Grand Ethiopian Renaissance Dam Moves Forward

The Washington-based Institute for Defense Analysis (IDA) published on 1 May 2014 a brief update on Ethiopia's Grand Renaissance Dam titled "Egypt Failing to Stop Ethiopia's Dam on the Nile" by George Ward, IDA research staff member.  Three years after the commencement of work on the Grand Ethiopian Renaissance Dam (GERD), Africa’s largest hydropower project, located on the Blue Nile, the project is over 30 percent complete. When the dam is finished at the end of 2017, it will add 6,000  megawatts of electrical generating capacity to the African grid. Egypt, which depends on the Nile for 95 percent of its water supply, fears that the GERD will seriously threaten the health and livelihoods of its people by reducing the amount of water available to them.  Nevertheless, Egypt, which briefly in mid-2013 seemed to be threatening military action, has so far not succeeded in gaining much traction in its campaign to sidetrack or delay the ambitious project. For its part, Ethiopia is busy creating facts on the ground while  rejecting Egypt’s arguments. Compromise Remains Elusive When IDA’s Africa Watch last lookedat the prospects for GERD in November 2013, it appeared unlikely that the dispute  between Egypt and Ethiopia would result in conflict and somewhat more likely that some sort of regional compromise  might resolve the issue. Almost six months later, the military option seems to have faded further, but so have attempts at  finding a compromise. In January 2014, a third round of negotiations involving Egypt, Ethiopia, and Sudan ended in failure  when Egypt withdrew, accusing Ethiopia of failing to guarantee Egypt’s share of the Nile waters. In April, the Ethiopian  foreign ministry rejected an Egyptian proposal for joint control of the GERD, an arrangement that might have involved  provision of Egyptian financing for the project.  Egypt’s Strategy Having failed to negotiate a solution, Egypt is seeking international support in the dispute. Its strategy seems to be  proceeding on three tracks. First, Egypt is seeking to cut off international financing for the GERD. According to a report  based on Arab-language media sources, the World Bank, the EU, and others have decided to refrain from financing the  GERD. On April 9, 2014, the EU’s ambassador to Egyptwas reported saying that the EU is not funding the GERD. Although  China has not provided financing for the dam, it has pledged to support construction of the power transmission lines.  Second, Egypt has approached Italy through diplomatic channelsto ask that the Italian general contractor on the project  be obliged to suspend construction until agreement can be reached on modifications to the project. This tactic has not  yet been successful. Third, Egypt is exploring the possibility of taking the dispute to the United Nations, either through  the Security Council or the International Court of Justice (ICJ). Neither of these two options appears promising, as the ICJ  normally requires parties in a dispute to agree to binding arbitration, and the Security Council usually sets a fairly high bar  before exercising its mandate to consider matters related to international peace and security. Ethiopia Moves Forward Ethiopia has responded effectively to Egypt’s tactics, but in ways that carry some economic and political risk. First,  Ethiopia has succeeded in winning the support of Sudan, a country that, by the terms of existing treaties dating to 1929 and  1959, shares the rights to the bulk of the waters of the Nile with Egypt. Sudan has sided with Ethiopia on issues related to  the structural safety of the dam. In return, however, Sudan may expect to be allowed to take additional downstream water  for farm irrigation. If so, this would weaken Ethiopian arguments that the dam will not ultimately reduce the amount of  water available to Egypt. Second, Ethiopia has made the decision to pay for the dam itselfif no other sources of financing  are available. Since the dam will cost over $4 billion, roughly equivalent to 12 percent of Ethiopia’s GDP, this is quite an  The opinions expressed in these commentaries are those of the authors and should not be viewed  as representing the official position of the Institute for Defense Analyses or its sponsors.  Links to web sites are for informational purposes only and not an endorsement. undertaking. So far, Ethiopia has been successful in meeting its financial obligations, having paid around $1.5 billion. The  risk here is that the government, which is requiring banks to lend it 27 percent of their loan books at concessional rates,  is crowding out private credit needs. The IMF forecasts that public infrastructure projects such as the GERD have reduced  Ethiopian economic growthby around 1 percent annually. Expert Opinions Differ The division between Egypt and Ethiopia over the GERD is paralleled by dissent among experts. Both countries  have publicly asserted that the May 2013 report of the International Panel of Experts supports their position. A leaked  copyof that report, however, suggests that the panel’s experts neither fully endorsed nor completely condemned the  project. Rather, the panel cited the need for more information on certain aspects and asked for further studies. Analysts  at International Rivers, an NGO that often opposes large-scale hydroelectric projects, have been critical of the GERD. On  the other hand, Dr. Ana Cascão, a researcher at the Stockholm International Water Institute and an expert on the hydro  politics of the Nile basin, largely supports the Ethiopian position. Conclusion Considering the facts as they stand, it appears more and more likely that the GERD will be built, perhaps with some  delay, and that Egypt will need to find a way to live with it. Under the historical treaty regime, Egypt has enjoyed rights  to abundant water. A sizable portion of that resource has been used inefficiently in water-intensive types of agriculture.  Egypt will bolster its case and its bargaining power to the extent that it is able to improve the efficiency with which it uses  its increasingly scarce water resources. In addition, to salvage as much as possible from the current situation, Egypt may  need to focus now on achieving agreement with Ethiopia on guidelines for filling the dam, to avoid creating shortages  downstream, and on limiting use of the waters of the Blue Nile for irrigation.  Ambassador (ret.) George F. Ward is a Research Staff Member at the Institute for Defense Analyses and the editor of Africa  Watch. He is a former U.S. ambassador to the Republic of Namibia