A surprise memorandum of understanding between Ethiopia and Somaliland has aggravated tensions in the Horn of Africa with reverberations beyond. Somaliland, a former British colony lying along the Gulf of Aden, proclaimed independence from Somalia in 1991. Its independence is not recognised by any country, but it has attracted significant foreign investment, partly because of its strategic Berbera port. On 1 January, Somaliland said it had agreed to lease land to Ethiopia to build a naval facility on its coast in return for the latter’s recognition of its statehood. The deal has angered Somalia, which considers Somaliland to be part of its territory and worries that regional giant Ethiopia will impinge upon its sovereignty. The resulting crisis could escalate, as Somalia is rallying international opposition to the deal, while Ethiopia and Somaliland appear determined to plough ahead. Observers, and indeed Somali officials, fear the dispute may play into the hands of Al-Shabaab, the Islamist insurgency in Somalia, and further polarise the region.

So far, the preliminary accord’s details are opaque, with Ethiopian and Somaliland officials offering different accounts of its contents. First, Ethiopian officials have suggested that the new facility will have both military and commercial purposes. Yet Somaliland insists that Ethiopia will build only a naval base, continuing to use the Berbera port for trade. The size of the area under discussion is also unclear. While the two sides originally announced that Ethiopia would lease 20km of coastline, a top Ethiopian official later said the deal covers 20 sq km of land and sea. Even the facility’s location is vague. Some claim that it will be situated at Lugaya, close to the Djiboutian border. Others say it will be close to Berbera. By some accounts, the deal provides for Hargeisa to obtain shares in Ethiopian state-owned enterprises such as Ethiopian Airlines. Though Ethiopia has not publicly committed to recognising Somaliland as an independent state, many Somaliland officials, including President Muse Bihi, claim that it promised to do so under the accord. Given that Somaliland would be unlikely to move ahead with such an explosive initiative without extracting the prize of official recognition, it seems clear that the two signatories understand the memorandum as a port-for-recognition swap.

What happens from here is unclear, however, in no small part due to the practical and technical details that would need to be hammered out to move the deal forward. In the meantime, the news has sent shock waves through the Horn of Africa, reminiscent of those generated by Addis Ababa’s 2011 announcement that it would build a massive hydropower plant on the Blue Nile upstream from Egypt and Sudan. The project sparked a bitter dispute with Ethiopia’s regional rival Egypt that remains unresolved even after the mega-dam began filling in 2020. Many in Addis expressly compare the two episodes, claiming that the government will persevere with the port as it did with the dam. If Ethiopia begins constructing a coastal foothold while recognising Somaliland as an independent state, tensions among the various powers jockeying in the region will soar. With relations between Ethiopia and Somalia increasingly acrimonious, a flurry of diplomatic activity on both sides of the Red Sea suggests that regional divides are widening as other countries line up behind the two opponents.

Ethiopian Prime Minister Ahmed Abiy and Somaliland’s Bihi have presented the deal as a major win for their respective national goals: restoring sea access, on Ethiopia’s side, and gaining international recognition, on Somaliland’s.

With some 120 million people, Ethiopia is the world’s most populous landlocked nation, having lost its coastline when Eritrea seceded in 1993. Over the last two decades, successive administrations have stressed that the country is over-reliant on neighbouring Djibouti’s port, which handles the bulk of Ethiopian trade. But, before the January memorandum, the closest Ethiopia got to port ownership was a 2017 agreement with Somaliland under which Addis Ababa was to take a 19 per cent share in Berbera. The deal fell through, reportedly because Ethiopia failed to make timely payments.

[Prime Minister Abiy Ahmed] described regaining sea access as a matter of existential importance to a growing Ethiopia.

Abiy’s ascent as prime minister gave the aspiration to restore sea access a new push. He and his close-knit team of advisers have long signalled that he views sea access as part of the legacy he wants to leave the country. The prime minister has also made clear that he envisions Ethiopia as a future naval power. Strains between Ethiopia and Djibouti, partly due to Ethiopian complaints about Djibouti’s port fees and excessive red tape, may factor into Abiy’s calculus. In a speech televised on 13 October 2023 (but reportedly delivered months earlier), he described regaining sea access as a matter of existential importance to a growing Ethiopia. Many regional and outside officials took Abiy’s speech as an implicit threat to invade Eritrea and seize its southern port of Assab. Following quiet diplomatic entreaties, Abiy clarified that he was not envisaging military action.

