1. I didn’t see other parts of Ethiopia, but in Addis Ababa, there is a visibly frantic development activity going on. My question is: some countries went through such rapid real estate development that was followed by a catastrophic collapse of the real estate market and thus of the economy—do you think such a collapse would happen in Ethiopia?
No. Because it is not a significant part of the economy. The real estate sector is obviously growing and not just in Addis; it is growing across the country. But it is a small part of the economy, no more than 10 to 15% of the local loans given by the private banks. Public banks which provide more than 50-60% of the total loan do not provide any loan for real estate. So it will be on the range of 5-7% of the bank loans. Therefore, I do not see a real estate bubble appearing. But we are keenly following the issue. In spite of the big construction activities that are going on in Addis, there is a massive shortage of housing in this city.
2. Does the big number of new hotels on every corner of the city reflect a comparable increase in tourism? Then, I have an observation (you can consider it a personal complaint): why are Ethiopian hotels the only unfair establishments for tourists and visitors? I mean, when I buy gas, shop at a retail store, at restaurants and everything else, I am charged the same prices as an any Ethiopian for the same service or product that I get, but when I go to a hotel, they tell me: if you are an Ethiopian, you pay 200 Birr but if you carry a foreign passport, you pay $40 (which is 640 birr, more than 300%) for the same room and the same bed?
On the first question, hotels space…there is still an acute shortage of hotel space, still. It is mainly related to conference tourism. A lot of conferences are held here in Addis. And when there are conferences we have problems accommodating customers to the extent that we sort of block certain hotels for official delegation and that creates havoc. So there is an acute shortage of hotel space here in town, particularly at the higher end. But there is significant investment in the hotel industry happening also in the higher end. 3 or 4 additional five-star hotels are coming in. And so that should reduce the pressure.
Now the hotel business…I am not going to justify this; I am going to try to explain it without justifying it. Whenever I go to foreign countries, including Rome, they tell me–for meetings, they tell me the rates during those meetings are much higher than the normal rates…they tell me, this is even true of New York. Because the occupancy rate becomes higher during meetings, they charge higher during meetings than is the case normally. So there is a distinction in every hotel. The rates vary from time to time. Now what these hotels in Ethiopia do is use the local customers as local fillers from whom they do not make much money and use foreigner, and the only way they distinguish foreigners is by passport. And if there is a consolation to your predicament, it is the fact that if you had been an American of Ethiopian origin, you would still have faced the foreign rate, it is just your passport that distinguishes you as a foreigner and nothing else. The justification behind it is that they make the real money not from Ethiopians that they use as a sort of gap fillers, but out of the foreign tourists. And the other justification is that on balance, the rates here are much higher than comparable cities. But I cannot justify it.
3. I have been visiting Addis Ababa frequently since 1991 (excluding the period between 1998 and 2008): there are still a considerable number of beggars and crippled persons, but I have noticed a drastic decrease. Why is that, did their economic situation improve? Or in the case of crippled persons, I think most are polio and such victims, has the healthcare situation improved in Ethiopia that much?
What is happening is that the people who used to come from every corner of the country without any specific job or opportunity of getting a job but to engage in begging on the streets in the hope and expectation that they would be able to survive on the alms given to them, a good number of them are getting alternative sources of income. We have trained some them and engaged them in cobblestone working in the city; some of them have gone back to their village where the opportunities are significantly higher now. And over time, we are beginning to institutionalize support for those who do not have the means to survive on their own. We didn’t want to take a drastic step against it, because of the history—I don’t know if you know the history, of Addis- but what used to happen, when I was a student, when there was a meeting, this ugly face of Ethiopia will be cleaned off Addis streets for a few days and eventually they come back again. We felt that this would be insulting, to everybody, including the victims themselves. They are not begging because they love begging, but because they do not have other opportunities. So it took a lot of time because we wanted to do it in a sort of a natural way…and that is happening across the country. Step by step, those who are unemployed, but can work, are encouraged to be trained and given an opportunity to work. Those who can go back to their villages are also encouraged to go to their villages. And those that cannot fend for themselves in any way, then we encourage institutionalize support for them.
