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2006-10-31 14:12:00
Embassy Addis Ababa
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DE RUEHDS #2901/01 3041412
P 311412Z OCT 06
						S E C R E T SECTION 01 OF 05 ADDIS ABABA 002901 




E.O. 12958: DECL: 10/24/2016

Classified By: Charge Vicki Huddleston for reasons 1.4 (b) and (d).





E.O. 12958: DECL: 10/24/2016

Classified By: Charge Vicki Huddleston for reasons 1.4 (b) and (d).

1. (C) SUMMARY: Ethiopia currently finds itself engaged in
simultaneous struggles for democratization and security amid
extremely difficult circumstances. Eritrea is providing
material support to both the GOE's internal opponents and its
newest external nemesis, the Council of Islamic Courts (CIC)
in Mogadishu. The success of the CIC in southern Somalia has
provided a staging ground both for Somali jihadists whose
declared aim is prying loose Ethiopia's Somali Region, with
support from Ogaden National Liberation Front (ONLF), as well
as for the Oromo Liberation Front (OLF), an internal
insurgency with wide support in Ethiopia's largest region.
As the GOE has turned some of its attention and military
force to confront this new threat from the south, the
Eritrean armed forces recently occupied portions of the
Temporary Security Zone on Ethiopia's northern border. In
the midst of these security challenges, the GOE must continue
to make progress in opening political space for the
opposition or face increased risks of new internal unrest as
well as the possibility of reductions in badly-needed support
from international donors. For now, the GOE remains firmly
in control and has recently assured USG visitors that it can
manage multiple external threats and still keep the
democratization process on track.

2. (C) In this message, post's country team seeks to analyze
in a holistic way the multiple political developments
occurring simultaneously both in and around Ethiopia, as well
as offer some thoughts on how the USG can interpret and
respond to them. Our basic analysis is that Ethiopia, our
principal strategic partner in the Horn of Africa and the
second most populous nation on the continent, is under severe
pressure and will need steady engagement from the USG to
successfully cope with external threats while accompl
ishing a
transition to a genuine democratic order -- one that will
ultimately promote real stability. Without sustained U.S.
political support mixed with prodding on human rights and
democracy, Ethiopia runs the risk of descending into
Sudan-like chaos and civil war over the next several years.
End Summary.

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3. (C) Since overthrowing the oppressive Derg regime fifteen
years ago, the Ethiopian People's Revolutionary Democracy
Front (EPRDF) has demonstrated its ability to maintain
stability and relative security in an ethnically diverse
nation of over 75 million inhabitants. The vanguard Tigrayan
People's Liberation Front (TPFL), hamstrung by its origins as
a guerrilla organization steeped in Marxism and dominated by
an ethnic minority constituting roughly seven percent of
Ethiopia's population, was nevertheless able to consolidate
its hold on power by building a network of alliances (the
EPRDF) with groups who claimed to represent Ethiopia's major
ethnic groups. The EPRDF promised respect for local autonomy
and an end to the long-standing "domination" of Amharas under
both the Derg and several emperors stretching back into the
nineteenth century. Along with the radical new approach of
"ethnic federalism", the EPRDF also proclaimed its intention
to both democratize Ethiopia's authoritarian political
culture and lead the country's emergence from chronic famine
and abject poverty.

4. (C) The EPRDF survived a bloody conflict with Eritrea in
1998-2000, a nasty internal battle within the party in 2001
and most recently a massive wave of popular protest against
irregularities in the May 2005 elections. It has also
delivered to some extent on its promise of economic
development, building a generally positive relationship with
donors and making considerable progress in education and
health care, particularly in rural areas. Despite these
characteristics of a strong state, however, the EPRDF
continues to suffer from several fundamental weaknesses.
Chief among these is the party leadership's insistence on
absolute control of all decision-making and reluctance to
work with, or in some cases even tolerate the existence of,
independent-minded political organizations. Local observers
argue that this political inflexibility drove both the OLF
and the ONLF from the EPRDF fold in the early days following
the fall of the Derg, forcing the EPRDF to rely since then on

ADDIS ABAB 00002901 002 OF 005

hand-picked Oromo and Somali allies who do not enjoy
extensive popular support in the regions they are supposed to
represent. The EPRDF has also developed organizations to
perform a similar role in the Amhara and Southern Nations and
Nationalities Region (SNNPR). This weak scheme of
representation has in turn forced the EPRDF to resort in some
cases to intimidation, and allegedly to manipulation of
government benefits like subsidized fertilizer, in order to
maintain control in large swathes of the country. The
marginalization of non-Tigrayans in the armed forces has also
accentuated the sense of disenfranchisement of some ethnic
groups, particularly Oromos. In the case of the Somali
region, the EPRDF's inability to address the needs of, or win
over, the local population is simply a continuation of the
Ethiopian state's centuries-old concentration on the

