiopia’s construction of a major dam, with a 3 billion cubic meter storage capacity, on the Atbara river, which also flows into the Nile. Ethiopia only informed Egypt about the dam after finishing construction in 2009. Crisis Group interview, former Sudanese cabinet minister, Khartoum, June 2018. Ethiopia also resisted calls for studies into the impact of the Gilgel Gibe III Dam, whose construction began in 2006.Hide Footnote

Any mediation role for Gulf powers or for Turkey would be greatly complicated by their rivalries and battle for influence.

Multiple actors maintain open lines with the riparian countries and could nudge them toward compromise. China has close ties with both Egypt and Ethiopia. U.S. diplomats have discreetly shuttled between Addis Ababa and Cairo to explore possibilities for resolution, though some Ethiopian officials see the Americans as overly sympathetic to Egypt.[fn]Crisis Group interviews, U.S. diplomats, Addis Ababa and Abu Dhabi, May-July 2018. An Ethiopian analyst with close ties to the government argued the Egyptians assumed that they could stop the dam because some U.S. officials reportedly sympathised with the Egyptian positions. He claimed both sides underestimated Ethiopian resolve. Crisis Group interview, Ethiopian political analyst, Addis Ababa, May 2018. American officials said the U.S. did not favour any side and encouraged all parties to move toward a resolution. They said the Egyptians requested a “Camp David-style” summit on the issue but found insufficient U.S. support. Crisis Group interviews, U.S. diplomats, Addis Ababa and Abu Dhabi, May-July 2018.Hide Footnote The EU’s special representative for the Horn of Africa has engaged authorities in Cairo, Khartoum and Addis to encourage greater cooperation. Germany’s special envoy for Nile affairs has also met government representatives in the three capitals.

The Gulf powers and Turkey might also play a role. Both sides in the current Gulf crisis (Saudi Arabia and the UAE on the one hand, Qatar on the other) wield influence along the Nile. Riyadh and Abu Dhabi, seeing the region primarily through a security lens, have upped spending in the region over the past few years, largely to curtail Iran’s influence. Sudan has been among the chief beneficiaries, receiving aid and investment in return for severing ties with Tehran and sending thousands of Sudanese to fight with the Saudi-led coalition in Yemen.[fn]A senior Emirati official said Sudan has sent up to 10,000 troops to Yemen. He said the Emiratis appreciate the fact that Sudanese soldiers have gone to dangerous fronts while most other allies have committed only to air support. Many of the Sudan contingent of fighters are children as young as fourteen according to media reports. Crisis Group interview, Abu Dhabi, July 2018. See also Crisis Group Middle East Briefing N°65, The United Arab Emirates in the Horn of Africa, 6 November 2018; and “On the front line of the Saudi war in Yemen: Child soldiers from Darfur”, The New York Times, 28 December 2018.Hide Footnote Riyadh and Abu Dhabi may not fully trust President Bashir and have not provided the level of support he craves, but they maintain close ties. In Egypt, those two powers are deeply invested in President Sisi’s success, seeing him as a bulwark against the Muslim Brotherhood. Both have given him significant aid and plan to expand economic ties.[fn]Crisis Group interviews, Emirati foreign ministry officials, Abu Dhabi, July 2018.
 Hide Footnote
The UAE also intends to support major infrastructure projects in Ethiopia.[fn]“After the launch of La Gare Downtown Luxury Complex, Addis Ababa city poised to build at least four similar joint projects”, Addis Standard, 20 November 2018; and “UAE plans oil pipeline from Ethiopia to Eritrea in latest Horn of Africa move”, Reuters, 10 August 2018.Hide Footnote Abu Dhabi has privately signalled that it would be willing to mediate between Cairo and Addis.[fn]Crisis Group interview, UAE foreign ministry official, Abu Dhabi, July 2018.Hide Footnote It has already helped Abiy make peace with Eritrea.

For their part, Qatar and Turkey enjoy especially close ties to Sudan and warm relations with Ethiopia. Turkey is rehabilitating the Ottoman-era Suakin port (recent reports that it intends to establish a naval base there have alarmed Cairo).[fn]Turkey had initially claimed that it planned to rehabilitate the port only as a tourist attraction. But in the second week of November 2018, Turkish officials signalled that they would station air, land and sea forces in Suakin. “Sudan’s Suakin revealed as the location for Turkish military base”, World Bulletin, 13 November 2018.Hide Footnote Qatar was among the first foreign governments to come to President Bashir’s defence as the popular unrest swelled, though how committed Doha is to his survival is an open question.[fn]“Qatar’s emir offers support for Sudan: Sudan presidency”, Reuters, 22 December 2018.Hide Footnote Qatar has also offered Ethiopia financial aid and Turkish companies are among the largest investors in that country.[fn]A Turkish official said local companies held investments worth about $3 billion in Ethiopia, employing some 30,000 people. The bulk of investment is in the textile, construction and light industry sectors. Crisis Group interview, Turkish foreign ministry official, Ankara, September 2018.Hide Footnote Both Doha and Ankara are seeking to expand their economic footprint in the Horn and Nile basin while building diplomatic clout.