For Somaliland, the memorandum of understanding is a political gamble that has energised its long quest for outside recognition. Since 1991, Somaliland has developed many trappings of a state, including a largely stable, functional administration and relations – both diplomatic and commercial – with foreign powers, including the U.S., UK and United Arab Emirates (UAE). In particular, the Emirati firm DP World is investing $442 million in Berbera port, aiming to make it into a regional trade and logistics hub. Meanwhile, Somalia continues to demand that Somaliland rejoin its federation, leading external partners that want the two to resolve their differences amicably to support off-and-on talks between Mogadishu and Hargeisa. The latest attempt at reviving these talks came just days before the memorandum, with Somali President Hassan Sheikh Mohamud and President Bihi of Somaliland meeting in Djibouti on 28-29 December. Somaliland officials described the memorandum to Crisis Group partly as a response to Somalia’s uncompromising stance on the independence question, including at that meeting, and an expression of frustration with Somaliland’s unresolved status.

Additionally, the deal with Ethiopia is likely driven by Bihi’s desire to bolster his political standing at home. A long-running dispute over how to sequence elections likely weakened his chances for the presidential vote, which is now scheduled for November. He has also taken flak for a disastrous military failure in the Sool region, which Somaliland disputes with neighbouring Puntland. In February 2023, Hargeisa attempted – and failed – to quell an uprising by the Dhulbahante clan in Las Anod, Sool’s capital. The Dhubalhante belong to the Darod family, which is not part of Somaliland’s dominant Isaaq clan. The Dhulbahante prefer that the Sool area, in which they make up a majority, become a state in Somalia’s federation, rather than fall under Somaliland (or Puntland) jurisdiction. In August, after recurrent clashes, Somaliland forces retreated to positions about 100km west of Las Anod, and an uneasy calm settled in. Nonetheless, the front lines are heavily militarised, the two sides eyeing each other warily and expecting that fighting could resume at any moment.

The announcement infuriated Somalia, which recalled its ambassador to Ethiopia and immediately declared blocking the accord a national priority. On 6 January, President Mohamud signed a parliamentary bill declaring the deal “null and void”, though this step was mostly rhetorical. Opposition to the deal spread quickly among the public as well, and government officials participated in a protest march in the Somali capital on 11 January. Mogadishu’s most hostile move so far came six days later, when it denied air traffic clearance to an Ethiopian Airlines flight carrying a high-level Ethiopian delegation to Hargeisa for discussions about the memorandum. (Mogadishu has almost no sway over what happens inside Somaliland, but it retains control of the skies.)

Somalia is angry about more than the idea that Ethiopia might recognise Somaliland’s independence. First, it accuses Addis Ababa of meddling in its internal affairs, initiating discussions about an affair of state with Hargeisa without even notifying Mogadishu in advance. (Ethiopia says it did inform Somalia that talks would take place, but Somali officials say Addis did not provide full details.) Secondly, while Somali officials say they do not object to Ethiopia using the Gulf of Aden coast – whether at Berbera or another port along the Somali cost – for commercial purposes, they draw a red line at an Ethiopian military installation on what they consider Somali soil. Thirdly, and relatedly, the initiative feeds centuries-old Somali suspicions that Ethiopia is eyeing Somali-inhabited lands. This last sentiment is deepened by the fact that Mogadishu is not sure what is in the memorandum, given the conflicting reports about its contents.

