Ethiopia and UAE: a relationship of

brotherhood, cooperation and development

By Uhans Id
On Apr 26, 2022 1,486

At Dubai beach Abraha and his companions spend some good moments together chatting and
talking about their homeland, Ethiopia in the ETHIOPIA STAR COFFEE SHOP which is
deemed a shelter that provides them good opportunities to achieve their dreams in a decent
life in UAE.

Abraha says that he enjoys being with his Ethiopian friends more than earning money, adding
that despite the comfort of life in Dubai City, the homesickness is haunting him.

Abraha and his Ethiopian friends are part of the Ethiopian diaspora in UAE, who are
estimated to be a hundred thousand working in business, services and the greater part of them
in domestic labor.

The UAE has enjoyed historical ties with Ethiopia for more than two decades. In 2018, the
bilateral relations have deepened. Indeed, this choice didn’t come out of a vacuum, it shows
the strong willingness of the two country’s leaders in the importance of an economic
cooperation which is vital for both of them. Furthermore, the relationship between the two
countries have been developed significantly in recent years especially in the areas of
investment, agriculture and trade etc. Moreover, the two countries work in tandem when it
comes to international/regional issues and areas of common interest particularly the
peacemaking efforts in the African horn.

Economic Cooperation:

The external trade (non-oil) except free zones, had reached 809 million USD in 2012 with
surplus in the trade balance (629.2) for the UAE. The non-oil products represented 87.4
million USD; whilst the re-export for Ethiopia represented 632 million USD with 90 USD of
imports. Concerning the Ethiopian exports for the UAE during the first half of 2013, it
reached 49 million USD.  It is worth noting that the UAE was ranked 10th at the trade
partner’s level importing from Ethiopia; while the Ethiopian imports from the UAE reached
171 million USD in the first half of 2013. The UAE is the second state after Saudi Arabia
when it comes to investments in Ethiopia. In fact, the UAE investments were three billion
USD in 2014. It is worth mentioning that the volume of mutual trade was 873.6 million USD
in 2015-2016.

Peace efforts

The UAE played a big role in the historic peace agreement between Ethiopia and Eritrea,
contributing to the consolidation of the security and stability therein and particularly in the
African horn as well as the whole region. The UAE affirmed its support for the peace
agreement because of its willingness to build good international relations, taking into account
the good neighborhood and respecting the international pacts and conventions.

UAE humanitarian aids

1|Page
The UAE has recently provided Humanitarian assistance to Ethiopia. It sent 46 tons aircrafts
load to the Tigray region to alleviate suffering caused by the last war from people.

UAE sent six aircrafts loaded with 300 tons of relief items by International Humanitarian
City in Dubai and its partners( international Organizations).

The UAE is willing to help Ethiopia and the people over there to overcome the critical
situations caused by the war and the spread of Covid-19. To do so, UAE announced last
March its aid (85 million USD) to combat the humanitarian consequences in the African horn
and supporting the Humanitarian operations in Ethiopia. FANA NEWS, April, 2022

AGREEMENT BETWEEN THE GOVERNMENT OF THE FEDERAL

DEMOCRATIC REPUBLIC OF ETHIOPIA AND THE GOVERNMENT OF THE
UNITED ARAB EMIRATES CONCERNING THE PROMOTION AND
RECIPROCAL PROTECTION OF INVESTMENT

The Government of the Federal Democratic Republic of Ethiopia and the Government of the
United Arab Emirates (hereinafter jointly referred to as the "Contracting Parties" and
separately as a "Contracting Party");

RECOGNIZING that investment has a vital role in ensuring sustainable economic growth
and development;

SEEKING to promote investment that contributes to the sustainable development of the

Contracting Parties;

DESIRING to create conditions for greater investment by investors of either Contracting

Party in the territory of the other Contracting Party;

RECOGNIZING that the mutual encouragement and promotion of such investments will be
conducive to the stimulation of individual business initiative;

AIMING to ensure the observance of laws and regulations of the host State by the investors;

Desiring to intensify the economic cooperation of both Contracting Parties on the basis of
equality and mutual benefits;

ACKNOWLEDGING the rights and responsibilities of the Contracting Parties to regulate

investment within their territories in order to meet national policy objectives;

Have agreed as follows:

Part 1. GENERAL PROVISIONS

Article 1. Definitions

"Host State" means the Contracting Party in which the investment is located.

"ICSID Additional Facility Rules" means the Rules Governing the Additional Facility for the
Administration of Proceedings by the Secretariat of the International Centre for Settlement of
Investment Disputes.
2|Page
"ICSID Convention" means the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States, done at Washington, March 18, 1965.

"Investment" means: every kind of asset invested in connection with economic activities by
an investor of one Contracting Party in the territory of the other Contracting Party in
accordance with the laws and regulations of the latter and shall include, in particular, though
not exclusively:

(a) shares, stock and other forms of equity participation in a company, and bonds, debentures
and other forms of debt interests in a company;

(b) rights conferred by law or contract carried out for economic and commercial activities,
such as concessions, licences, authorisations and permits, excluding natural resources;

(c) tangible property, including real property; and intangible property, including rights, such
as leases, mortgages, liens and pledges on real property; and

Any change in the form in which assets are invested shall not affect their characters as
"Investments" if such change is made in accordance with the laws and regulations of the
Contracting Party in whose territory the investment has been made.

