Ethiopia Airlines is on the verge of an ownership transformation, with the government preparing to relinquish a portion of its 100 percent stake in exchange for a strategic lease deal at the Red Sea.

This development follows the signing of a memorandum of understanding between Ethiopia’s Prime Minister Abiy Ahmed and Somaliland President Musa Bihe.

The agreement grants Addis Ababa access to the Seaport on the Red Sea, resolving a longstanding quest and averting potential conflicts with Eritrea and Djibouti.

PM Abiy, in a notable departure from traditional diplomatic channels, had previously underscored the critical nature of securing Red Sea access, warning that failure to do so through Eritrea, Somalia and Djibouti could escalate into war.

The memorandum of understanding between Ethiopia and Somaliland paves the way for a 50-year lease, enabling Ethiopia to utilise the Red Sea for military and commercial purposes.

Ethiopia Prime Minister Abiy Ahmed during the visit to the Grand Renaissance Dam. Image: (PMO)
Ethiopia Prime Minister Abiy Ahmed during the visit to the Grand Renaissance Dam. Image: (PMO)

This landmark development was revealed during a comprehensive briefing held in the capital, Addis Ababa, on Monday.

Moreover, Ethiopia gains the prerogative to construct vital infrastructure and establish a corridor within the leased area, signaling its commitment to enhancing its geopolitical and economic standing in the region.

However, this move is not without geopolitical ramifications. Somalia, a neighbouring nation, has previously condemned Prime Minister Abiy’s statements, and this latest manoeuver is poised to escalate diplomatic tensions between Ethiopia and Somalia.

Notably, Somaliland, the region in question, is a breakaway territory outside the control of Mogadishu, and its recognition as an autonomous state remains contentious.

This development stems from Ethiopia’s loss of direct sea access in 1993 following Eritrea’s independence after a protracted three-decade war.

Presently, Ethiopia relies on a primary trade route comprising roads and a railway connecting the capital, Addis Ababa, to a port in Djibouti, one of the five neighboring countries with coastlines, alongside Somalia, Eritrea, Sudan, and Kenya.

As diplomatic intricacies unfolded, Somalia’s State Minister of Foreign Affairs, Ali Omar highlighted previously the sacrosanct nature of his nation’s sovereignty and territorial integrity, underscoring the sensitivities surrounding Ethiopia’s move in the region.

gandae@businessdayafrica.org