A warship docks at Mogadishu port as a second major cache of weapons is delivered from Egypt to Somalia. Reuters
A warship docks at Mogadishu port as a second major cache of weapons is delivered from Egypt to Somalia. Reuters
A warship docks at Mogadishu port as a second major cache of weapons is delivered from Egypt to Somalia. Reuters
A warship docks at Mogadishu port as a second major cache of weapons is delivered from Egypt to Somalia. Reuters

Egypt's second weapons shipment to Somalia deepens dam dispute with Ethiopia


Kamal Tabikha
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Egypt's second shipment of military aid to Somalia on Monday as part of a military accord has become another point of contention in the long-standing dispute between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam on the Blue Nile.

Ethiopia's Foreign Ministry on Tuesday expressed concern over the consignment of arms sent to Somalia, warning the move could further destabilise the fragile security situation in the Horn of Africa region.

The weapons supply "by external forces would further exacerbate the fragile security and would end up in the hands of terrorists in Somalia", Ethiopia's Foreign Minister Taye Atske Selassie was quoted by Ethiopia News Agency as saying. But Rakha Ahmed Hassan, formerly Egypt's assistant foreign minister, said the move should not be perceived as aggressive aimed at escalation with Ethiopia.

"There is this pervasive perception at the moment that Egypt is making military moves against Ethiopia, but perception is not reality," he said.

Mr Hassan stressed that the military aid to Somalia was requested by Mogadishu itself, following Ethiopia's deal with the self-declared Republic of Somaliland for access to the sea and possible use of the coastline for a naval base, which angered many of its neighbours.

"It was Somalia who came to Cairo and requested military aid," he said. "We must remember this is entirely natural since many Horn of Africa nations are not happy with what they see as Ethiopia's unilateral and overly ambitious moves in the region."

The dispute between Somalia and Ethiopia led to Mogadishu calling on the African Union to remove Ethiopian troops from a peacekeeping mission, which the body has been sending to Somalia to assist in its fight against Al Shabab, an Al Qaeda-affiliated insurgency that has been at war with Somalia's government since 2012. The gap left by the removal of Ethiopian troops was filled by Egypt, with the country, in addition to shipping weapons, agreeing to plug the void and train Somalia's military, Mr Hassan said.

To gain the upper hand in the dam dispute, Egypt has, over the past 10 years, pursued stronger ties with Ethiopia's neighbouring countries and other nations in the Nile basin. Cairo has provided these countries with technical assistance in various sectors and has also delivered aid packages.

Egyptian President Abdel Fattah El Sisi has also made more visits to sub-Saharan Africa than any previous leader of the country, suggesting a commitment to fostering these relationships in the hope of encouraging Ethiopia to adopt a more accommodating stance in negotiations. "Space was made for Egypt because Somalia does not trust Ethiopia at the moment, which is something it has in common with many other Horn of Africa nations," said Mr Hassan, who is now a diplomat.

Ethiopian and Somali government soldiers form a joint patrol near Dusamareeb, Somalia, as they prepare for an offensive advance against Al Shabab militants in a long-running conflict. Reuters
Ethiopian and Somali government soldiers form a joint patrol near Dusamareeb, Somalia, as they prepare for an offensive advance against Al Shabab militants in a long-running conflict. Reuters

Addis Ababa has reacted negatively to the deal between Cairo and Mogadishu, filing an official letter to the UN Security Council this month, condemning what it called Egypt’s “aggressive approach” in the region’s politics. The letter was sent in response to an earlier complaint sent by Cairo to the Security Council to complain about Addis Ababa's continuing unilateral actions over the Gerd project.

Ethiopia's reaction to the initial deployment of Egyptian troops to Mogadishu, Mr Hassan said, was more an indication that it feels "guilty and cornered" – because of the disputes with most of its neighbours – than a sign Cairo is taking meaningful military action.

"When someone has done something wrong, they are always on the lookout and their guilt shows in their posture," he said. "I see this in Ethiopia's response. I think it was a bit of an overreaction to file a complaint to the Security Council over the Cairo-Mogadishu deal.

“Ethiopia itself recently held military talks with Morocco and Egypt did not bat an eye nor did it interfere to prevent the talks or any consequent deals. If one country wants to engage with another on certain matters, how is it anyone’s business to interfere?”

The growing tension has also led to speculation about a potential defence protocol between Egypt and Eritrea – another neighbour with which Ethiopia has previously been at odds. However, Mr Hassan warned against a simplistic view of the situation, stating that shared interests between Egypt and Eritrea do not mean they will “wage a full war” against Ethiopia.

“Eritrea has its own security and military matters to consider and even if it is coming close to Egypt because of shared interests, it has a lot more in common with Ethiopia on account of the ethnic commonalities between both peoples,” he said. “We mustn’t forget that Eritrea and Ethiopia share borders, common security objectives and economic interests – these things aren’t just erased because of one disagreement.”

While acknowledging Egypt's increased engagement with the Horn of Africa exhibits clear political ambitions for more influence in the region, primarily motivated by Cairo's efforts to bring Addis Ababa to the table to sign a binding agreement on the Nile dam, he stressed the shipment was not an act of aggression against Ethiopia.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: September 25, 2024, 8:49 AM