Egypt's Options to Counter Ethiopia's Grand Dam Run Dry- stratfor.com

Highlights

§  The Grand Ethiopian Renaissance Dam, a critical component of Addis Ababa's economic development strategy, will provide ample electricity for the country's 100 million citizens.

§  Despite Egypt's long hostility to the project, Ethiopia will soon complete the dam, underscoring the shifting balance of power from Cairo to the upstream states of Sudan and Ethiopia.

§  Cairo's weak hand and inability to gain sufficient leverage over Addis Ababa will force it to coordinate dam operations if it wishes to have input on future Nile River projects.

 The diplomatic merry-go-round shows little sign that it is about to slow down. In mid-May, officials from Egypt, Ethiopia and Sudan sat down in Addis Ababa to discuss the estimated $6.4 billion Grand Ethiopian Renaissance Dam project and to find a solution to the Egypt-Ethiopia impasse over the hydroelectric project on the Nile River. Although the negotiators, including foreign ministers, intelligence chiefs and water ministers, failed to break the deadlock, they did sign a new road map to establish a scientific study group to monitor one of Egypt's biggest concerns — the rate at which water fills the reservoir. The talks seem likely to beget more talks, because Cairo will have little choice but to adopt a more conciliatory tone in the months ahead if it wishes to minimize the effect of the new dam — as well as that of any future projects — on downstream activities.

A Battle for Water

Attempts at diplomacy notwithstanding, the fundamental differences between Cairo and Addis Ababa (as well as Khartoum) will remain as the project nears completion. (Ethiopian authorities have said they are aiming to finish the project by the end of the current Ethiopian year, which ends in October, but that time frame appears to be overly ambitious.) Egypt harbors understandable fear about the potentially negative effects of the dam, because the downstream giant derives 95 percent of its water supply from the river. Consequently, officials in Cairo are particularly worried about the rate at which Addis Ababa fills the dam's reservoir, because doing so rapidly would further strain Egypt's water supply. A French firm conducting impact study reports has suggested that Ethiopia could prevent undue disruptions in the water flow to downstream countries if it fills the reservoir more slowly, although Cairo and Addis Ababa have been tussling over the report's findings. Ultimately, Addis Ababa wishes to fill the reservoir in about three years or so — a much quicker time frame than the decadelong duration preferred by Cairo.

For Addis Ababa, the dam addresses the country's electricity shortages and furthers its development strategy. Upon completion, the project will make the landlocked country of 100 million more attractive to outside investment. The benefits will also be tangible for Sudan, which will have the option of using the dam's surplus electricity. In fact, the prospect of more electrical power effectively convinced Khartoum to switch sides from Cairo to Addis Ababa — inevitably infuriating Egypt.