But despite the torrent of condemnatory statements, the Somali government has thus far acted cautiously vis-à-vis Ethiopia. It has refrained from cutting political or economic ties with Addis or from undertaking military preparations. Its approach probably reflects the asymmetry in its overall relations with Ethiopia, which has sent thousands of troops to fight Al-Shabaab, both as part of the African Union Transition Mission in Somalia (ATMIS) and as a separate contingent. Instead, Mogadishu has focused on galvanising its allies and international organisations to help persuade Ethiopia to renege on the January memorandum. It has been able to convene emergency summits and meetings of the League of Arab States, the AU, the Intergovernmental Authority on Development (IGAD), a Horn of Africa body, and the UN Security Council. (Lacking outside recognition, Somaliland is excluded from all these organisations.)

International reactions have largely favoured Somalia’s argument that the deal runs counter to principles of preserving territorial integrity, sovereignty and non-interference in internal affairs. In the immediate vicinity, Abiy’s push for sea access has unsettled neighbours Djibouti and Eritrea, which both seem to have sided with Mogadishu. Although Eritrea’s government has been quiet about the deal, President Isaias Afwerki invited Somalia’s President Mohamud to Asmara. Mohamud’s press office said “profound talks” were held “while refraining from a reactive posture to various provocative agendas”. Djibouti, which is friendly with Somaliland despite competing with it commercially, has come out strongly against the January memorandum. Djibouti has taken on significant Chinese debt to improve a road connecting its port to Ethiopia, assuming that a large volume of trade would continue to transit, and stands to lose significant revenue from port fees if the deal holds up. Additionally, Bihi signed the memorandum shortly after Djibouti President Ismaïl Omar Guelleh tried to mediate between Somaliland and Somalia, which likely came as an insult.

Farther afield, Egypt has perhaps been most active in capitalising on the dispute, doubtless due to Cairo’s longstanding rivalry with Addis Ababa. On 20 January, Egyptian President Abdelfattah al-Sisi invited President Mohamud to Cairo, pledging to defend Somalia if asked. Traditional partners like the European Union and the U.S. have expressed strong support for Somalia. Other powers closer to the Horn of Africa, including Qatar, Saudi Arabia, Türkiye and the UAE, have publicly backed Mogadishu but likely seek to balance their relations in the region. The UAE appears to be in a particularly awkward position, given its majority stake in Berbera port, its strong security partnership with Mogadishu and its warm relations with Addis Ababa. Somali officials complain quietly that they see the Emirates playing a role in the deal, given Emirati leaders’ proximity to Abiy, although foreign diplomats are less certain.

The AU has urged its high representative to the Horn, former Nigerian President Olusegun Obasanjo, to foster dialogue between Mogadishu and Addis Ababa. But early indications are that Obasanjo is struggling to make headway, with Somalia reluctant to engage him. Mogadishu has thus far refused to enter bilateral talks with Addis: Abiy reportedly tried to speak with President Mohamud, but Mogadishu insists that Addis pull out of the memorandum before the two leaders meet face to face.

Indeed, hopes that the two leaders would talk on the sidelines of the annual AU summit in Addis Ababa on 17-18 February quickly evaporated. Mohamud claimed that Ethiopian authorities tried to prevent him from leaving his hotel to drive to AU headquarters. Ethiopia blamed the incident on the Somali delegation, saying it refused the Ethiopian security team assigned to it under AU protocols. Authorities also alleged that Somali security personnel tried to enter the AU building’s premises carrying firearms without prior notification.

Kenya seems to be taking a lead within the regional bloc IGAD to mediate. Abiy and Mohamud met separately with Kenyan President William Ruto in Nairobi, on 28 and 29 February, respectively, but there was no significant breakthrough, although some reports suggest a quiet agreement to de-escalate. Ethiopia and Kenya released a joint statement pledging to respect the “sovereignty and territorial integrity of states” but without naming Somalia.

The agreement between Ethiopia and Somaliland could spell further friction in an already troubled Horn of Africa. Even if the deal collapses, the question of sea access for Ethiopia will remain a divisive issue that is likely to resurface soon. Abiy is bent on restoring it, and he has a penchant for unilateral action. Although the prospect of more armed conflict as a result of the January memorandum seems low, given that both Ethiopia and Somalia seem to be keeping their differences in the diplomatic and political arena, that could change if Addis Ababa and Hargeisa move quickly to the deal’s next stage.

