The recent verbal argument between two members of the Egyptian parliament over the UAE’s financing of the Ethiopian Renaissance Dam represented the first semi-official sign of Cairo’s anger over Abu Dhabi’s role in the dam crisis.
The two Egyptian MPs, Mostafa Bakri and Diaa El-Din Daoud, got into an argument over the latter’s accusation of “one of the Arab countries in financing the Renaissance Dam,” without naming the state.
– Al Jazeera Egypt (@AJA_Egypt) June 6, 2021
According to an identical text mentioned by Egyptian media, including the state-owned newspaper, Akhbar Al-Youm, “During the parliament session, Bakri said: “Daoud belongs to the Nasserite nationalism (relative to former Egyptian President Gamal Abdel Nasser), which called for respect for Arabism, but he gave signals that I did not wish that He refers to it that an Arab country is involved in financing the Renaissance Dam.”
He added: “The aforementioned country sent an envoy a few days ago to Sudan and Ethiopia, and he submitted to the political leadership a comprehensive report on the situation and stands with us in the same trench,” which was considered a clear indication to the Emirates.
According to the same sources, “Daoud tried to interrupt him, and they waved hands at each other, but the head of the council, Hanafi al-Jabali, intervened to break up the argument,” saying: “The matter is over and the words were deleted from the record.”
A picture reveals Ethiopia’s retreat from its plans for the Renaissance Dam
The Egyptian water expert, Abbas Sharaki, revealed that the level of the Renaissance Dam lake has decreased, explaining that the level did not exceed the first storage. pic.twitter.com/Z4ECG0GlH3
— faten abd alftah (@AlftahFaten) June 8, 2021
An argument was not spontaneous over the UAE’s role in financing the Renaissance Dam
In light of the current structure of the regime in Egypt, it is difficult to imagine that this argument is spontaneous and that Representative Diaa El-Din Daoud, who is charged with the opposition, made this accusation in two very sensitive issues, namely the file of the Renaissance Dam, and the relationship with the UAE on his own.
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Also, Bakri’s response, who is known to be close to the security services, appears to be absolved by the state of this accusation, which was issued by a deputy described as an opponent, but usually does not take a sharp opposition or a clear disagreement with the state’s policy.
The most important thing is that Egyptian newspapers, including official newspapers, publish this text. It cannot be spontaneous or press discretion, in light of the strict control over the media in Egypt, which prevents the publication of news that is much less sensitive than this news.
Sameh Shoukry denies this accusation from the UAE
In mid-April, Egyptian Foreign Minister Sameh Shoukry affirmed, in a speech to parliament, that “there are no friendly countries with close relations with Egypt that finance the Renaissance Dam.”
These indications reflect official Egyptian concern about the UAE’s supportive stances for Ethiopia in the Renaissance Dam crisis, at a time when the relationship between the two allies is tense in several intertwined files.
It is believed that the differences between the two countries include Emirati reservations about the settlement in Libya and the Egyptian-Turkish truce, and Egyptian anger over Emirati normalization with Israel, especially the file of finding alternatives to the Suez Canal.
The UAE was one of the few Arab countries that did not issue a statement in support of Egypt and Sudan’s position on the Renaissance Dam crisis, during the period when Egyptian President Abdel Fattah El-Sisi made his first threats to Ethiopia.
At the same time, it announced sending aid to Ethiopia, knowing that it had helped Addis Ababa to suppress the Tigray region.
But apart from the Emirati positions on the Renaissance Dam crisis and the angry hints from Cairo towards Abu Dhabi, what is the truth about the UAE’s financing of the Renaissance Dam?
Who finances the Renaissance Dam?
The cost of the Grand Ethiopian Renaissance Dam (GERD) is estimated at approximately $5 billion, or about 7% of Ethiopia’s total national product for 2016, according to the book “The Grand Ethiopian Renaissance Dam on the Blue Nile” published for the first time in 2018.
The book notes that the lack of international funding for projects on the Blue Nile has long been claimed as a reason for Egypt’s ongoing campaigning to criticize the project.
Therefore, Ethiopia is forced to finance the Renaissance Dam with crowdfunding by raising internal funds in the form of selling bonds and persuading employees to contribute part of their income.
Despite the local success in raising funds, the contribution of Ethiopians and Ethiopians living abroad was met with skepticism due to the political environment in Ethiopia.