But "investments" does not mean;

1. a claim to money that arises solely from;

(a) a commercial contract for the sale of a goods or services by a national or enterprise in the
territory of a Contracting Party, or

(b) the extension of credit in connection with a commercial transaction, such as trade
financing, or

(c) any other claim to money, that does not involve the kinds of interests set out in
subparagraphs (a) to (c) in the definition for investment;

2. Investment shall exclude assets not acquired in the expectation, or not used for the purpose
of, economic activity or other business acquired for speculative purposes.

"Investor" means:

(a) natural persons being nationals of a Contracting Party, deriving their status as nationals
from the domestic law of that Contracting Party, and who have made investments in the
territory of the other Contracting Party; or

(b) legal person which is an economic entity established or constituted in accordance with the
laws and regulations of that Contracting party conducting substantial business activity in the
territory of one of the Contacting Parties and domiciled in its territory.

The concept of "substantial business activity" requires an overall examination, on a case-by-

case basis, of all the circumstances, including, inter alia:

(i) the amount of investment brought into the country;

(ii) the number of jobs created;

3|Page
(iii) the length of time the business has been in operation.

"Measures" means any legal, administrative, judicial or policy instrument adopted or

maintained by a Party, directly relating to and affecting an investment in its territory, after
this Agreement has come into effect.

"Returns" means all amounts yielded by an investment such as profits, dividends, interests,
royalties, or any other fees.

"Secretary-General" means the Secretary General of ICSID.

"Territory" means:

(a) In respect of the Federal Democratic Republic of Ethiopia: the territory in which the
Federal Democratic Republic of Ethiopia exercises sovereign rights or jurisdiction in
accordance with its laws and regulations and international law.

(b) In respect of the United Arab Emirates: the United Arab Emirates and when used in
geographical sense, the area in which the territory is under its sovereignty as well as the
territorial sea, airspace and sub-marine areas over which the United Arab Emirates exercises,
in conformity with international law and the laws of the United Arab Emirates sovereign
rights, including the main land and islands under its jurisdiction in respect of any activity
carried on in connection with the exploitation for or the exploitation of natural resources.

"In like circumstances" means an overall examination on a case by case basis of all the
circumstances of an investment including, inter alia,

a) its effects on the national environment, including the cumulative effects of all investments
within a jurisdiction on the environment;

b) the sector of the investment;

d) the aim of the laws and regulations concerned.

Article 2. Scope of Application

(a) This Agreement applies only to investments once admitted in accordance with domestic
laws, regulations and policies of the Contracting Parties.

(b) This Agreement shall apply to all investments, whether made before or after its entry into
force, but shall not apply to any dispute concerning an investment which arose, or any claim
concerning an investment which was settled, before its entry into force.

(c) This Agreement does not apply to government measures relating to taxation and
immigration.

Part 2. TREATMENT OF INVESTMENTS AND INVESTORS

Article 3. Promotion and Protection of Investments

1. Each Contracting Party shall encourage and create conditions for investors of the other
Contracting party to invest in its territory and shall admit such investment in accordance with
its laws and regulations.

4|Page
2. The Contracting Parties shall exchange information with respect to the investment
opportunities, laws and regulation for foreign investors in their territories.

3. A Contracting Party shall accord investments of investors of the other Contracting Party
protection no less favourable than that which it accords to investments of its own investors or
to investments of investors of any third state.

4. Investors of one Contracting Party whose investments in the territory of the other
Contracting Party suffer losses owing to war or other armed conflict, revolution, revolt,
insurrection or riot in the territory of the Host State shall be accorded by the Host State.
treatment, as regards restitution, indemnification, compensation or other settlement, no less
favourable than that which the Host State accords to investors of any third state. The above
shall not include acts of God, natural hazard and force majeure.

Article 4. National Treatment

Each Contracting Party shall in accordance with its laws and regulation, accord to investors
and their investments of the other Contracting Party a treatment no less favorable than that
which it accords, in like circumstances, to its own investors and to their investments with
respect to the management, operation, enjoyment, or disposition of their investments in its
territory.

Article 5. Most Favored Nations Treatment

1. Each Contracting Party shall accord to investors and their investments of the other
Contracting Party a treatment no less favorable than that which it accords, in like
circumstances, to investors and their investments to any third country with respect to the
management, operation, enjoyment, export or disposition of their investments in its territory.

2. The provisions of this Agreement shall not be construed so as to oblige one Contracting
Party to extend to investors and to their investments of the other Contracting Party the
benefits of any treatment, preference or privilege which are extended or may be extended by
the Contracting Party resulting from:

a) any existing or future customs union, economic or monetary union, a common market or a
free trade area or similar economic integration institutions or any other international
agreements to which either of the Contracting Party is or may become a party;

b) any international agreements, or arrangements pertaining wholly or mainly to taxation or

to migration.

3. The obligation referred to in paragraphs (1) shall not apply to treatment accorded under
any bilateral agreements in force or signed prior to the date of entry into force of this
Agreement. For more certainty, MFN shall not apply to any procedural or judicial matters.

Article 6. Expropriation

1. A Contracting Party shall not nationalize or expropriate investments in its territory or.
adopt any other measures tantamount to expropriation of investments except:

(a) for the public interest;

(b) on a non-discriminatory basis;

5|Page
(c) in accordance with due process of law; and

(d) on payment of prompt, and adequate compensation.

2. Adequate compensation shall normally be equivalent to the market value of the

expropriated investment immediately before the expropriation took place ("date of
expropriation"), and shall not reflect any change in value occurring because the intended
expropriation had become known earlier.

Any payment shall be made in freely convertible currency. compensation shall include
interest at the current commercial rate from the date of expropriation until the date of actual
payment.