4. A sustainable economy needs an efficient use of assets, why is the concept of maintenance so poor in Ethiopia? Don’t you think you are losing so much man hours and money to replace broken assets whose lifespan could have been elongated with proper maintenance—this goes to cars, lifts, street lamps, sewage, etc…
I wouldn’t be surprised if these assets happen to be government assets.
5. Most probably yes.
I would be surprised if these assets are private ones. In terms of government assets, the culture is to build, use and dispose of. Maintenance has not been a major aspect of it. In recent years we have taken steps for maintenance work to maintain power installations, and telecommunications, infrastructure in general. We have specifically allocated funds for maintenance in these basic infrastructure projects. But housing is managed on the basis of its own income. The government has inherited a lot of houses, and we are not building new ones except low-cost housing and that is transferred to owners immediately so that they take care of it. But we still have government houses that are managed by the public enterprise, and because this institution has no future—it has a past but no future—sooner or later it will disappear because we don’t have plans to own government housing indefinitely. Over time, we will either bulldoze it of transfer it to the private sector. And there has not been a culture of maintaining these housing, so public assets are not properly cared for, especially real estate type of assets of the government. And some of it might come to the private sector; after all, those who run private housing might have been working in the public sector and sort of inherited the culture from where they were working initially.
6. Unemployment. How severe is it and what is being done to alleviate it?
In terms of unemployment, we have been perhaps lucky in the sense that rural-urban migration is extremely low, probably the lowest in Africa. This is partly a reflection of our focus on rural development and land ownership system in Ethiopia. So the influx from the rural areas that, traditionally, created portions of unemployment in the urban area, it is not happening anymore. The young people from the rural areas stay behind in the urban areas after they complete their education. Most of them don’t go back, to the rural areas, but they have some education. So unemployment in the urban areas is much lower than it was, let’s say, five years ago. The second reason why it is lower is because we have network programs here, small and micro-enterprise sector, we train young people, engage them in all sorts of public projects to give skills, employment opportunity and startup capital as a result of the work that they do. That has lessened the pressure but I can only say that the pressure has been reduced, it is not removed, it is never removed, and in countries such as Ethiopia, you don’t have unemployment insurance programs. So it remains to be a significant challenge but not as big as it used to be five or six years ago.
7. Recently there is a shortage of cooking oil, sugar and other the price of other essential foodstuff is increasing…sometimes beyond the reach of the poor. How are you facing this difficulty?
Edible oil and sugar: We are at a tussle with the private sector who were distributing edible oil and sugar, because it had been monopolized by a small group of about five businessmen and they were charging exorbitant prices (what is called rent-seeking), and so we had to distribute it through cooperatives, and the traditional channels of distribution has interrupted sugar and edible oil. So we had a shortage in the recent weeks but it is an artificial shortage because we are not trying to restructure the distribution and retail sector– it used to be a forest where nobody knew who was who, whose income was what, and so on. So we are requiring everybody to have a tax identification number, like the social security number. And most of our businessmen don’t like it. So it is a difficult task.
Eritrea, Ethiopia & Egypt
8. Ethiopian Egyptian relationship has been deceiving on the surface because, deep inside, both countries were mutually suspicious of each other—two major issues have been the Eritrean revolution and, hydro politics: the Nile water. You have now embarked on an ambitious power generating (not irrigation) project and it is making the Egyptians uneasy. You said that the projects would protect both Egypt and Sudan (in fact you said they should partially fund the projects). If that is the case, how do you explain the Egyptian reaction? Or is it the Egyptian wish to keep the 1929 agreement intact? Why would they object to Ethiopia generating power from the Nile?