That said, any mediation role for Gulf powers or for Turkey would be greatly complicated by their rivalries and battle for influence. Though Egypt sided immediately with the Saudi bloc in its spat with Qatar, neither Sudan nor Ethiopia officially picked sides; both could still come under pressure to choose. Ethiopia in particular has become a site of Gulf-related competition.[fn]Crisis Group interviews, diplomats, government officials and analysts, Abu Dhabi, Washington, Istanbul, Ankara and Doha, June-November 2018.Hide Footnote Before Abiy took office, Addis Ababa was officially non-aligned in the Gulf dispute. Riyadh and Abu Dhabi, however, perceived it as being close to Qatar (which offered Addis substantial budgetary support) and Turkey (whose investors have staked millions of dollars in construction and other sectors).[fn]Crisis Group interviews, Turkish investors, think-tank officials and foreign ministry officials, Ankara, September 2018.Hide Footnote Abiy is seen as having pivoted toward the Saudi bloc. Qatar and Turkey reportedly remain keen to reposition themselves as key players in Ethiopia.[fn]Crisis Group interview, former Ethiopian government official, Addis Ababa, August 2018.Hide Footnote Cairo, in accord with Riyadh and Abu Dhabi, looks askance at Ankara and Doha’s efforts to cultivate allies in the region, particularly in Sudan, where they have invested substantially of late. These contrasting goals mean that it will be hard for the Gulf states and Turkey to serve as arbitrators along the Nile.

A. Policy Options

Despite mutual suspicion, a window of opportunity currently exists to find a way forward. Ethiopia’s transition has led to improved ties between Addis and Cairo, while Khartoum stands to be one of the GERD’s chief beneficiaries. External actors should support efforts to strike a deal before the dam is completed by encouraging all parties to show greater flexibility. All sides abandoned their maximalist positions in March 2015, when they effectively opened the door to a negotiated solution. By agreeing to discuss implementation of the dam, Egypt implicitly accepted Ethiopia’s demand for more equitable use of water resources. Conversely, by committing to avoid significant harm to downstream countries, Ethiopia accepted Cairo’s concerns about mitigating downstream impact. In talks, authorities in Sudan also signalled to Cairo that they do not intend to expand water use in a way that would threaten supply to Egypt. What is now required is for the three countries’ leaders to take confidence-building measures, paving the way for a deal well in advance of the GERD’s completion.

The most effective approach likely would proceed in phases:

a) Advancing talks on the GERD’s impact

To unblock the tripartite talks, Ethiopia should cooperate more fully with Egypt’s request for the parties to obtain binding technical advice from respected consultants outlining a fill rate timeline that neither unduly delays the project nor ignores downstream countries’ concerns about water flow. Past efforts in this vein ran aground due to suspicion among the parties. Particularly contentious has been the question of whether the studies’ findings would be binding. Egypt favours this position while Ethiopia fears it could be used to excessively constrain them.

Addis Ababa should accept that Cairo’s demands for such a study accord with international water law, which recommends that upstream countries assert their right to develop their resources while avoiding significant harm to downstream partners. Ethiopia should avoid stalling the initiatives under way since 2013 that aim to resolve this matter. As a further incentive for Addis, the EU’s long-term lending institution, the European Investment Bank, which Ethiopians perceive as less pro-Egyptian than the World Bank, could agree to fund the final stages of dam construction. To reassure Sudan, such a study would also address the dam’s safety.

To further build confidence, Prime Minister Abiy could invite his Egyptian and Sudanese counterparts on a joint tour of the dam site to lift the veil of secrecy that surrounds the project and demonstrate willingness to pursue a negotiated solution. These steps would have ancillary benefit: they could provide both Abiy and Sisi the domestic space required to sell a compromise to their constituencies at home. In the same spirit, Ethiopian and Egyptian security services could resume full cooperation and information-sharing. Egypt’s leaders repeatedly complained in the past that they had to negotiate with Ethiopian politicians over Nile water issues while the security establishment made all the decisions.[fn]A Western diplomat who has spoken to security officials in Addis Ababa, Cairo and Khartoum said Egyptian officials concluded that the Ethiopians were not interested in pursuing a deal because they never included security sector officials in meetings even when the Egyptians requested it. The security officials then reportedly vetoed concessions offered by then Prime Minister Hailemariam Desalegn. Prime Minister Abiy has changed this practice. Crisis Group interview, Western diplomat, Nairobi, July 2018.Hide Footnote Ethiopia under Abiy may be more open to meaningful engagement.[fn]Egyptian officials have told diplomats that the Abiy administration has been more responsive to their concerns than its predecessor. As described, they express satisfaction with Abiy’s June 2018 decision to replace heads of the intelligence services and the military viewed by Cairo as hostile. Crisis Group interview, Western diplomat, Nairobi, September 2018.Hide Footnote

