Ethiopia’s Controversial Grand Dam Project and Egypt’s Predicament

News Politics

“The only matter that could take Egypt to war again is water,” Anwar Sadat, Egypt’s second President

Nile River
Egypt must face up to the challenge set by Ethiopia if it is to be considered as influential in the region or the situation does not look pretty well for Egypt

By Stratfor,

At the height of the Arab Spring in March 2011 when Egypt was consumed by domestic unrest, Ethiopia announced it would soon begin construction on a hydroelectric dam along the Blue Nile River, one of two main tributaries for the Nile.

The Grand Ethiopian Renaissance Dam, which will be one of the ten largest dams in the world at its estimated completion in 2017, will likely interrupt or limit the flow of water to Egypt and Sudan for several years, and could permanently alter the amount of water those countries are able to draw from the river. 

For decades, Cairo has held sole authority over Nile water allocation under a colonial-era agreement signed in 1959 by Sudan, Egypt and the United Kingdom. Cairo has accordingly taken issue with Addis Ababa’s dam and has launched a diplomatic and economic offensive to win the other Nile River Basin countries to its side in an effort to halt the project. Questions remain about Ethiopia’s ability to finance the dam’s construction, but given Egypt’s dependence on water from the Nile, Cairo will use any tool at its disposal to stop the project, including military force if necessary.


Ethiopia and Egypt have long been strategic competitors based on historical and religious factors, but more recently stemming largely from Egypt’s control of the Nile waters. Ethiopia contends that it was not a signatory to the 1959 treaty that gave Egypt authority over the river’s water in perpetuity, control that Addis Ababa finds particularly galling given that about 85 percent of the Nile’s water is generated in the Ethiopian highlands.

Recent years have seen efforts intended to weaken Egyptian control over the river’s resources. In order to resolve disputes over Nile water and address other development concerns, all the countries along the Nile set up a forum called the Nile Basin Initiative in 1999. But in 2010, five upstream countries — Ethiopia, Kenya, Uganda, Rwanda and Tanzania — used the forum to draft and sign an agreement that would take the 90 percent of Nile water used by Egypt and Sudan and distribute it more equitably among river states. The agreement would also revoke the requirement for Egypt give permission for any change in Nile water use, including dam construction. Burundi later signed the agreement in 2011 and the Democratic Republic of the Congo is expected to sign soon.


For obvious reasons, Egypt and Sudan strongly opposed the measure. In the past, Egypt had shut down any serious moves to adjust the terms of the 1959 deal, but Egypt’s focus on its numerous domestic concerns after former President Hosni Mubarak’s ouster left Cairo ill-prepared to deal with the situation in 2011. Addis Ababa chose that time to announce and begin work on the controversial dam project. Also, unlike the last seven dams it has constructed, Ethiopia started construction on the Grand Ethiopian Renaissance Dam without securing all the necessary funding in advance, suggesting the project may have been launched on an accelerated time frame to take advantage of Cairo’s situation.

Construction has already begun on the dam, which will be capable of generating 6,000 megawatts of electricity. The Hoover Dam in the United States, by comparison, has a capacity of 2,080 megawatts. The project is far larger than any other dam Ethiopia has constructed and will have a corresponding impact on Nile water flow. When Ethiopia began building the much smaller 580-megawatt Tana Beles hydroelectric dam in 2010 that diverted a small amount of water for irrigation, Egypt reacted furiously and ordered its military to “prepare for any eventuality.” Ethiopia downplayed Cairo’s threat as a “psychological game.”

At this point, it is not clear how the dam will be financed. The estimated cost of $5 billion is roughly equivalent to the country’s entire annual budget. Addis Ababa had been in talks with China to secure a loan, but more recently Beijing has tried to distance itself from the controversial project. If Ethiopia is unable to acquire foreign investment, it may be forced to raise all the funds for the project through selling bonds to the Ethiopian public, which the government has already begun.

Ethiopia needs the dam for its own domestic agriculture and its increasing electricity needs. Currently, Ethiopia only uses about 1 percent of the Nile’s water since it has access to other rivers for a water supply. The dam will also advance other strategic interests for Ethiopia; the added electricity-generation capacity will allow it to export energy to its chronically electricity-strapped neighbors Kenya, Sudan, South Sudan and Djibouti, which share its power transmission grid. More broadly, the dam also gives Ethiopia a strategic tool to counteract Egypt’s domination of the Nile River Basin.


Egypt has asked Ethiopia to consider delaying construction and for a comprehensive study on the impact of the dam, appeals that have been rejected thus far. For Cairo, continued access to its expected supply of Nile water is a paramount concern. About 99 percent of the Egyptian population lives in the Nile Valley and practically all the country’s fresh water supply and irrigation water comes from the Nile. In recent years, the flow of water has been reduced due to environmental degradation. By 2050, Egypt’s water demand is expected to double, making the water it has become accustomed to controlling that much more important.

Cairo fears that once the dam is completed in 2017, it will take two to three years, depending on rainfall, to fill up the 67 billion cubic meter reservoir, which could reduce the amount of water that flows into Egypt by 25 percent. After the reservoir fills up, there is no guarantee that Egypt will maintain its present share of the water, and Ethiopia is already planning multiple agriculture projects on Nile tributary rivers flowing from Ethiopian highlands. Speeding up the diversion of water would put added pressure on Cairo, which Addis Ababa knows and could take into account when deciding how much to moderate water use.

Consequently, Egypt has transferred responsibility for the Nile issue from its Irrigation and Natural Resources Ministry to the Interior Ministry, largely because of the threat it believes the Grand Ethiopian Renaissance Dam poses to national security.


Egypt’s most viable option to halt the dam’s construction in the near term is diplomatic pressure. Any change to the Nile’s water flow not approved by Egypt, which the dam most certainly represents, is technically illegal under the terms of the 1959 agreement, since the new deal will not be a legally binding international agreement until each signatory country’s parliament approves it. Egypt has used that fact as an opportunity to put pressure on national legislatures to delay or prevent ratification.

Cairo has dispatched envoys to the Nile Basin countries and offered loan assistance and access to Egypt’s Commercial International Bank and the National Bank of Egypt as a way to garner diplomatic support. For example, it has offered Uganda, Sudan and South Sudan a generous loan package.

If diplomatic efforts fail, Egypt’s next most likely approach is to support proxy militant groups against Ethiopia. In the 1970s and 1980s, Egypt and later Sudan hosted and supported several militant groups hostile to Addis Ababa, including the Eritrean People’s Liberation Front and Tigrayan People’s Liberation Front. Eritrea also seceded from Ethiopia (got its independence) in 1994 1993 (partly) with Egyptian backing. Egypt could again consider supporting such armed groups, at least a dozen of which remain active, to harass the authoritarian and ethnically divided Ethiopian government.

Even direct military action by Egypt cannot be ruled out, though this is the least likely approach and one Cairo would undertake only if the dam was completed and significantly interrupted the water flow. Such a course will also largely depend on Egypt’s new leadership and how assertively it wants to press for Egypt’s rights to the water, but whatever its political inclination, a large-scale reduction in water from the Nile would be intolerable for any Egyptian government. As a result, the dam will be an important tool for Ethiopia in any negotiations.

Northern Section of the Nile
Satellite image of the Northern section of the Nile