Ethiopia’s historical deal with Somaliland granting it commercial and military access to the port of Berbera is part of Addis Ababa’s ambition to reestablish a green-water navy, but the deal’s implementation will likely reshape the politics of the Horn of Africa and pave the way for protracted tensions with neighboring Somalia. On Jan. 1, Ethiopian Prime Minister Abiy Ahmed signed a Memorandum of Understanding (MoU) with Somaliland President Muse Bihi Abdi that set the basis for Ethiopia to recognize the breakaway region’s independence in exchange for Somaliland granting landlocked Ethiopia military and commercial access to the Gulf of Aden port of Berbera. Somalia’s government deemed the deal an act of ”aggression” and accused Ethiopia of violating its sovereignty and territorial integrity. Egypt, meanwhile, expressed support for Somalia’s territorial integrity amid sustained tensions between Cairo and Addis Ababa over the operation of the Grand Ethiopian Renaissance Dam on the Blue Nile. Similarly, the European Union criticized the agreement and stressed that preserving Somalia’s territorial integrity was key to avoid further destabilizing the Horn of Africa. The United States also expressed concerns about the deal’s implications for regional stability, but refused to call for it to be rescinded, instead urging Ethiopia and Somalia to engage in diplomatic dialogue. However, the regional trade bloc Intergovernmental Authority on Development (IGAD) did not overtly condemn the deal, highlighting Ethiopia’s diplomatic sway in the region. 

• While Somaliland has de facto been independent since declaring independence from Somalia in 1991, Ethiopia would be the first U.N.-recognized country to recognize Somaliland. The Ethiopian government has stressed that the deal committed Ethiopia to ”make an in-depth assessment towards taking a position regarding the efforts of Somaliland to gain recognition,” even though the Somaliland government stated that Ethiopia would ”formally recognize the Republic of Somaliland” as a result of the agreement. 
• The Ethiopian government also stated that the MoU will enable the country to secure a ”permanent and reliable naval base and commercial maritime services in the Gulf of Aden through a lease agreement,” while Somaliland President Abdi noted that the deal involved Somaliland granting ”20 [kilometers of] sea access for the Ethiopian Naval forces, leased for a period of 50 years.” Nonetheless, details on the nature of the leasing agreement and Ethiopia’s ability to access the port of Berbera remain scant. 

While the deal is unlikely to trigger an armed conflict between Ethiopia and Somalia in the short-to-medium term, it risks upending counterterrorism cooperation between the two countries and paving the way for protracted diplomatic tensions. While Ethiopia and Somalia fought a war in 1977-1978 over the control of Ethiopia’s Somali-inhabited Ogaden region, bilateral relations between the two countries have markedly improved in recent decades. Ethiopia and Somalia have strengthened their counterterrorism cooperation, with Ethiopian troops being directly involved in the fight against al Shabab in Somalia. Since the 1990s, Ethiopia has sought to buttress its fragile neighbor’s territorial integrity rather than exploit Somalia’s internal fractures. Addis Ababa’s move to formally recognize Somaliland as part of its new MoU with the breakaway region would thus mark a major shift in Ethiopian policy and highlight the importance Abiy gives to securing direct maritime access. But while the deal has heightened bilateral tensions, a major armed conflict between Addis Ababa and Mogadishu appears unlikely for the foreseeable future given the Somali Armed Forces’ continued difficulties in the fight against al Shabab. Still, domestic pressure within Somalia could prompt Somali President Hassan Sheikh Hamadu to suspend joint counterterrorism operations with Ethiopia, although this decision could also be taken by Abiy in retaliation for legal action from Mogadishu. The suspension of counterterrorism cooperation with the Ethiopian military would risk hindering Somalia’s counter-insurgency campaigns against al Shabab in southern and central Somalia, which could in turn enable the jihadist group to consolidate its presence in these areas. Furthermore, Somalia’s diplomatic campaign to heighten opposition to the Ethiopia-Somaliland deal will likely be successful with Egypt and Eritrea, with both countries set to increase pressure on Addis Ababa to respect Somalia’s territorial integrity. If tensions over the MoU escalate, both Somalia and Eritrea could provide covert support to some of Ethiopia’s rebel groups as a means of pressuring Abiy into accepting the status quo ante, although this appears unlikely to occur so long as Somalia’s legal actions are ongoing.

• On Jan. 2, a day after the MoU was announced, Somalia recalled its ambassador from Addis Ababa for consultations, suggesting that Somalia is gearing up for a shift in its relations with Ethiopia. 