Outside actors could help: as seen, the European Investment Bank could play a part; the UN could offer technical support; the U.S., Saudi Arabia and the EU could encourage authorities in both Addis and Cairo to compromise.

Achieving a breakthrough on the issue of the timeline for filling the dam would significantly reduce tensions and pave the way for more substantive talks on basin-wide cooperation.

b) Negotiating a longer-term Nile treaty

In a second phase, the parties should support efforts toward a long-term trans-boundary cooperation agreement up and down the basin. Egypt could signal good faith by rejoining the NBI, the most effective platform to reach a broader Nile basin agreement. This gesture would be both forward-leaning and justified by the present state of affairs: Egypt (along with Sudan) froze participation in the NBI because upstream countries refused to abide by the 1959 Nile agreement, which allocated 100 per cent of Nile waters to the two downstream countries. Those disagreements are now moot as explained above: the dispute is no longer a battle for hydro-hegemony but rather an argument about how to share resources in a way that benefits all riparian states.

In 2017, Egypt signalled its intent to re-engage with the NBI by sending lower-level officials to meetings.[fn]“Egypt’s participation will add new tonic to Nile Basin Initiative”, The New Times, 11 November 2017.Hide Footnote Its return to full participation could give a fillip to efforts to craft a permanent institutional framework for basin-wide cooperation. NBI member states, in turn, could invite Eritrea, a close Egyptian ally, to upgrade its status to full membership. That step, together with Egypt’s improved ties with Burundi, the Democratic Republic of Congo, South Sudan and Uganda, ought to provide Egypt with greater confidence that its concerns will receive a more favourable hearing in future talks. (In the past, the Egyptians perceived Ethiopia as the dominant player within the NBI.)

Any Nile basin agreement would need to respect the interests of all eleven basin countries.

Any Nile basin agreement would need to respect the interests of all eleven basin countries – which, apart from Egypt, Ethiopia and Sudan, include the upstream countries of Burundi, the Democratic Republic of Congo, Eritrea, Kenya, Rwanda, South Sudan, Tanzania and Uganda. And it would need to lay out a framework for cooperation and consensus-building regarding GERD developments to avert similar showdowns in future. The prospect of such a framework that would protect Egypt’s water supply for years should appeal to President Sisi. He could publicly present it as a win insofar as it would provide guarantees that no longer exist in light of Ethiopia’s and other upstream countries’ rejection of the 1959 treaty. It also could create space for Sisi to more effectively implement long overdue reforms to increase water conservation and efficiency in Egypt.

At any rate, climate change-induced variations in water supply mean that the parties will have little choice in the long run but to make adjustments to their overall water management approach. Scientists at the Massachusetts Institute of Technology project that the Nile basin will experience greater variability in rainfall patterns in the future – with more years featuring droughts or extreme floods – pointing to the need for greater cooperation between all riparian countries to avoid environmental shocks up and down the basin.[fn]Mohamed S. Siam and Elfatih A. B. Eltahir. “Climate Change Enhances Inter-annual Variability of the Nile River Flow”, Nature Climate Change, 2017.Hide Footnote If Egypt fully rejoins, the NBI could evolve into a permanent commission, as envisioned at its founding, offering a platform for sharing information between parties and providing strategic analysis to help the parties manage what will be a more difficult environmental terrain in the future.

c) Implementing reforms to improve water use

Egypt, Ethiopia and Sudan all can do more to prepare for less water due to climate change. Egypt and Ethiopia, in particular, in the past have resisted calls to conserve water because public opinion in both countries viewed such steps as displays of weakness in the face of regional rivals’ demands.[fn]One Egyptian economist said authorities in Cairo needed to be brave enough to prepare the public to use water more efficiently and also that they should cast the dispute in less existential terms to allow themselves wiggle room to sell a compromise deal later: “Egypt is on the cusp of a seismic shift when it comes to water. This will require a fundamental shift in how we consume and price water, but ultimately a change in our own national identity that moves away from tying everything to the Nile River”, Crisis Group interview, Cairo, June 2018. Public perceptions in Addis Ababa on the dispute are no less rigid. According to a former Ethiopian government official, Abiy would face significant public backlash at home if he was seen as offering too many concessions. Crisis Group interview, Nairobi, February 2019.Hide Footnote As the sides adopt a more cooperative posture, they should prepare to make necessary adjustments.

