Egypt, Ethiopia and the division of the Nile

The Nile river is the world’s longest, flowing through north-eastern Africa out to the Mediterranean Sea. The Nile consists of two major tributaries: the White Nile originates at Lake Victoria, between Tanzania, Kenya and Uganda; and the Blue Nile, the largest tributary, begins in the Ethiopian Highlands. The two tributaries meet in Sudan to form the main waterway which flows north through Egypt before it spills out to sea. In 2011, Ethiopia announced its plans to dam the Blue Nile, resulting in conflict with Egypt and many years of ongoing discussions and negotiations.

Professor Daniel Abebe, Vice Provost at the University of Chicago’s Law School, has examined this conflict in depth. While attending a symposium some years ago, he was inspired to begin thinking about the economic foundations of international law and how economics can play a critical role in enabling international cooperation. He spoke about his findings at the Global Water Institute’s most recent water issues commentary seminar in August, where he  argued that the traditional doctrinal approach, based solely on an examination of international water law, treaties, and customary international law, was unlikely to result in a legal conclusion, and that an economics approach could hold the answer.

Prof Abebe says that his intuition told him from the outset that international water law would not be helpful in reaching a satisfactory conclusion for both Ethiopia and Egypt. The reasons for this were threefold. Firstly, both countries are highly dependent on the Nile’s water resources, with Ethiopia’s population increasing rapidly and 96% of Egypt’s renewable freshwater coming from the Nile. Secondly, the lower riparian state (Egypt) is much more powerful than upper riparian state (Ethiopia), and, finally, neither country has a record of complying with international water law. To compound this, there is no central enforcement mechanism – or ‘police’ of sorts—to enforce international water law.

Conflict was high when between 2010 and 2014, Egypt, Ethiopia and nine other countries created the Nile Basin Initiative. In essence, the agreement under this initiative said that the upper riparian states could use more of the Nile. Unsurprisingly, Egypt and Sudan rejected that idea immediately and threatened to blow up the dam because of the risk it would reduce the amount of water available to them.

From an international law perspective, the Convention on the Law of Non-navigational Uses of International Watercourses was concluded by the United Nations in 1997. It required 35 countries to sign to come into course, and only 34 countries have signed, with neither Egypt nor Ethiopia signatories. The convention allows for the equitable and reasonable utilisation of international water courses by the riparian states, and there is an obligation not to cause significant harm to other states sharing the watercourse. The issue with the Convention is that both countries could successfully argue that their positions are protected, and even once an international court makes a determination, there is no enforcement mechanism and it is not clear that either country would respect the decision.

Prof Abebe surmised that this was not a particularly fruitful way of looking at conflict resolution in this instance. It is not wrong, per se, but it also doesn’t give anything prescriptive. He has thought through possible scenarios that could maximise welfare for the two countries by using an economics approach, rather than a law approach.

Prof Abebe argues that the simple application of transaction costs economics could help resolve the conflict. This approach focuses on property rights and liability rules, suggesting that an example of a successful outcome would see Ethiopia building the dam and providing financial compensation to Egypt, then keeping any excess revenue for itself.

Prof Abebe says, “This would be the efficient or optimal level because it would leave both parties better off. International law does not leave us with any sort of normative or prescriptive claim, but this economics approach does.”

Currently, tensions remain high in Ethiopia and Egypt, and Sudan has aligned itself with Ethiopia. There has been regime change in all three countries since 2015, all populations have exploded and water dependency has increased. All three turned to negotiations and have signed a ‘declaration of intent’ to address some of the potential problems of the dam, including reduced water flows and dam failures.

After an international panel of experts produced a report saying that the proposed dam adhered to international design criteria and met acceptable dam practices, serious differences arose and another agreement was signed – the Declaration of Principles or ‘Nile Agreement’. The Nile Agreement incorporates both international law and economic principles and paves the way forward for all states within the basin.

The Agreement acknowledges that colonial agreements that favour the downstream riparian states are unsustainable, because they mean no one upstream could ever exploit the Nile. The Agreement also rules out the use of water for irrigation, and Ethiopia committed that there would be no change in annual flow following construction of the dam.

Further articles were also added ensuring equitable use, the prevention of significant harm, and giving downstream countries priority for the purchase of hydroelectric power.

International law does not leave us with any sort of normative or prescriptive claim, but this economics approach does.

Prof Daniel Abebe, Vice Provost, University of Chicago Law School

Prof Abebe says, “Through the Declaration of Principles, the states are memorialising a shift from the status quo—which is a property regime in which Egypt has the exclusive rights to the Nile—to one in which they recognise that Egypt has an entitlement, but Ethiopia needs to provide some sort of compensation.”

Prof Abebe suggests that this Agreement demonstrates that there is a place for economics in international water law, particularly when the states are dissimilar in power, they have an equal need for the water and no existing reputation for compliance to uphold.

The dam is set to be complete in 2022, and the big issue currently up for discussion is the reservoir filling time period. Egypt would like to see it filled over 15-20 years so that the initial reduction in flow is not as severe, while Ethiopia wants it completed in six years. Can economics again play a part in resolving this aspect of the conflict? Time can only tell.

Interested in hearing Prof Abebe's full presentation? Listen now on the GWI YouTube channel.