3. This Article shall not apply to the issuance of compulsory licences granted in relation to
intellectual property rights, or to the revocation, limitation or creation of intellectual property
rights, to the extent that such issuance, revocation, limitation or creation is consistent with
applicable international agreements on intellectual property.

4. Non-discriminatory measures of a Contracting Party that are designed and applied to

protect or enhance legitimate public welfare objectives.

5. The investor affected by the expropriation shall have a right under the law of the
Contracting Party making the expropriation, to a review by a judicial or other independent
authority of that Contracting Party, of his/its case and the valuation of his/its investment in
accordance with the principles set out in this Article.

Article 7. Transfer of Capital

1. A Contracting Party shall accord to investors the right to:

(a) Repatriate investment returns, such as profits, capital gains, dividends, royalties;

(b) repatriate funds for repayment of loans;

(c) repatriate proceeds from compensation upon expropriation, the liquidation or sale of the
whole or part of the investment including an appreciation or increase of the value of the
investment capital;

(d) transfer payments for maintaining or developing the investment project, such as funds for
acquiring raw or auxiliary materials, semi-finished products as well replacing capital assets;

(e) remit the unspent earnings of expatriate staff of the investment project; and

(f) Payments arising out of the settlement of a dispute by any means including adjudication,
arbitration or the agreement of the Contracting Party to the dispute.

2. Each Contracting Party shall allow transfers in paragraph 1 of this article to be made in a
freely convertible currency at the prevailing rate of exchange prevailing at the time of transfer
without unreasonable delay and restriction.

3. Notwithstanding paragraphs 1 and 2, a Contracting Party may prevent or delay a transfer

through the non-discriminatory application of its law and regulations relating to:

(a) Bankruptcy, insolvency, or the protection of the rights of creditors;

6|Page
(b) Criminal offences and the recovery of the proceeds of crime where decisions have been
made by judicial bodies in accordance with due process of law;

(c) Financial reporting or record keeping of transactions when necessary to assist law
enforcement or financial regulatory authorities;

(d) Ensuring compliance with orders or judgments in judicial or administrative proceedings

with due consultation with the investor concerned ;

(e) non-payment of taxes and other financial obligations owed to third parties or required by
the laws and regulations of the host State;

(f) The formalities required to register and satisfy the Central bank and other relevant
authorities of a Contracting Party.

Article 8. Subrogation

1. Where the Contracting Party or its designated agency has guaranteed any indemnity
against non-commercial risk in respect of an investment in the territory of the other
Contracting Party and has made a payment to such investors in respect to their claims under
this Agreement, the latter Contracting Party shall recognize that the former Contracting Party
or its designated agency, by virtue of subrogation, is entitled to exercise the rights and to
enforce the claims and be subject to obligations of its own investors. However, these rights or
claims cannot be further assigned.

2. Subrogation shall take place after the prior written consent of the Host state in whose
territory the investment is made.

3. The subrogation rights or claims shall not exceed the original rights or claims of such
investors.

4. For the purpose of this article, a "designated agency" shall refer only to state agencies of a
Contracting Party that provide political risk insurance.

5. Subrogation shall take place after the prior consent of the party whose subrogation is
taking place on its territory.

Article 9. Measures to Safeguard Balance of Payments

Where payments and capital movements under this Agreement cause or threaten to cause
serious difficulties for the operation of monetary policy or exchange rate policy in either
Contracting Party, the Contracting Party concerned may take safeguard measures with regard
to capital movements for a period not exceeding twelve months if it considers such measures
as strictly necessary.

Article 10. Senior Management and Board of Directors

1. A Contracting Party may not require that an investor appoints to senior management
positions individuals of any particular nationality relating to its investment provided that the
country of the employee has diplomatic relations with the Host State.

2. Subject to its laws, regulations and policies relating to the entry of aliens, each Contracting
Party shall give sympathy to entry to nationals of the other Contracting Party, employed by
an investor of the other Contracting Party, who seek to render services to an investment of
7|Page
that investor in the territory of the Contracting Party, in a capacity that is managerial or
executive or requires specialized knowledge.

Part 3. INVESTOR RESPONSIBILITIES

Article 11. General Obligations

1. Investors and investments are subject to the laws and regulations of the Host State.

2. Investors and investments shall strive, to the extent possible, through their management
policies and practices, to contribute to the development objectives of the Host State and to the
benefit of the local community where the investment is made.

3. An investor shall as far as possible provide such information to the Host State that may be
required Concerning the investment in question for purposes of decision-making in relation to
that investment or solely for statistical purposes. The Contracting Party shall protect any
confidential business information from any disclosure that world prejudice the competitive
position of the investor or the investment.

Article 12. Environmental and Labour Standards

1. Recognizing the right of each Contracting party to establish its own levels of domestic
environmental protection and environmental development policies and priorities, and labour
laws and standards, and to adopt or modify such laws, standards and policies, each
Contracting Party shall strive to ensure that it provides for high levels of environmental and
labour protection and standards and shall strive to continue to improve the same.

Article 13. Corporate Governance

Investments shall as far as possible meet national and internationally accepted standards of
corporate governance for the sector involved, in particular for transparency and accounting
practices.

Part 4. PROMOTION AND ENCOURAGEMENT OF INVESTMENTS

Article 14. Transparency

1. Each Contracting Party shall as far as possible publish, or otherwise make publicly
available, its laws and regulations of general application as well as international agreements
which may affect the investments of investors of the other Contracting Party in the territory
of the former Contracting Party.