Adjustment should involve greater basin-wide cooperation that takes advantage of each country’s strengths. Ethiopia is ideally positioned as a hydropower generator: its high altitude, ample annual rainfall and relatively low average temperatures mean that it loses less water stored in dams to evaporation.[fn]Verhoeven, “Black Gold for Blue Gold? Sudan’s Oil, Ethiopia’s Water and Regional Integration”, op. cit.; Anwar Adem, Dessalew Aynalem, Seifu Tilahun and Tammo Steenhuis, “Predicting Reference Evaporation for the Ethiopian Highlands”, Journal of Water Resource and Protection, vol. 9 (January 2017).Hide Footnote Ethiopia could therefore serve as a hydropower production hub and export cheap power to neighbours.

Abiy’s government also should temper domestic expectations. The GERD undoubtedly will boost Ethiopia’s economy, but is unlikely to be the game changer government propaganda proclaims. Ethiopia’s economy remains weak and requires long-term reform. Four in five Ethiopians live in rural areas.[fn]In 2017, the World Bank estimated the Ethiopian rural population at 80 per cent. “World Bank Staff Estimates Based on the United Nations Population Division’s World Urbanisation Prospects”, World Bank.Hide Footnote Eighty-five per cent depend on subsistence agriculture. Average power consumption per connected household is ten times lower than the sub-Saharan African average.[fn]Ethiopia’s average power consumption was as 69 kWh/year per capita in 2014 compared to 510 kWh for sub-Saharan Africa. “Ethiopia Electric Power Consumption”, Trading Economics (www.tradingeconomics.com).Hide Footnote Private-sector participation in the country is low. Ethiopia is a difficult place to do business, with a slow, rigid and conservative bureaucracy. It is ranked 161 out of 190 on the World Bank’s Ease of Doing Business index. Opening even a small business requires reams of paperwork and other bureaucratic hurdles.[fn]Crisis Group interview, European investor, Addis Ababa, August 2018. The investor made the point that bureaucrats typically greet foreign private sector players at best with indifference and sometimes with overt hostility. He said changing these attitudes would be one of Prime Minister Abiy’s biggest challenges.Hide Footnote The GERD is only one step of many required to improve Ethiopia’s economic fortunes.

For its part, Sudan badly needs to reform to improve the country’s investment climate and attract funds to develop its vast tracts of arable land for agricultural use.[fn]Crisis Group interviews, investors and Sudanese analysts, Khartoum, April 2018.Hide Footnote Greater cooperation with neighbours, including Egypt, could pave the way for joint farms that would grow staples such as wheat and rice, earning Sudan foreign exchange while securing Egypt’s food supply.

With its larger economy and greater pool of technical expertise, Egypt has much to offer the other riparian countries, not least one of the continent’s most extensive markets. At the same time, it faces the most substantial water deficit among basin countries and therefore will require thorough reforms to its water management system. It should embrace more efficient means of irrigation across the board, prepare its farmers for the inevitable adjustments and sensitise its population to the need for less wasteful water use practices.

 

VI. Conclusion

The case for cooperation among Egypt, Ethiopia and Sudan in resolving the Nile water dispute is unambiguous. All stand to benefit. Dangers of failing to work together are just as stark. The parties could blunder into conflict, with severe humanitarian consequences, if they cannot formulate technical fixes to allow the GERD’s construction to take place in a way that spares downstream countries economic and environmental shocks. And all could pay a steep economic and ecological price if they do not join forces and adopt a more forward-looking approach. Leaders of the three countries should seek agreement today, rather than wait until the project nears completion.

The optimal way forward is to pursue a deal on the most immediate priority: agreeing on a dam fill rate timeline that both mitigates harm to downstream countries and protects Ethiopia’s desire to bring the dam online as soon as feasible. This step would prepare the ground for more substantive talks on a long-term multilateral framework for managing Nile water resources among Egypt, Ethiopia and Sudan, as well as the eight other riparian countries. This framework, in turn, would lay out the terms for mutually beneficial resource sharing.

Nairobi/Abu Dhabi/Istanbul/Brussels, 20 March 2019

Appendix A: Key Issues for Egypt, Sudan and Ethiopia in the Nile Region

Appendix B: The Nile from Lake Tana to the Mediterranean