The announcement made on New Year’s Day that Ethiopia has signed a Memorandum of Understanding (MOU) with Somaliland covering several areas may have created the first major geopolitical risk of the year 2024.

There is a copious amount of information to glean through to determine what is fact from fiction however there are several key points to take into consideration. Ethiopia has sought an outlet to the sea since Eritrea won its independence after a protracted insurgency ended in the 1990s. On the surface this MOU fulfills a need that the Ethiopians need.

The scenario from the Somali side of the equation presents a unique set of challenges. First question that needs to be asked is does the Somaliland region have the legal authority to sign on to a deal like this? The authorities in Mogadishu emphatically state that they do not. However in 2017 the Puntland region signed a deal with a UAE based firm to develop and operate the port of Bosaso. There has been no criticism of that deal from the Somali Federal Government.

That suggests the issues that Mogadishu currently has originated from either one of the following details. First the deal proposes that Ethiopia would be allowed to have a military base in the port of Berbera. This is one of the root causes of the vitriolic reaction that came from Mogadishu. Their view is that Somaliland is still part of Somalia. Hence any deal that allows for a foreign entity to be based on Somali territory has to be negotiated by Mogadishu and not by Hargesia.

There are two other issues that may compel Ethiopia to take this step. They are separate concerns but can appear to be interconnected. First off are the attacks in the Red Sea committed by the Houthis. The reduction in traffic though this transit point appears to be impacting the Ethiopian Economy. The Economic concerns are the second issue that may compel this action to be taken.

The MOU also contains some interesting clauses. These clauses allow for Somaliland to acquire a stake in Ethiopia Airlines for example. This deal could accelerate plans by Ethiopia to construct a railroad from Ethiopia to Berbera that would move over 1 million tons of freight annually when completed.

To state that this MOU is controversial is an understatement. The challenge becomes whether or not Addis Ababa will recognize the independence of Somaliland. Those advocating for independence have been emboldened by the fact a regional actor is interested in conducting business with them. When this was announced early reports suggested that Ethiopia would take this step at some point in the future.

The reaction from the Somali Government has been swift. The government has stated that the MOU that was signed had “no legal force and threatened regional stability” and would further state that it would defend its sovereignty. In a sign that this situation is now bordering on the bizarre, the militant group Al-Shabaab released a statement that criticized the signing of the MOU.

There have been some interesting statements made by the main security partners of Somalia as well. The EU issued a statement reminding all of “the importance of respecting the unity, the sovereignty and the territorial integrity of the Federal Republic of Somalia” as defined by its Constitution and other AU and UN treaties.

The US State Department has also issued a statement that has some interesting language. During a press briefing on January 4 a spokesman stated “We join other partners in expressing our serious concern as well about the resulting spike in tensions in the Horn of Africa.” However the statement would further iterate “ We urge all stakeholders to engage in diplomatic dialogue and the United States recognizes the sovereignty and territorial integrity of the Federal Republic of Somalia within its 1960 borders.”

What will the next steps look like? That is an interesting question to ponder. We should expect those who have been advocating for various Governments such as the United States, United Kingdom and the United Arab Emirates would be the first countries that we will see the focus on first. We may expect feelers to be sent out to Kenya and other regional actors as well. It is known that the Somali Federal Government has reached out to Egypt for Security Guarantees and has sought an emergency meeting of the Arab League Foreign Ministers to discuss this crisis.

The Potential Involvement of Egypt will present a new flashpoint with relations with Ethiopia. Already tensions between the two countries are simmering over the GERD project which Egypt fears will reduce the flow of the Nile River. This is another tantalizing fact to learn as the crisis continues to unfold.

The next few months in the Horn of Africa will be both concerning and an issue to watch.