2. Nothing in this Agreement shall require a Contracting Party to furnish or allow access to
any confidential or proprietary information, including information concerning particular
investors of investments, the disclosure of which would impede law enforcement or be
contrary to its domestic laws protecting confidentiality or prejudice legitimate commercial
interests of particular investors.

3. This article is not subject to the investor-state arbitration provision in Part 5 of this
Agreement.

Part 5. DISPUTES BETWEEN CONTRACTING PARTIES

Article 15. Settlement of Disputes between a Contracting Party and an Investor

8|Page
1. Any dispute between an investor of one Contracting Party and the other Contracting Party
in respect of an investment in the territory of the other Contracting Party shall, as far as
possible, be settled through negotiation between the parties to the dispute.

2. If the dispute cannot be settled through negotiations within six months, either party to the
dispute shall submit the dispute to the competent court or administrative tribunals of the Host
State.

The notice of the claim shall specify:

a) The name and address of the investor;

b) For each claim, the provisions of this Agreement, alleged to have been breached and any
other relevant provisions;

c) The legal and factual basis for each claim; and

d) The relief sought and the approximate amount of damage claimed.

3. If the dispute cannot be settled within six months after resort to a court or administrative
tribunal, either party to the dispute shall be entitled to submit the dispute to the national or
international arbitration tribunals.

4. The investor and the Contracting Party concerned in the dispute may agree to refer the
dispute either to:

a) the International Centre for the Settlement of Investment Disputes /having regard to the
provisions, where applicable, of the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States, opened for signature at Washington DC on 18
March 1965 and the Additional Facility for the Administration of Conciliation, Arbitration
and Fact-Finding Proceedings; or

b) the Court of Arbitration of the International Chamber of Commerce; or

c) an International Arbitrator or Ad Hoc Arbitration Tribunal to be appointed by a special

agreement or established under the Arbitration Rules of the United Nations Commission on
International Trade Law; or

d) if after a period of three months from written notification of the claim there is no
agreement to one of the above alternative procedures listed under sub Article c, the dispute
shall at the request in writing of the investor concerned, be submitted to arbitration under the
Arbitration Rules of the United Nations Commission on International Trade Law as then in
force.

5. The investor has no right to submit the dispute to the international arbitration in accordance
with paragraph 4 of this Article, if more than 3 years is passed from the date on which the
investor first became aware, or should have known about the origin of the circumstances that
caused the dispute

6. The arbitral awards shall be final and binding for both parties to the dispute.

7. Each party to the dispute shall bear the cost of its representation in the arbitral proceedings.
The cost of the arbitrators and the remaining costs shall be borne in equal parts by the parties
to the dispute.
9|Page
Article 16. Disputes between the Contracting Parties.

1. Disputes between the Contracting Parties concerning the interpretation or application of

this Agreement shall, as possible, be settled through the diplomatic channels.

2. If a dispute between the Contracting Parties cannot thus be settled within 6 months of the
initiation of diplomatic negotiations to resolve the dispute, it shall upon the request of either
Contracting Party be submitted to an arbitral tribunal.

3. Such an arbitral tribunal shall be constituted for each individual case in the following way.
Within two months of the receipt of the request for arbitration, each Contracting Party shall
appoint one member of the tribunal. Those two members shall then select a national of a third
State with which both Parties have diplomatic relations who on approval by the two
Contracting Parties shall be appointed Chairperson of the tribunal. The Chairperson shall be
appointed within two months from the date of appointment: of the other two members.

4. If within the periods specified in paragraph (3) of this Article the necessary appointments
have not been made, either Contracting Party may, in the absence of any. other agreement,
invite the President of the International Court of Justice to make any necessary appointments.
If the President is a national of either Contracting Party or if he is otherwise prevented from
discharging the said function, the Vice-President shall be invited to make the necessary
appointments. If the Vice-President is a national of either Contracting Party or if he too is
prevented from discharging the said function, the Member of the International Court of
Justice next in seniority who is not a national of either Contracting Party shall be invited to
make the necessary appointments.

5. The arbitral tribunal shall reach its decision by a majority of votes. Such decision shall be
binding on both Contracting Parties. Each Contracting Party shall bear the cost of its own
member of the tribunal and of its representation in the arbitral proceedings; the cost of the
Chairperson and the remaining costs shall be borne in equal parts by the Contracting Parties.
The tribunal shall determine its own procedure.

Article 17. Governing Law

When a claim is submitted to a tribunal under this Agreement, it shall be decided in

accordance with this Agreement, national law of the host state, and the general principles of
international law.

Part 7. FINAL PROVISIONS

Article 18. Right to Regulate

1. In accordance with customary international law and other general principles of

international law, the Host State has the right to take regulatory or other measures to ensure
that development in its territory is consistent with the goals and principles of sustainable
development, and with other social and economic policy objectives.

2. Non-discriminatory measures taken by a Contracting Party to comply with its international

obligations under other treaties shall not constitute a breach of this Agreement.

Article 19. General Exceptions

1. Subject to the requirement that such measures are not applied in a manner which would.
constitute a means of arbitrary or unjustifiable discrimination between investors or
10 | P a g e
investments were like conditions prevail, nothing in this Agreement shall be construed to
oblige a Contracting Party to pay compensation by adopting or enforcing measures designed
and applied:

(a) to protect public morals and safety;

(b) to protect human, animal or plant life or health; or

What’s new? The United Arab Emirates (UAE) has been expanding its role in the Horn of
Africa. Along with other Gulf powers, it is broadening its ties to the region. Strategic
rivalries, including those within the Gulf Cooperation Council pitting the UAE and Saudi
Arabia against Qatar, often motivate Gulf powers’ increasing influence.