For land-locked Ethiopia, this MoU with Somaliland is an attempt to diversify its maritime access, a key Ethiopian policy objective since neighboring Eritrea gained independence over 30 years ago. While Ethiopia enjoyed direct access to the Red Sea throughout the Cold War, the latter was lost following the independence of Eritrea in 1991. The rapid deterioration in bilateral relations with Eritrea following its independence resulted in the suspension of trade between the two countries, leaving Ethiopian imports and exports with little alternative but to transit through Djibouti. In turn, Ethiopia has become heavily dependent on Djibouti to access international markets, which has become a source of frustration for Addis Ababa that successive Ethiopian governments have failed to alleviate. Diversifying Ethiopia’s access to the sea has been one of Abiy’s top priorities since taking office in 2018, even though the issue took a back seat during the 2020-2022 conflict in Ethiopia’s northern Tigray region. As the peace deal in Tigray continues to hold, Abiy has once again turned his attention to the sea, stressing in October 2023 that securing maritime access was an ”existential issue” for Ethiopia’s future. But Ethiopia’s options to diversify its maritime access were limited, with Sudan engulfed in a civil war, Somalia facing a decades-long insurgency from jihadist group al Shabab, and relations with Eritrea facing continued difficulties despite a 2018 peace deal. These challenges, in turn, increased Ethiopia’s incentives to strike a deal with unrecognized yet relatively stable Somaliland. The MoU also grants Ethiopia fresh bargaining power vis-a-vis Djibouti to lower the annual port fees that it pays to its small yet strategically located neighbor. 

• Around 95% of Ethiopia’s export-import trade currently transits through the port of Djibouti, for which Addis Ababa has on average paid over $1 billion in annual port fees.
• As part of efforts to diversify Ethiopia’s sea access, Kenya agreed to grant the Ethiopian government a lease at the port of Lamu for logistic purposes in May 2018, and the two countries revived plans to build a 3,000-kilometer railway line connecting Lamu to Addis Ababa in 2023. 

The agreement with Somaliland is also part of Abiy’s push to reestablish a naval force capable of securing the waters off the Horn of Africa, but this ambition will face a range of legal, financial and infrastructural challenges. Upon his appointment as prime minister in 2018, Abiy rapidly made clear his ambition to not only diversify the country’s sea access, but also reestablish an Ethiopian navy capable of securing the waters off the Horn of Africa (or green-water navy), which ceased to exist following Eritrea’s independence in 1991. The agreement with Somaliland is a major step in this direction, and the deal’s operationalization would represent a major political success for Abiy that will likely secure his reelection in Ethiopia’s next general election scheduled in 2025 given many Ethiopians’ aspiration to regain direct maritime access. However, this ambition still faces a range of challenges, starting with the fact that the new MoU with Somaliland is not legally binding. To consolidate its access to the Gulf of Aden, Ethiopia will need to strike a future, legally binding treaty with Somaliland, which will involve finalizing the leasing agreement, determining the ease with which Ethiopian military units will be able to access the port of Berbera, and formally recognizing Somaliland’s independence. As such, the deal could still fall through — with negotiations over financial commitments likely to be complicated by Ethiopia’s recent default on its external debt, although reports that Ethiopia will grant Somaliland an undisclosed stake in state-owned Ethiopian Airlines suggest Abiy could overcome these challenges. But even if the deal with Somaliland is finalized, Ethiopia’s difficult fiscal position will complicate efforts to build the necessary port infrastructure to accommodate a new Ethiopian Navy. Further delaying Addis Ababa’s ambition to reestablish a green-water navy will be its need to train sailors and officers, as well as procure maritime vessels. As such, while Ethiopia may be able to set up a token navy comprising a handful of patrol ships over the next several years, rebuilding a full-fledged naval force capable of improving maritime security around the Bab el-Mandeb Strait will likely be a decades-long process. 

• In March 2018, Abiy signed a defense agreement with French President Emmanuel Macron stipulating that France would support Ethiopia in developing the country’s navy. Abiy symbolically reestablished the Ethiopian Navy in 2019. 

• Ethiopia announced its acquisition of a 19% stake in the port of Berbera in 2018, which it ultimately lost over its failure to fulfill the conditions required to complete the ownership deal — showcasing the possibility of the Ethiopia-Somaliland MoU falling through, 

• On Jan. 7, Somalia passed a law nullifying the Ethiopia-Somaliland MoU. This could discourage investments in Ethiopia’s port project by exposing companies to lawsuits from the Somali government, further complicating Ethiopia’s efforts to develop the necessary port infrastructure.