Another major concern is that the feud could become the latest front for proxy shadowboxing in the Horn of Africa, echoing previous bouts of competition among Gulf powers in the region. The deal could drive a wedge between two emerging blocs – on one hand, Saudi Arabia, Egypt and their allies, including Eritrea and Djibouti, all of which are situated on the Red Sea; and the UAE, Ethiopia and their allies, on the other. Saudi Arabia, Egypt and Eritrea share a desire to prevent other powers from encroaching on the Red Sea, while Djibouti has drifted closer to Saudi Arabia since it fell out with the UAE and seized control of a container terminal operated and jointly owned by DP World. These blocs are already at odds over the Sudan war, with Egypt, Saudi Arabia and Eritrea favouring the Sudanese army on one side and the UAE backing the rival paramilitary Rapid Support Forces on the other. Recent developments – Egypt’s vocal support for Somalia, the pomp attending the announcement of a surge of Saudi aid to Somalia, and a series of meetings between Djibouti and Saudi Arabia – suggest that the parties are indeed positioning themselves along these lines.

Al-Shabaab is another concern. A breakdown in relations between Addis Ababa and Mogadishu could threaten their close cooperation in fighting the insurgents. Should Addis use its troops as a bargaining chip or Mogadishu expel them to spite Ethiopia, a security vacuum would emerge that Al-Shabaab could exploit. The insurgents would then pose a greater danger not only to Somalia but also to Ethiopia and other countries in the region. Even the threat of such measures could prove destabilising, given that ATMIS is slated to draw down by the end of 2024 and talks with the AU about a follow-on mission are still under way.

Al-Shabaab may also benefit from the nationalist backlash to the memorandum in Somalia. It has portrayed itself as the only actor capable of rolling back Ethiopian ambitions in Somali territory, depicting the Somali federal government as too weak to stand up to outsiders trying to manipulate it. Al-Shabaab will undoubtedly attempt to win new recruits based on this narrative, something it has done in the past, particularly following Ethiopia’s 2006 invasion of Somalia to depose the Islamic Courts Union, an Islamist outfit that had seized power in Mogadishu.

Ethiopia, Somaliland and Somalia should strive to de-escalate tensions. Despite aggressive rhetoric, all three parties have so far avoided rash decisions. They should continue to show restraint. All the external actors trying to mediate, including IGAD and the AU, should make sure to coordinate efforts so that they do not work at cross-purposes. As a first step, regional and other actors with influence should work toward a conciliatory step from Ethiopia that could pave the way for direct talks. For instance, Ethiopia could issue a clear statement acknowledging its respect for Somalia’s territorial integrity. Meanwhile, despite the stance taken by Hassan Sheikh Mohamud, now is the best time for Mogadishu to engage, because the memorandum is a preliminary accord whose formal contractual obligations still need to be negotiated. A failure to talk now could result in a missed opportunity before the deal gets fleshed out. Given Somalia’s preference for multilateral engagement, the two heads of state can meet in the company of fellow IGAD heads of state, such as Ruto and current IGAD chair Guelleh.

For Addis Ababa, the moment is likewise opportune: its economy is in deep distress and relations with many neighbours are deteriorating. Pushing ahead with the deal amid such stiff regional opposition would carry major risks. Outside actors should encourage the parties to engage in such discussions rather than use the dispute to further their own interests.

Mogadishu and Hargeisa will also need to resume direct dialogue, since no other path to resolving Somaliland’s limbo status is apparent and since spiralling tensions risk harming both. Such talks look unlikely until the present crisis dies down.

The memorandum of understanding has brought two of the Horn’s enduring questions to the fore: Ethiopia’s long-held desire for sea access and Somaliland’s uncertain status. Dealing with both simultaneously will be tricky indeed, especially given the regional and geopolitical posturing at play. The priority today must be to prevent further escalation of the crisis. Still, regional diplomats should ensure that addressing these core disputes in a manner that all can live with and benefit from remains firmly on their agenda. Failure to do so means that the disputes will inevitably resurface down the road, as will the tensions that come with them.