Why does it matter? The influence of, and competition among, Gulf states could reshape
Horn geopolitics. Gulf leaders can nudge their African counterparts toward peace; both the
UAE and Saudi Arabia helped along the recent Eritrea-Ethiopia rapprochement. But rivalries
among Gulf powers can also sow instability, as their spillover into Somalia has done.

What should be done? The UAE, whose Horn presence is particularly pronounced, should
build on its successful Eritrea-Ethiopia diplomacy. It should continue backing Eritrean-
Ethiopian peace, encouraging both parties to fulfil their commitments. Abu Dhabi should heal
its rift with the Somali government, and thus help calm tensions between Mogadishu and its
peripheries.

I. Overview

The United Arab Emirates (UAE) has emerged in recent months as an important protagonist
in the Horn of Africa. Through political alliances, aid, investment, military base agreements
and port contracts, it is expanding its influence in the region. A recent manifestation came in
the summer of 2018, when Eritrea and Ethiopia announced – after a flurry of visits to and
from Emirati officials – that they had reached an agreement to end their twenty-year war.
Emirati and Saudi diplomacy and aid were pivotal to that deal. Elsewhere, however, Gulf
countries have played a less constructive role. Competition between the UAE and Saudi
Arabia, on the one hand, and Qatar on the other, spilled into Somalia beginning in late 2017,
aggravating friction between Mogadishu and Somali regional leaders. Abu Dhabi’s relations
11 | P a g e
with the Somali government have collapsed. As its influence in the Horn grows, the UAE
should build on its Eritrea-Ethiopia peace-making by continuing to underwrite and promote
that deal, while at the same time looking to reconcile with the Somali government.

An array of calculations shapes the UAE’s actions in the Horn. The Gulf port cities have a
long history of ties with Africa, centred around maritime trade and dating to the era before
the Emirates united as a nation-state. From 2011, however, Abu Dhabi began to look at the
countries along the Red Sea coast as more than commercial partners. Turmoil in the Middle
East, Iran’s growing regional influence, piracy emanating from Somalia and, from 2015, the
war in Yemen combined to turn the corridor’s stability into a core strategic interest. The 2017
Gulf crisis, which saw Saudi Arabia, the UAE, Bahrain and Egypt cut ties with Qatar, pushed
leaders on both sides of the divide to double down on their alliances, including in the Horn.
Since then, the UAE has nailed down diplomatic relationships and extended its reach,
particularly along the Red Sea.

In places, Gulf rivalries have been destabilising.

In places, Gulf rivalries have been destabilising. In Somalia in particular, the UAE,
perceiving the Somali government of President Mohamed Abdullahi Mohamed “Farmajo” as
too close to Qatar and keen to protect years of investment, has deepened its relations with the
governments of Somalia’s regions, or federal states. Importing the Gulf crisis into Somalia
has contributed to tensions between Mogadishu and the federal states that over recent months
have threatened to boil over. Elsewhere, however, Abu Dhabi’s peace-making is evident. The
UAE, together with Saudi Arabia, provided critical diplomatic and financial support to help
Eritrea and Ethiopia take the first steps toward a rapprochement that could prove enormously
beneficial for wider Horn stability. Both Gulf monarchies also appear to have contributed to
an easing of tensions between Ethiopia and Egypt.

The UAE, along with its fellow Gulf monarchies, is investing in the Red Sea and Horn of
Africa for the long haul. Ideally, its successful Eritrea-Ethiopia diplomacy would provide the
basis for that engagement. To that end, it should consider the following:

 Keep underwriting Eritrean-Ethiopian peace, including by releasing the aid it has

promised and pressing Asmara and Addis Ababa to follow through on the September
agreement they signed in Jeddah;

 Seek to end its debilitating spat with Mogadishu, with the understanding that warmer
Abu Dhabi-Mogadishu relations are likely a prerequisite for overcoming divisions
between President Farmajo’s government and Somali regional leaders. The UAE

12 | P a g e
 could encourage allies in the regions to reconcile with Mogadishu and take steps to
facilitate their doing so, for example pledging to inform Farmajo’s government of its
activities in the federal states, from training security forces to developing ports.

II. The UAE’s Long Involvement in the Horn

When the Eritrean and Ethiopian leaders signed the September agreement, Saudi Arabia and
the UAE’s role in brokering it was in full view. The ceremony took place in Jeddah, on Saudi
Arabia’s Red Sea coast. The two African leaders sat in an opulent room under the gaze of a
metres-high portrait of the founding Saudi king, Abdulaziz. The current king, Salman, looked
on, flanked by Saudi Crown Prince Mohammed bin Salman and the Emirati foreign minister,
Sheikh Abdullah bin Zayed. The traditional regional powerbrokers – Western countries, the
UN and the African Union (AU) – were absent.

The Eritrean-Ethiopian rapprochement, as well as a flurry of other Horn of Africa diplomacy,

has greatly boosted Gulf states’ visibility as geopolitical actors along the Red Sea. Saudi
Arabia and the UAE are now central to conversations about the future of a region still
suffering strife and instability. With Washington seemingly in retreat, the Gulf countries
appear intent on playing a major role. As one Gulf official put it: “If you look at the future of
Africa, it’s clear – China is in. The Arab countries are in. The U.S. is not”.

The larger questions are what each Gulf country aims to gain and how each intends to use its
newly acquired leverage.

The UAE itself has a long track record of engagement across the Red Sea.

