The Shift of the Balance of Power in Northeastern Africa and Its Impact on Hydropolitical Cooperation in the Blue Nile States

On Monday November 4^th, 2013 representatives from The Republic of Sudan, Egypt and Ethiopia met in Khartoum to discuss the findings of a report by an International Panel of Experts concerning the development of the Grand Ethiopian Renaissance Dam. Though an agreement to form a supervisory committee for the dam failed it is important to note that this meeting would have been inconceivable three years ago, however, the Arab Spring and the secession of South Sudan have significantly changed the balance of power in Northeastern Africa. Cairo's consent to the meeting and Khartoum's support of the dam testifies to this shift. Though an agreement has not been reached, Egypt’s weakness and Sudan’s support of the dam indicates that a deal could become a reality provided that Cairo’s concerns are mollified. A more thorough examination of the dam's impact could go a long way to addressing these concerns paving the way for an agreement which would increase energy production and agricultural output while reducing political instability between the countries (Egypt’s domestic situation is an entirely different story).

Due to domestic instability Egypt has neither the strength to enforce its will on the Nile nor the resources to go to war, especially as most of its co-riparian countries have common hydropolitical grievances which could unite them. The Republic of Sudan is the only other country whose water rights Cairo formally recognizes. This has historically meant that Egypt and Sudan's interests usually aligned, however, in a recent about-face Khartoum is now in support of the dam. This change in policy is not surprising as the independence of South Sudan has reduced oil revenues for the Republic of Sudan making the revitalization of its agricultural sector an economic imperative. The dam will facilitate this shift. An increase in arable land is essential as Khartoum and Beijing have recently reached an Agricultural Cooperation Agreement.

The Grand Ethiopian Renaissance Dam is scheduled to be completed by 2017. When operational it will facilitate the irrigation of about 500,000ha of new agricultural lands in Sudan. The dam will be based on the Benishangul-Gumuz region of North Eastern Ethiopia, which is about 25 miles from the Sudanese border. This proximity will provide cheap energy to Sudan further helping the country develop. The fact that Ethiopia is paying the dam's projected cost of 4.7 billion USD is also a benefit for Sudan. Naturally, the dam will help Ethiopia meet its own developmental needs. Certainly, the country will benefit from the hydropower and increased agricultural yield. Recent deals with Djibouti, such as the Djibouti-Ethiopia railway line, are also reducing the land locked status that the independence of Eritrea has imposed on Ethiopia. This will help reduce the cost of Ethiopian exports.

Cairo now finds itself in a position where negotiating is preferable to aggression. Khartoum has an affordable way to reorient its economy. And Addis Ababa is in a position to attract investment and build up its economy. All of these changes reflect the regional power shift. Ideally, an increase in agricultural yields will allow the region to feed its growing population while exporting the surplus. That said, the terms and conditions of such deals should be monitored closely as the ideal and the actual do not always overlap. Overly exploitative deals could reduce the stability that an agreement on the dam could bring.

　

The Malagasy Election and its Potential Impact on Land Deals in Subsaharan Africa

Madagascar goes to the polls today for the first time since the coup of 2009. Though there were multiple reasons for Andry Rajoelina’s overthrow of the government of Marc Ravalomanana it must be noted that Ravalomanana’s plan to lease approximately half of Madagascar’s arable land to Daewoo Logistics for 99 years served as a major rallying point for Rajoelina’s supporters. In the aftermath of the coup foreign aid, which provided approximately 40% of Madagascar’s 2008 budget, plummeted while malnutrition, sex tourism and deforestation increased. Legitimate tourism, an important component of the Malagasy economy, also fell as did school enrollments. Clearly, the coup did a great deal of damage to Madagascar.

Given the state of the Malagasy economy it is not surprising that economic recovery is central to the platforms of the two main contenders Hery Martial Rakotoarimanana Rajaonarimampianina and Richard Jean-Louis Robinson. If economic recovery is to occur foreign investment is going to have to increase. As a result of the Daewoo deal, potential investors will presumably be paying close attention to land tenure in Madagascar. For this reason potential agricultural and mining deals should be monitored closely as their completion could indicate that some of the concerns about "Land Grabs" in Africa have been addressed. Companies are unlikely to make significant investments in Madagascar if they feel that a repeat of 2009 will occur. To ensure stability it is not impossible that greater transparency could play a role in future land negotiations. Commitments to ensuring the food security and access to potable water of the local populations could also be components of future agreements. I am not saying that a perfect model for land deals will result. I am merely stating that future investment in Madagascar will likely indicate that conditions have improved to the point that businesses do not fear losing profitability due to delays, sabotage or forced withdrawal. The terms of the sale or lease of land and the feedback of the local population will be key indicators as to how stable agricultural and mining investments will be in the future.

The United Nations defines Land Tenure as "…the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land." It is important to note that "customarily defined" indicates that land rights that are not legally codified are still recognized as valid. This needs to be taken into account when looking at property rights in many emerging markets, as a lack of a written deed does not necessarily mean that a group of people does not have a right to the land in question. For this reason it is not impossible that a company could buy or lease land, invest heavily in it, and at some point down the line find that they have no legal right to be there. This is essential like receiving stolen property without knowing that it is stolen. On one hand the recipient might not have done anything wrong. On the other they will likely have to return the property. Another important factor to note is that many developing countries do not have adequate dispute resolution mechanisms thus people who feel that their land is under threat are more likely to take the law into their own hands. This breeds distrust and ultimately means that deals, which in theory could be mutually beneficial, will not become a reality.

Madagascar and the Daweoo Deal is an important example of what can go wrong for countries and businesses when deals are not arranged appropriately. The reality is that Antananarivo needs investors and that Madagascar does have resources that could attract them. Finding a way to balance the needs of the Malagasy people with the expectation of investors is not impossible. Given the events of 2009 such a balance could be an essential component of future land deals within the country. After all, every party has incentives to come to a mutually beneficial agreement. If they are successful such a model could be exported. The reality is that buying and leasing land in Subsaharan Africa is increasingly becoming a means for developed countries to ensure food security. This trend is likely to continue. In theory it could be an important source of revenue for developing countries which, provided their own agricultural needs are met, could promote social stability. In practice this trend has often had the opposite effect. Any precedents that could improve this process should be watched closely. Madagascar is one place where a positive precedent could occur.