You know the advantage of being in my position is you get to access information that is not necessarily publicly available. And the first thing that I learned that these Nile issues, the debate on the distribution of The Nile issue, was really a bogus issue. It was really a bogus issue because if you were to treat the Nile basin–and the most sensitive part of the Nile basin is the so-called eastern Nile, the Nile that goes from Ethiopia to Sudan and Egypt– because 85% of the water that goes to Aswan comes from Ethiopia. This part of the water, Nile, which is supposed to have a shortage of water, doesn’t have a shortage of water; it only has a shortage of money. Ethiopia is structured to be the power generating center of the Nile, geographically. Sudan is, geographically, created to be the main agricultural producer of this region. Only the delta part of Egypt is supposed to produce goods, agricultural goods. And so if you use the Nile water in a rational manner, there will not be any shortage of water. The fact is, for example, that if you built dams in Ethiopia and removed Jebel Awliya from Sudan, it is useless; it generates 17 megawatts of electricity but exposes Nile water to evaporation in unheard of proportion. So you don’t need the regulation of Jebel Awliaya because the water would have been regulated here. And reduce the operating level of Aswan Dam, you would have enough water to irrigate more than a million hectares in Ethiopia, and 4 to 5 billion cubic meters of additional water for Sudan, and Sudan can use the water better than anybody else. The Egyptians themselves have a water conservation project which will end in 2017. And their plan is to save 8 billion cubic meters of additional water. Now, unless they want to take this water and let it evaporate in the desert, they don’t have land that requires 8 billion cubic meters of water. So it is not really about water, it is about politics and power.
The problem, as I see it, is the politics of the Egyptian elite: there is a bit of racism behind it, and there is a bit of colonial inheritance behind it. Colonial clerks tend to be more colonially inclined in their attitudes than their masters and the Egyptians have been, to some extent, clerks of British colonialism in Sudan. And so they inherited this British theory of the Nile serving Liverpool via Egypt. Egypt growing cotton for Liverpool. And finally, the Nile has been this drug that has been used to hook the Egyptian people for external enemies and justify this gargantuan state, Egyptian state which is there to protect the Egyptians vis-a-vis the Abd from the South. So it has been a political instrument more than anything else. And the fact that the Egyptian edifice is beginning to crack now, is allowing alternative opinions amongst Egyptians to creep through the cracks… and these opinions are: why should we quarrel over some natural resource that belongs to us, let’s see if there is a rational win-win alternative…this is unheard of, but it is beginning to creep even into the Egyptian media, so I am very encouraged by it.
9. Do you intend to develop irrigation projects using the Nile in the future? And how would you balance the natural rights of lower Nile countries and your country’s right to exploit the Nile water resources?
The fact is that the Egyptians could sustain this irrational policy for a number of reasons. First, the geopolitical position was such that they could prevent Ethiopia from accessing grants, loans, and credits for projects on the Nile. They have completely shut off our access to credit whether it is from the World Bank, or Brazil or China or Europe or the USA. And so they were assured, given the poverty level in Ethiopia, that Ethiopia will not be investing anything on the Nile, of substance. That was the key instrument. The other instrument they had was that Ethiopia itself was unstable and was not going to focus on development and it was surrounded by a hostile government. That is why [Gemal Abdel] Nasser went out of his way to recruit non-Arabs into the Arab League simply because they were in close proximity to Ethiopia—Somalia is a case in point. Now we have reached a stage where some of these assumptions are no longer valid. We are now able to do something significant. We first started with minor projects on the Tekeze [River], Lake Tana. Now we are in a position to be able to finance, on our own, the biggest dam that can be built on the Nile, in Ethiopia. We believe that this is going to dismantle much illusion amongst the Egyptians. We believe that this is going to convince them that they cannot stop us. We believe that this is going to convince them that they do not need to stop us because we are doing their job. The dams we build, we are unable to use 100% of their service, because much of the service is downstream-inevitably, unavoidably. So we will show them in practice, that where we build dams, these are not intended against them. In fact, these are dams that they ought to finance, at least partly, because they will benefit from them. So once we break this taboo, I believe the path will be opened for a rational engagement between ourselves and the Egyptians. By the way, on balance, the Sudanese have taken a rational position on the Nile. On the surface they seem to be twins on their positions on the Nile; that is far from the truth.
10. Eritrea is considered a Nile basin country, what is the strategic leverage that Eritrea has to influence Nile politics?