The UAE itself has a long track record of engagement across the Red Sea. It hosts large
diasporas from Horn countries, some of which were integral to its founding in 1971. Arabic-
speaking Sudanese civil servants helped build nascent ministries, and members of the
diaspora still swap stories about how President Omar al-Bashir was once Khartoum’s military
attaché in Abu Dhabi.

Dubai, meanwhile, is the banking hub for many Somali businesses.

The Emirates’ history as a trading coast also informs its contemporary economic outreach.
The UAE’s model of economic diversification is built around its role as a logistics hub and
regional headquarters. It is a model premised on freedom of maritime navigation, including
through Bab al-Mandab, the narrow passage from the Gulf of Aden to the Red Sea, and the
Strait of Hormuz. Analysts often describe both bodies of water as chokepoints because they

13 | P a g e
are easily closed to oil tankers and other cargo ships. Having cooperative, even like-minded
governments along the Red Sea corridor is a strategic priority.

Africa is also a natural theatre for trade and logistical ambitions. It comes as no surprise that
one of the Dubai-based logistics giant DP World’s first contracts abroad was in Djibouti,
where it began to develop Doraleh port in 2006.

III. The Arab Uprisings and a New Emirati Stance Abroad

The 2011 Arab uprisings vested the Red Sea with strategic importance for the UAE beyond
core economic interests and led Abu Dhabi to view that corridor, as well as places as
seemingly far-flung as Jordan and Libya, as its “neighbourhood”.

Those uprisings transformed the Middle East from a zone of entrenched autocracies into a
web of conflicts that political Islamists associated with the Muslim Brotherhood, whom the
UAE and Saudi Arabia view as enemies, initially seemed to be winning. Abu Dhabi, in
particular, views groups affiliated with the Muslim Brotherhood, which have traction inside
the Emirates, as an existential threat. Their ascendancy as far away as North Africa alarmed
the Emirates, particularly as conflicts across the Arab world increasingly appeared
interlinked, with events in one place shaping those elsewhere.

A growing sense of danger bred a more interventionist foreign policy. The UAE, like Saudi
Arabia and Qatar, funnelled support to allies in Libya, Egypt and elsewhere. To explain these
actions to citizens at home – used to an economically focused UAE – Emirati leaders invoked
an argument still oft-repeated in policymaking hallways in Abu Dhabi: you can’t be safe if
your neighbourhood is at war.

Egypt’s future took on particular importance after its first democratic election in modern
history brought a Muslim Brotherhood leader, Mohamed Morsi, to the presidency. After
Morsi’s ouster in a coup that the UAE and Saudi Arabia lauded and may have actively
encouraged, Abu Dhabi and Riyadh, together with Kuwait, poured billions into the new
government’s coffers.

Abu Dhabi also kept a keen eye on the security of the Suez Canal, including when the scale
of piracy in the Red Sea, the canal’s southern gateway, jumped in the mid-2010s. Seeing a
risk to its oil shipments and cargo containers, the UAE took an active role in counter-piracy
initiatives. In Somalia, it trained a marine police force in the semi-autonomous region of
Puntland and began experimenting with counter-terrorism operations against the Islamist Al
Shabaab insurgency. The country became a Petri dish of learning for UAE special forces,
which Western defence officials describe as the most capable in the Gulf today.
14 | P a g e
IV. The Yemen Catalyst

By 2015, the tumult in the Middle East – the Islamic State’s rise, Libya’s collapse, the Syria
inferno, instability in post-coup Egypt and fear at what some Gulf leaders saw as Iran’s
increasing influence across the region – created a siege mentality in some Gulf monarchies.
In that context, Saudi Arabia and its primary partner the UAE led a military intervention in
Yemen to roll back Huthi rebels loosely allied with Tehran. The Huthis had ousted the
president and taken control of the capital and much of the country in late 2014 and early
2015.

In its anti-Iran drive, Riyadh sought assistance from past allies Sudan and Eritrea, both of
which had strengthened ties with Tehran while all three countries were under international
sanctions. Beginning in the 1990s, Sudan had built its defence industry with Iranian
assistance and know-how; Eritrea had offered use of its port, Assab, to the Iranian navy. In
2014, however, both countries ejected Iranian diplomats. A year later, both agreed to
contribute troops and resources for the Yemen war.

At the outset of the Yemen conflict, the UAE and Saudi Arabia were alarmed by Huthi
rebels’ gains around Bab al-Mandab, raising the possibility that an Iranian-allied group would
control such a chokepoint. They prioritised retaking Yemen’s western and southern
coastlines.

The UAE took de facto responsibility for operations in Yemen’s south and quickly found
itself in need of a naval and air base along the Red Sea. The natural candidate was Djibouti,
where DP World had built the port. By then, however, Abu Dhabi’s relationship with
Djibouti was souring over allegations of corruption related to DP World’s contract (DP
World disputes the allegations).

Officials from the two countries had a falling-out in April 2015, when the UAE, with DP
World’s infrastructure, sought to use Djibouti as a military launching pad into Yemen.

The Saudi-led coalition turned to another port, Eritrea’s Assab. Riyadh signed a security
agreement also that April to use Assab, leaving Abu Dhabi to carry out the deal’s terms. By
September, the Emirati military was flying fighter-bombers from the Eritrean coastline.

The dispute with Djibouti left the UAE uneasy about its reach along the Red Sea corridor.
Abu Dhabi worried that it could not rely on allies in the Horn – even in cases where it felt
existential questions were at stake.

15 | P a g e
As UAE-backed Yemeni forces pushed northward along the Red Sea coast, Abu Dhabi
sought to expand its strategic depth. DP World and the Emirati military each penned an
agreement to develop Berbera port in the self-declared republic of Somaliland. A subsidiary
of DP World later signed a contract with local authorities in the Somali federal state of
Puntland to develop Bosaso port. The attitude, as one Emirati official put it, became “fill
space, before others do”.