5. (C) The EPRDF's most immediate internal vulnerability
probably remains popular frustration, especially in Addis
Ababa and other urban areas, over the disputed 2005 election
and the subsequent imprisonment of senior leaders from the
largest, Amhara-dominated opposition movement, the Coalition
for Unity and Democracy (CUD). While it appears unlikely
that massive, violent street riots like those in November
2005 will occur again soon, allegations of election fraud and
the harsh crackdown on suspected CUD supporters last November
further alienated a significant portion of Ethiopia's
population. Recent GOE efforts to discuss reforms with
opposition parties, including the majority of CUD MPs that
eventually chose to enter Parliament, have helped restore a
sense of normalcy and some progress on democratization,
though many Ethiopians' political sentiments remain focused
on imprisoned CUD leaders. PM Meles has made clear, public
commitments to deepen Ethiopian democracy and has said that
Ethiopia's survival depends upon it. The problem for the
EPRDF is, of course, that more independent institutions and
free elections may well lead in the medium term to a
fundamental political re-ordering in Ethiopia. Lidetu
Ayalew, a prominent opposition leader, told the Charge
recently that for democratic change to occur, Ethiopia's
political system must ultimately be made safe for the EPRDF
to survive in the minority. This is not currently the case.


6. (C) The EPRDF emerged bloodied but victorious from a
military attack initiated by Eritrea, a new nation whose
independence the EPRDF itself facilitated in 1993. Eritrea
was unsuccessful in its attempt to seize territory militarily
from Ethiopia in 1998, and has subsequently been unable to
claim the territorial "victories" it won through the
subsequent ruling of the Ethio-Eritrean Border Commission
(EEBC). Local analysts, including both those friendly to the
EPRDF as well as its opponents, have long argued that
Eritrean President Isaias' ultimate goal is not the recovery
of territory administered by Eritrea under colonial
governments. Rather, Isaias is determined to cut Ethiopian
Prime Minister Meles Zenawi, his erstwhile ally in
overthrowing the Derg, down to size and enhance Eritrea's
relative influence in the region in the process. The GOE
maintains that, having understood he will not succeed against
Ethiopia in a frontal assault, Isaias has over the last year
developed and refined a strategy to topple the EPRDF through
a combination of supporting internal opponents and creating a
"second front" in Somalia.

7. (C) PM Meles commented recently on these efforts in an
address to Parliament, arguing that Eritrean support has
brought together many enemies of the EPRDF whose agendas are
mutually contradictory. He pointed out that some of those
enemies, including some elements of the CUD, actually opposed
Eritrea's continued existence as a state, but are still
willing to accept financial and other material support from
Isaias. Meles was undoubtedly referring to the Alliance for
Freedom and Democracy (AFD), a coalition that for the first
time includes both the OLF and Amhara opponents of the
government, including some supporters of the CUD and the
small Amhara insurgency know as the Ethiopian People's
Patriotic Front (EPPF). Two of the central tenets of the CUD
campaign platform in 2005 were to oppose ethnic federalism
and, to some degree, the independence of Eritrea. The OLF

ADDIS ABAB 00002901 003 OF 005

and ONLF, for their part, have long advocated referendums on
the Oromiya and Somali regions' continued links to the
Ethiopian state. These opposition movements have
nevertheless joined together in the AFD, which is principally
active in the Diaspora. The AFD has allegedly been
encouraged behind the scenes by Eritrean officials who have
also offered financial support to the effort. While the
AFD's stated agenda is an all-inclusive conference (including
the EPRDF) to discuss Ethiopia's future, the fact remains
that several of its members are simultaneously conducting
"armed struggle" against the GOE. The GOE has not
surprisingly rejected the AFD proposal.