Eritrea is a marginal player on the Nile; it is part of the Nile riparian countries primarily because of the Tekeze River. As you know the Tekeze River or the Atbara River in Sudan carries about 9 million cubic meters of water. There are one or two minor rivers from Eritrea that flow to the Tekeze and maybe contribute about 0.1% or so of the Tekeze which is itself part of the Nile basin. Every stream counts. That is why, technically, Eritrea is a riparian country but it is not in the meetings of the ten riparian countries of the Nile. This is not by design but because your president is not infatuated with international organizations of any sort.
11. Ok. Now, he has never been my president…sorry for the correction Mr. Prime Minister….The head of the Eritrean regime had close relations and coordination with Egypt on Somalis’ and Sudanese politics. He also had good relations with Kaddafi and benefited from him financially. Now, Mubarek is gone and Gaddafi is on the edge of the cliff. How do you think this would affect the Eritrean regime and how would that affect the stalemate between Eritrea and Ethiopia?
The thing is that Isaias needed the support from these parties, to do not just their bidding, but his own internal drive. So this was a marriage of convenience. This was not Egypt and Kaddafi hiring out Isaias. These [are] two groups coming together on the basis of a common agenda. Egypt providing some of the diplomatic clout, some of the training and assistance; Kaddafi providing the finance and Qatar also providing the finance. Now, what the current environment suggests is that this external support is no longer available. But that doesn’t mean Isaias is going to change his color; he will seek alternative sources of financing—and by the looks of it, he is likely to look at possible mining resources within Eritrea to fill in the gaps that will be left by the discontinuation of support from abroad.
12. According to the Eritrean regime, your government is on the verge of collapse and they mention defections and military operations by your opponents in North Ethiopia. How true is this?
According to the Eritrean regime, we have been on the verge of collapse, for what…ten years now! And these ten years happen to be, in the eyes of a neutral observer, the golden years of Ethiopia. We have been growing at a double-digit rate for seven, eight years now. The country is stable from end to end. Obviously, we have our own challenges; we are still a very poor country. Seven years of growth does not mean much when you start from the bottom of the heap. But there is clearly light at the end of the tunnel and it is visible to every Ethiopian. And you don’t have to come to Addis to see it; you could see it in Washington. Ten years ago, none of the meetings that we would call for would be attended by any significant number of people. The other day, in spite of a massive campaign by the Diaspora opposition and the Eritrean regime, we had thousands upon thousands of Ethiopians attending our meeting and deciding to buy bonds for the construction of the dam on the Nile. So, it is a very stable government and that is what every major country that has interest in the region would tell you. I think this [claim of imminent demise] is how they keep the illusion of succeeding in their agenda of regime change in Ethiopia.
13. After the last election and after forming a new government, observers believe that the old guards [of the Ethiopian ruling party] were unceremoniously distanced from the center and new blood occupied their positions. This is said to have caused a rift between you and some of your colleagues. How true is this?
It started out with my declaration that the last term would be my last term. In some ways, that was my public declaration of that intention and it was contradictory to normal party procedures. Because it has not been sanctioned by party debate; I didn’t do that by accident but it was, nevertheless, not within the rules of the party. So it pressed a debate on succession and carried out studies and we saw experiences of other countries and, in the end, leadership came to a conclusion that there should be an organized, gradual withdrawal of the leaders of the armed struggle. And the best way to withdraw is while the going is good, while that leadership is still alive and able to influence policies from behind. So, at that stage, this was the consensus position. Now, who goes first and who goes later—there was some debate but it was mostly focused on when I leave when I depart. And then it was agreed that I will depart at the end of this term. And that would be my departure and the team that departs with me would be the last one. That is why everybody has to depart between the beginning of this term and the end of this term. So it was a consensus position and there has not been any of those that have been retired. They are not unemployed—some of them are ambassadors, some of them are training our leadership, some of them are working in public enterprise and so on and so forth. So there are no complaints.
14. Last year, you signed an agreement with the Ogaden groups and they even participated in the elections and are part of the local government. Are they in the federal government? If you could describe for me where that agreement that reached… what was achieved and what was not, maybe sticking points if there are any?
