Ethiopia and the Federal Republic of Somaliland have signed a memorandum of understanding (MOU) that grants Ethiopia access to the Red Sea in exchange for various benefits.
The MOU will enable Ethiopia to lease access to the Red Sea from Somaliland for military and commercial purposes for 50 years.
It also allows Ethiopia to build infrastructure and a corridor in Somaliland. In exchange, Ethiopia is expected to provide a stake in its flagship carrier, Ethiopian Airlines according to reports.
The memorandum of understanding (MoU) was signed between Prime Minister Abiy Ahmed and Somaliland’s President Muse Bihi Abdi who is on a state visit to Ethiopia since Sunday.
Ethiopia currently relies heavily on the port in Djibouti for most of its trade and sees this lease deal as critical for securing alternative access to seaports.
The port access Ethiopia will gain by leasing stakes in Somaliland is expected to be vital for increasing regional trade and spurring massive economic growth in coming years.
The Memorandum of Understanding between Ethiopia and Somaliland outlines three critical components:
1. Recognition: By officially acknowledging Somaliland as an independent state, Ethiopia sets a precedent as the first African country to do so. This move is particularly impactful given Somaliland’s long-standing quest for global recognition since its 1991 declaration of independence from Somalia.
2. Lease of Maritime Area: In a significant stride towards enhancing its maritime capabilities, Ethiopia has secured a 20-square kilometer stretch of Somaliland’s coastal waters. This lease grants Ethiopia, which has no coastline of its own, vital access to the Red Sea. The agreement opens up new avenues for trade, logistics, and military positioning, marking a crucial step in Ethiopia’s strategy to broaden and safeguard its maritime access.
3. Berbera Port Utilization: Gaining access to the strategically positioned Berbera Port is a game-changer for Ethiopia’s trade network. Located on the Gulf of Aden, the port offers Ethiopia a valuable alternative route for importing and exporting goods, diminishing its dependence on other ports and significantly bolstering its trade and strategic regional influence.