V. The Intra-Gulf Crisis

The June 2017 Gulf crisis brought yet more urgency to the scramble along the Red Sea
corridor. Saudi Arabia, the UAE, Bahrain and Egypt cut ties with and imposed an embargo
on Qatar.

Among the reasons the UAE in particular cited for breaking ties with Qatar was Doha’s
alleged betrayal of the Saudi-led coalition efforts in Yemen.

The Qataris had sent few personnel to the war theatre, but Abu Dhabi accused them of having
revealed the location of a UAE-led operation to al-Qaeda, resulting in Emirati casualties,
though they provided no evidence to support that allegation. (Qatar at the time declined to
respond to this specific claim, and urged the UAE to provide evidence.

) After they imposed an air and naval blockade on Yemen, Riyadh and Abu Dhabi continued
to claim that Doha was working actively against Saudi-led efforts, particularly through the
media.

Also at the outset of the Gulf crisis, both sides began a frantic diplomatic push to secure
allies, including among countries in Africa. In the Horn, competition was particularly fraught,
given this subregion’s strategic value and proximity to Yemen. Djibouti and Eritrea both
issued statements of support for the Saudi alliance, prompting Qatar to withdraw 400
observers it had stationed to monitor a border dispute between the two.

In Somalia, Farmajo, who had assumed office only months before the Gulf crisis, reportedly
faced intense Saudi and Emirati pressure to cut ties with Doha. Although the president
insisted that he wanted to remain neutral, for Abu Dhabi, widespread reports that he had
received Qatari funds before his election belied that claim, as did his post-election
appointment as chief aide of a former Al Jazeera correspondent with links to Doha.

In April 2018, Somali authorities seized from a UAE plane almost $10 million in cash that
Abu Dhabi said was intended to fund training of security forces that had long been underway
but which Mogadishu alleged would be used to fund its political rivals.

16 | P a g e
In the aftermath of the spat, Abu Dhabi withdrew some officials from Mogadishu, evacuated
a military training camp and shuttered a hospital.

The UAE also shored up its alliances with leaders in Somalia’s federal states and the
breakaway republic of Somaliland. It stuck to previous port agreements in Berbera and
Bosaso, as well as a military base agreement for Berbera, and reportedly is discussing the
development of Kismayo, in Jubbaland federal state, over the Somali federal government’s
objections. The Gulf powers’ backing of rival factions – notably Emirati support for the
governments of Somalia’s federal states and Qatari support for Farmajo – has exacerbated
existing tensions between Mogadishu and the regions to the point of near-conflict.

The dust-up in Mogadishu is often described by officials in Abu Dhabi as a “wake-up call” –
the most blaring signal that the UAE’s interests were imperilled along the African side of the
Red Sea.

For Abu Dhabi, the timing was inauspicious as well. Emirati-backed Yemeni forces had been
gearing up for an offensive to move toward the Huthi-controlled port of Hodeida – an
operation that was to rely heavily on assets parked across the sea in Assab. If past alliances
with Djibouti and Somalia could turn on a dime, perhaps other seemingly assured
relationships – such as with Eritrea – could do so, too.

VI. The Ethiopia-Eritrea Peace Deal

As the UAE’s relations with the Somali federal government soured, a new prime minister
emerged in Ethiopia whose reformist economic views appealed to Abu Dhabi.

Both countries had already begun laying the groundwork for closer ties some years ago. In
March 2013, the two agreed to form a joint commission to discuss economic, political and
other cooperation. In April 2018, the selection by Ethiopia’s ruling coalition of a new and
charismatic prime minister, Abiy Ahmed, paired with Abu Dhabi’s desire for a new partner in
the Horn, catalysed a quicker alignment. As Abiy spoke of privatisation and development to
unleash the potential of the Horn’s most populous country, the UAE saw a strategic and
investment opportunity. Among the many constraints on Ethiopia’s growth has been its lack
of sea access and consequent reliance on Djibouti as the sole outlet for its exports. The
UAE’s newly signed port contracts could help. In March 2018, DP World announced that
Addis Ababa would take a 19 per cent stake in the Berbera port’s development.

Now, with an energetic partner and a cornucopia of potential commercial opportunities lying
in wait in Ethiopia, Eritrea and Somalia, Abu Dhabi launched a series of meetings and mutual
delegations in a bid to forge strong ties with Abiy. Abu Dhabi’s and Riyadh’s relationships
17 | P a g e
with Eritrea positioned them well to help facilitate rapprochement between Asmara and
Addis Ababa, once leaders in those capitals were ready. Abu Dhabi pledged $3 billion to
Ethiopia, an amount that puts the country on par with Egypt as a recipient of UAE assistance.
The two Gulf countries assured Eritrea, meanwhile, that they would help lobby for the lifting
of international sanctions in the coming months.

If sanctions go, Assab – which has been modernised for military sorties but not for container
ships – will almost certainly be the next port to go to market for commercial development.

As seen from the Gulf, the Ethiopia-Eritrea peace deal has both economic and strategic
layers.

As seen from the Gulf, the Ethiopia-Eritrea peace deal has both economic and strategic
layers. Amid the UAE’s strategic setbacks in Djibouti and Somalia, the Ethiopia-Eritrea deal
in many ways cements Abu Dhabi’s role as a player in Horn politics. In the weeks since the
agreement was announced, Ethiopia’s prime minister also has helped spearhead efforts to
improve relations with Somalia, which may in turn help smooth the rough patch between
Mogadishu and Abu Dhabi – though for now little suggests rapprochement will come any
time soon.