Yes we signed agreements with two groups—one was an Islamist group, an offshoot of Al-Itihad Al-Islami group. Their agenda, their decision was to get out of politics and integrate into society, do business and so on and so forth. That has been completed. And then we had an agreement with one group, one faction of the ONLF, again the agreement was a process of integration domestically and for them to try to win over the rest of the ONLF particularly in the Diaspora. So I believe the program and the agreements are being implemented quite well.
15. Are they in the federal government?
16. Now you have South Sudan as an additional country that borders Ethiopia. As if how Sudan would have close relations with Ethiopia and Eritrea is not confusing enough, South Sudan has close relations with both Eritrea and Ethiopia. Can you tell me how that is possible when there are so many interconnected crises in the region?
The assumption is wrong. South Sudan is not in good terms with Eritrea. Before South Sudan is born, Eritrea is beginning to destabilize South Sudan. Those in the know in the region, they know among other things the Eritrean regime is beginning to arm a militia group led by a certain gentleman known as George Attol. I am told by reliable sources that the Southern Sudanese went to Asmara to plead with the president not to destabilize southern Sudan, and I am told that the response they got is a surprised stare—which is typical of the Eritrean regime: they never admit what they are doing. So, the relationship between South Sudan and Eritrea is typical of Eritrea’s relations with everybody in the neighborhood.
17. I heard from some sources that a leader of Southern Sudan is apprehensive that Ethiopia has relations with the Eritrean national opposition because he considers them Muslims and Arab influence. First, is this true? If yes, what was your response? Why would a new country adopt such a bigoted position?
The assumption is wrong again. Silva [kir, the leader of South Sudan] never, ever, asked me to, in any way, affect my policy on Eritrea. Not just with the opposition, but also with the regime. He never raised any of this issue, at all. Naturally, he didn’t, at all, raise the issue of who we are supporting or nor supporting section of the Eritrean opposition…I don’t think he draws all that conclusion of Eritrea.
I have heard and seen articles in the Eritrean opposition website about what Eritrea could teach southern Sudan and that and the other. I think this is largely ill-informed. First of all, southern Sudan currently has no business with Eritrea, they have no borders, and they have no economic interaction. Ten years ago, they needed Eritrea because they needed arms; now, if they need arms, they buy them; they can’t get them from Eritrea. So the only interest for Isaias in southern Sudan is that there is a significant Eritrean Diaspora in southern Sudan and they are doing well, business wise. And the regime is trying to suck money out of them like it does everywhere else.
18. You have Libyan investment in Ethiopia. One of them is Libyaoil: Is it true that Libyaoil is owned by one of Kadaddfi’s sons? If that is true, wouldn’t [it] be a gesture for Ethiopia to hand over the assets to the transitional Libyan administration? How about the Libyan embassy in Ethiopia—what is its position, still with Gaddafi? And how much of your oil comes from Libya and how has the supply been affected?
I understand the embassy, at least formally, is siding with Kaddafi. The Libyan government has bought off Shell Ethiopia and it is now OilLibya. That is the only investment I know of the Libyan government or Kaddafi—it is very difficult to distinguish between the Libyan government and Kaddafi. I don’t know where Gaddafi private starts or where the Libyan government property ends. Now, the way we operate here in Ethiopia is to follow first international law—Security Council has said this property is a sanction on Libya that applies to Ethiopia. Secondly, there is AU—sometimes we agree within them sometimes we do not agree with them. But even when we do not agree with them, we do not believe in publicly second-guessing them. This, we think, is part of the due that we have to pay for the fact that we host the AU. So at this stage, we have not recognized the national council in Benghazi, we wait for the AU to do so. Even in the case of, for example, Somaliland where we engage with the authorities like a sovereign authority, in everything except name. We refrained from recognizing them, and we have told the Somaliland authorities, they have got to get the African Union supporting them before we can recognize them. Again, in the case of [Alassana] Ouattara, in Ivory Coast. He is the internationally recognized president and he wanted to change his embassy here and we recognize him like the AU he is the internationally recognized leader, but we asked the AU if they would give us clearance because he will also be the ambassador not only to Ethiopia but also to the AU. The AU told us to hold up for a moment, hopefully, now they will give us a clearance. The way we operate here is such that we don’t take initiatives in recognizing states, especially in Africa.