8. (S/NF) UN reports and clandestine reporting confirm that
Eritrea, along with other states, have been supplying arms,
training and financial support to the CIC in southern
Somalia. Since Eritrea, a largely Christian state, has
little motivation to support Islamic fundamentalism per se,
its principal reason for backing CIC radicals is presumably
to weaken rival Ethiopia. CIC leader Sheik Hassan Dahir
Aweys fought against the GOE as a member of Al-Itihad
Al-Islamiya (AIAI) in the 1990's and has long advocated the
concept of "Greater Somalia" that would join Ethiopia's
extensive Somali region with Somalia and parts of Kenya as
well. In his recent rise to prominence, Aweys had used
strident anti-Ethiopian rhetoric to rally support inside
Somalia, and has also deepened cooperation with fighters from
the OLF and ONLF. The CIC's call for jihad against what many
in the Arab League consider a "Christian" state, poses even
broader risks. Extremists consider Ethiopia an "apostate"
state that was once Islamic. Muslims today make up at least
45 percent of the country's population and preserving the
delicate balance between Orthodox Christians and Muslims is
critical to Ethiopia's success as a developing state.

9. (C) The CIC's success in establishing control in Mogadishu
and southern Somalia fundamentally changes the strategic
equation for Ethiopia. A radical, hostile government in
Mogadishu can, at a minimum, provide material support to the
ONLF insurgency in the Somali region and the OLF insurgency
in Oromiya. Some OLF and ONLF fighters who trained with the
CIC in Somalia have reportedly already filtered back into
Ethiopia. As many as 1,000 OLF/ONLF insurgents are fighting
alongside the CIC in the expectation that they will move into
Ethiopia if the CIC takes over Southern Somalia. An Islamist
government in Somalia will likely allow AIAI safe haven and
do nothing to stop terrorist attacks against foreign and
domestic targets in Ethiopia. The CIC's Aweys previously led
AIAI attacks in Ethiopia. allegedly did while fighting with
AIAI. This threat would worsen still further if the CIC were
to extend its control into Puntland and Somaliland,
establishing a long arc of hostile, sparsely populated
borderlands that the GOE would be hard-pressed to defend.
Faced with real threats to its national security, the GOE is
pursuing a varied strategy to counter the influence of the
CIC. Ethiopia will respond militarily if the TFG is attacked
in Baidoa, since if the TFG falls the CIC will become the de
facto government of Somalia.

10. (C) The GOE does not want to attack the CIC because it
fears negative international opinion could cause a reduction
in foreign assistance. Many analysts have focused on the
potential for an Ethiopian attack to galvanize support behind
the CIC in Somalia and create heavier resistance. Another
risk is that intensified ethnic divisions and a general
crisis of morale within the Ethiopian National Defense Forces
(ENDF) might have reduced the readiness of the ENDF to
confront a motivated enemy like the CIC. General
disaffection with the ruling party may reduce the willingness
of some soldiers to fight, and might interfere with the usual
tendency of Ethiopian civilians to unite against a common
external enemy. In fact, radical elements of the CUD are
believed to be maintaining a clandestine network of "cells"
in Addis and elsewhere who might seize on the GOE's perceived
over-extension. Finally, Eritrea's recent move to send
several mechanized military units into the UN-patrolled
Temporary Security Zone (TSZ) between the two countries was a
stark reminder that President Isaias may be planning to
strike again in the North if Ethiopia becomes bogged down in

ADDIS ABAB 00002901 004 OF 005


11. (C) The bottom line for the GOE, however, is that it
cannot allow the TFG to fall to the CIC. If Baidoa is
attacked, the GOE will defend it. The GOE's hope is that the
international community will rally more forcefully behind the
TFG before so that Ethiopia can legitimately defend it from
being ousted by the Islamic Courts. If the UN partially
lifts the arms embargo on the TFG and authorizes IGASOM
deployment, this may discourage the CIC from attacking the
TFG in Baidoa, thereby keeping Ethiopa out of direct
confrontation. In addition, the presence of IGASOM would
give the TFG credibility at the Khartoum talks. If the UN
lifts the embargo, the TFG can seek to protect itself and
strengthen the anti-CIC coalition, including the
international community, rather than leaving Ethiopia as the
sole "enemy" (in the CIC's rhetoric.)

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12. (C) Prime Minister Meles recently wrote in a widely-read
essay for a conference that the GOE is a "developmental
state" with a strong commitment to addressing Ethiopia's
chronic poverty and food insecurity. Meles' treatise
referred admiringly to the track record of ruling parties in
East Asia that remained in power for several decades, long
enough (he argued) to maintain a steady policy focus. In
fact, most donors including the World Bank believe that the
GOE has been exceptionally effective at improving access to
health and education. The GOE has also revised its overall
development strategy from one focused almost exclusively on
improving the lot of subsistence farmers to a broader one
based on more efficient markets and encouraging urban growth
corridors to absorb excess labor from the countryside.
Ethiopia's roughly seven percent economic growth over the
last three years has been impressive, fueled by massive
public investment, increasing exports and good rains.