The truth about the UAE’s financing of the Renaissance Dam
The Chinese government also provides a significant amount of international financing for hydropower infrastructure.
It was also claimed that the Gulf states contributed to the construction of the dam, but the authors did not specify how accurate these claims are and which Gulf state funds it.
It is difficult to assert the existence of direct Emirati funding for the Renaissance Dam, in the absence of credible information in this regard.
But on the other hand, it can be said that the UAE and other Gulf countries contribute to the financing of the Renaissance Dam indirectly through two ways.
Economic aid and grants
The economic aid and grants provided by the UAE and Saudi Arabia to Ethiopia can be considered a kind of indirect financing of the Renaissance Dam.
Whereas, these aids and grants may support the budget of the Ethiopian government; allowing it to divert funds to build the dam.
The UAE is a huge and direct supporter of Ethiopia and not only an investor. Even the Ethiopian Foreign Minister, Gedo Andargao, previously said: “The support provided by the UAE to Ethiopia cannot be limited, especially in the economic field.”
He said, “The UAE has supported us in the financial transformation, created job opportunities for Ethiopians, and encouraged Emirati investors to send their projects in Ethiopia, as well as its keenness to follow up on the success of the transformation and reform process initiated by Prime Minister Abiy Ahmed.”
UAE financing for the Renaissance Dam
In 2018, Ahmed Shed, head of the Government Communications Affairs Office in Ethiopia, announced that the UAE would deposit $1 billion in the Central Bank of Ethiopia to ease the foreign currency shortage, coinciding with the visit of Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed to Addis Ababa.
Shed explained that the UAE also agreed to allocate an additional $2 billion for “various investments.”
In February 2020, the Emirati Khalifa Fund for Enterprise Development signed a $100 million agreement with the Ethiopian Ministry of Finance to support and finance micro, small and medium enterprises in Ethiopia.
The UAE is also the second Gulf country after Saudi Arabia to invest in Ethiopia in 2014.
The effects of the UAE financial aid can be understood given that this was the critical period for the construction of the dam, which had reached more than 70% construction by the end of 2017.
At that time, it was reported that the lack of liquidity in Ethiopia was hampering its completion, and it cannot be excluded that the Emirati money had solved the problem indirectly; By supporting the Ethiopian budget, even if by directing funds to items other than the construction of the dam, Addis Ababa can transfer funds from these items to the dam.
This Emirati and Chinese support explains the ability of a poor country like Ethiopia to build a dam the size of the Renaissance Dam without explicit support from Western financial institutions. Egypt, for example, needed Soviet support to build the High Dam after the United States refused to allow the World Bank to finance it.
As for the second financial way to indirectly support the Renaissance Dam, it is investments in the field of agriculture, which has become an incentive to build the dam and make it more profitable for Ethiopia.
It is also believed that these investments have negative effects on the environment and on the property of small farmers.
These Emirati investments in Ethiopia in the field of agriculture are part of a race in the Horn of Africa to invest in agriculture by the Gulf countries, especially the UAE, Saudi Arabia and Qatar, as well as by countries such as India, the United States and China.
India, China, Saudi Arabia, Qatar, the United States, and the United Arab Emirates are making large-scale agricultural investments in the Great Lakes region—Ethiopia, South Sudan, and other East African countries to provide food and agricultural fuel for their growing populations.
Saudi Arabia and the UAE look with particular attention to the role of Ethiopia and Sudan in providing food, but they also see strengthening influence in Ethiopia as a way to possess tools of pressure on their ally Egypt, according to a report by the American Carnegie Center.
The center notes that in light of the recent increased involvement of Abu Dhabi and Riyadh in the Horn of Africa, Cairo is unable to rely on its key Arab allies to pressure Ethiopia to adopt a more conciliatory approach.
Moreover, given the role of Ethiopia and Sudan in providing food to these countries, they are unlikely to intervene in Egypt’s favour, because the Renaissance Dam could increase their food security.
Hence, the report concludes that the UAE has a number of incentives regarding the continuation of the Renaissance Dam project, including serving its food security interests, protecting their hard-earned regional influence, and the possibility that they will have the upper hand against Iran, Qatar and Turkey. The latter is especially important after Cairo has tended toward reconciliation with Doha and calm with Ankara.
The center says that Abu Dhabi can be relieved by Cairo’s lack of options on the issue of the Renaissance Dam, as it seems to see that this makes Egypt more in need of it.
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