19. Over the last few weeks, you made statements regarding Eritrea and there were also statements from the Ethiopian ministry of foreign affairs. Is anything extraordinary happening at the border area, troop movements, preparation for an attack…or anything of that nature?
It is not so much about a tense border situation; it is about the fact that we have reached a stage where our previous policy of passive defense does not work, it cannot work anymore. In the past, our policy was to try and follow the terrorists that Isaias was sending across the border and try neutralizing them rather than responding at the source. That was fine for two reasons: first, their target ground opposition and terrorism was government and government institutions, specifically, military and security establishment and other government entities. These are what they call “hard targets”, you can harden them and protect them. You can never be 100% full proof. If some terrorist slips through a crack you can take it from there and move on because these are government targets. In recent months, the target has been shifted. The recent crop of terrorists that Isaias sent across the border were targeting things such as Fil-Waha [hot springs in Addis, which is a tourist destination], Mercato [shopping district], taxis, buses—these are what they call “soft targets”. The instructions that they were given when they were being trained around Asseb in Dankalia region, was to change Addis into Baghdad. Now, when you have such a soft target, the only way you can protect the soft targets is at the source. So, we now have to tell the Eritrean regime, if you carry outrageous acts in Ethiopia, not only the terrorists that you send but you yourself, you are going to pay. And our response is going to be proportional. As I was saying in parliament the other day, if they shoot a bullet at us, we shoot a bullet back at them. If this forces them to stop the destabilization activity, all the better for everybody. If they maintain the current state of undeclared war and do not escalate it, we will maintain a response that is appropriate to it, we will not escalate it. If they escalate it to a war and a full-scale invasion of Ethiopia, we will do what we always said we will do in the past because this will be a second certified invasion of Ethiopia where the proportionate response to it would be to make sure that there would not be a third one. So there is a shift in direction, it doesn’t automatically mean that there is going to be war –it all depends on how Isaias responds. [If it is] by escalation and invasion of Ethiopia, then we will have war. If he responds by de-escalating, then there won’t be one.
Djibouti, Eritrea & Ethiopia
20. Last week I was in Djibouti and I visited the port facilities, the container storage, car storage, oil tank farms and dry cargo facilities. I also visited Bilbela, a town that seems to thrive on business from the Ethiopian drivers and the general Ethiopia-Djibouti business and the transport trucks that pass through it. I also saw thousands of Ethiopian trucks in that area. My question is: how much business is Djibouti getting from Eritrea? And if what happened ten years ago didn’t happen, how much of that business do you estimate would have been the share of Eritrean ports? And, if the political situation in Eritrea changed and there was a liberal, business-friendly government there, how much of this do you think Eritrea would regain…I mean, including Massawa, which is more convenient to the northern part of Ethiopia.
Quite a lot. The current prospects in Ethiopia now are such that even if we had Eritrean ports as key ports, we will still be needing Djibouti. So, while we have not given up on the hope of normalization between these two countries, Eritrea and Ethiopia, nevertheless, we are convinced that even with normalization, Asseb and Massawa, and a few other ports like Tio, will just not be enough. So we are investing heavily in Djibouti. We are going to build a new railway from Addis to Djibouti. We are going to build a new railway system from the north to Tajura—a new port will be built in Tajura [old Djibouti port]. In the short run, all of that business, 80% of that business would have gone to Asseb and a small percentage would have gone to Massawa, but now it is completely diverted to Djibouti.
21. Can you give me some figures, the value of this business?
I do not have exact figures at hand, but I will be surprised if the net income of Djibouti were to be less than half a billion dollar or so.
22. Do you think that this business is lost forever by the Eritrean ports or Eritrea would be able to regain these lost opportunities under normal situation?
It is going to regain it precisely because the demand of the Ethiopian economy is going to go beyond the capacity of Tajura and Djibouti to take care of the requirements of Ethiopia. For example, we are beginning to develop the potassium resources in the Afar region of Ethiopia—that is millions of tons per year that need to be transported. Technically, the closest port to this is not even Asseb, it is Tio. You could develop it into a big port. So under normal situation, Eritrea could regain most of these businesses and develop new businesses as well.