Both Abu Dhabi and Riyadh also appear to have helped behind the scenes Prime Minister
Abiy’s efforts to improve relations with Egypt, another old foe. Abiy visited Cairo in June
and publicly reassured Egyptian President Abdel Fattah al-Sisi that Ethiopian development
projects – notably the Grand Ethiopian Renaissance Dam, which Egypt fears could severely
curtail its supply of Nile water – would not harm Egypt. Sisi has also taken a conciliatory
approach, saying he recognises that there is no military solution to the dispute.

At the same time, Saudi Arabia has helped start a dialogue between Eritrea and Djibouti over
a decade-long border conflict. Though that dialogue is still in its early days, after an initial
meeting between the two countries’ leaders in Jeddah in September 2018, Djiboutian
President Ismail Omar Guelleh told Saudi media that relations had “entered the normalisation
phase”.

In a sense, both Abu Dhabi and Riyadh are creating facts on the ground in the Horn. In the
process, they are becoming forces that cannot easily be ignored.

The payoff could be enormous for regional integration, infrastructure development and
connectivity across the Red Sea. Just with regard to ports, the Horn remains one of the most
underserved areas of the world relative to population, with a single modern multi-use deep-
water port at Doraleh, in Djibouti.
18 | P a g e
Yet because competition with adversaries also drives the push into the Horn, risks are at least
as prominent as opportunities. The contrast between the roles played by the Gulf powers in
Ethiopia and Somalia is instructive. At one moment, Gulf involvement in the Horn, even if
motivated in part by rivalry between two Middle East axes, can move things in the right
direction, as it has with Abiy’s push for peace with Eritrea. At another, those same rivalries
can destabilise and divide.

VII. Conclusion

The UAE signals repeatedly that its engagement with Africa is here to stay. In 2018, it is
opening an additional six embassies on the continent, adding to the more than a dozen already
there. As one Emirati official put it: “We need to diversify and strengthen our relationships
outside our own region. If we only pay attention to the Middle East and North Africa, we will
be bogged down in crisis. We could miss a lot of opportunities around the globe”.

While credit for the Ethiopia-Eritrea deal lies primarily with the leaders of those two
countries, clearly Gulf powers, especially the UAE, played an important role in helping push
forward the initial steps of a rapprochement that could be significant across the Horn. The
deal demonstrated that the UAE and Saudi Arabia can play important peace-making roles.
Abu Dhabi and its peers can encourage regional economic integration and help give leaders
in the Horn the extra boost, including both political and financial support, they might need to
make peace. Such was the story of Eritrea and Ethiopia – two countries that saw domestic
interests in making peace but needed the right economic and diplomatic assurances from
abroad.

The months ahead will be crucial for the success of that deal. Abiy faces enormous hurdles in
his quest to reform the economy and consolidate political support. Eritrea’s reopening to the
world will undoubtedly encounter unexpected challenges. For the Jeddah deal to succeed,
Riyadh and Abu Dhabi will need to work proactively to keep the parties on track. They can
begin by promptly following through on their aid commitments.

Despite the bright spot of Eritrea-Ethiopia peace-making, intra-Gulf competition colours

Emirati involvement across the Horn.

Yet despite the bright spot of Eritrea-Ethiopia peace-making, intra-Gulf competition colours
Emirati involvement across the Horn. Whether the killing of Saudi Arabian journalist Jamal
Khashoggi in Saudi Arabia’s Istanbul consulate will lead to some form of rapprochement

19 | P a g e
within the Gulf Cooperation Council (GCC), as some reports suggest might happen, remains
unclear.

But even if so, the Saudi-UAE alliance is still likely to view actors such as Qatar and Turkey
as competitors in strategic theatres like the Horn. Moreover, while for now Tehran’s
influence is largely limited to the Yemeni side of the Red Sea, Riyadh and Abu Dhabi’s
engagement in the Horn is likely to remain informed by their determination to ensure Iran
does not regain a foothold, including by winning back its former allies Sudan and Eritrea.

The damage that external rivalries can inflict on the Horn was made clear in Somalia, where
friction among Gulf powers, and in turn between the UAE and Farmajo’s government, has
exacerbated pre-existing tension over how power and resources are divvied up between the
capital and the regions. Abu Dhabi says that it wants a stable Somalia, but the country is
likely to remain volatile unless strong Emirati ties to Somali regional leaders are paired with
a reconciled UAE relationship with Mogadishu. Abu Dhabi could pledge to inform Farmajo’s
government of its activities in the federal states – whether training security forces or
developing ports – and ensure that its investment and aid benefit the country and not only its
regions. The UAE also might encourage its allies in the federal states to repair their own ties
to Mogadishu.

Abu Dhabi faces a choice in how much its Middle Eastern rivalries shape its Horn
engagement. If competition remains a primary driver, results will almost certainly be mixed.
In some places the UAE may still help bridge divides, even if partly motivated by shoring up
its own influence at the expense of rivals. Elsewhere, however, competition could put Horn
governments in a difficult spot, forcing them to choose between the two Gulf axes or
exacerbating local conflicts in new ways. Ultimately, zero-sum competition in the Horn risks
upsetting both the internal politics of the region’s diverse states and the balance of power
among those states. Outside powers may win short-term gains, but over time everyone stands
to lose from greater Horn instability.

Abu Dhabi/Washington/Brussels, 6 November 2018

20 | P a g e