13. (C) The GOE reacted with muted defiance when key donors
-- including the World Bank, EU and UK -- suspended foreign
aid flows in reaction to the November crackdown on
demonstrators and opposition leaders. PM Meles calmly told
the press that donors could spend their money however they
saw fit. At the same time, however, the GOE remains heavily
dependent on foreign assistance flows. The roughly $2
billion in foreign assistance Ethiopia receives annually
plays a key role in easing pressure on Ethiopia's balance of
payments position, compensating for a large trade deficit.
The GOE maintains foreign currency reserves equivalent to
less than three months of imports, and the temporary
suspension of Direct Budget Support (DBS) from several major
donors in late 2005 forced the National Bank of Ethiopia to
ration hard currency for the first part of 2006, until aid
flows from some major donors resumed. The GOE scaled back
development projects and spending on some infrastructure
improvements in response to falling assistance flows, and
also increased borrowing from state owned banks during this
period, probably increasing inflationary pressures somewhat
in the process. If donors again cut funding in response to
future political conflict in Ethiopia, whether a war or
another crackdown on the opposition, the country would again
be vulnerable to macroeconomic instability.

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14. (C) As noted above, Ethiopia faces multiple pressures,
including military threats on nearly all sides,
ethnically-based domestic insurgencies and demands for a more
representative political system from Ethiopians themselves.
With apologies to Embassy Asmara, Eritrean President Isaias'
ultimate objective appears to be to provoke a break-up of
Ethiopia in order to increase his own power and influence in
the region, rather than addressing real concerns about
particular points along the border. Despite Eritrea's small
size and limited resources, Isaias appears to be pushing all
the right buttons both within Ethiopia and beyond. He is
exploiting real weaknesses in the EPRDF's structure and mode
of governance, of course, and the GOE is likely to remain
vulnerable until those weaknesses are addressed. At the same

ADDIS ABAB 00002901 005 OF 005

time, no political force currently in the opposition appears
to offer a coherent, reliable alternative to govern
Ethiopia's diverse population and far-flung territory,
particularly given a very dangerous neighborhood. While not
sufficiently inclusive or representative, the EPRDF has
demonstrated that it has the toughness, internal discipline
and organizational effectiveness to maintain order in this
challenging environment, at least for the time being.

15. (C) Post believes that steady international engagement
will be necessary to keep situation in the largest nation in
the Horn of Africa from deteriorating over the next several
years. The first order of business will be to recognize
Ethiopia's legitimate security concerns with respect to
Somalia and Eritrea, both of which appear to be pursuing
aggressive agendas that threaten Ethiopia's territorial
integrity and political stability. This may require some new
thinking with respect to the Ethio-Eritrean border dispute,
as well as an increased international role in Somalia to
lessen Ethiopia's burden in confronting extremists. It will
also be critical to for the international c community
increase assistance in infrastructure -- and improve
governance -- in previously neglected and unstable areas like
the Somali, Southern Nations and Afar regions, building the
capacity of the Ethiopia state along the way.

16. (C) The second major challenge will be to maintain a
robust but supportive dialogue with the EPRDF concerning the
need for continued progress on democratization. Upcoming
inter-party talks on the reforms to the National Electoral
Board and the draft media law will be early tests of the
GOE's commitment in this area, but the next major milestone
will be local elections (septel) tentatively scheduled for
April 2007. Right now the climate is not propitious for
elections, given continuing restrictions on opposition
activity and the lack of public confidence in the electoral
process. Donors, and especially the USG, should continue
emphasizing the importance of increasing space for peaceful
political competition in order to reduce incentives for
joining violent political movements. Opposition movements,
on the other hand, must be convinced to embrace the
democratic political process unambiguously, and to avoid
associating with Eritrea and other actors who seek the
overthrow of the EPRDF by non-democratic means.

17. (C) Despite the GOE's expressed willingness to forego
assistance before yielding to pressure, donors may find that
they can exercise a fair amount of influence over EPRDF
behavior if they focus on broad trends and key junctures in
the democratization process, linking them to increases or
decreases in development resources, and avoid over-reacting
to single episodes of disturbing behavior. Donors must also
allow for the difficult security context in which
democratization must take place. The existing governance
matrix developed jointly between donors and the GOE provides
a road-map -- albeit somewhat cumbersome -- for such an
approach. In addition to the flow of aid resources, the GOE
no doubt values the political support that donors provide
indirectly by remaining engaged.