(introduction...)

Ethiopia is an old country with old problems, but the solutions it is trying to apply to them are often bold and new. Some have never been tried in Africa before and, if they succeed, could show a possible way forward for other troubled parts of the continent.

A patchwork of races, religions, climates and landscapes, Ethiopia has one of the world's ancient culture and echoes of its history reach us from a very distant past. it was one of the earliest homes for the monotheistic religions of the Middle East: Judaism was the first arrival, probably in Old Testament times, Ethiopia's highlands were Christian before most of Europe and its lowlands Muslim before most of Arabia. Rich archaeological remains attest to the existence of successive kingdoms which had a flourishing trade with the outside world and produced literature, music and art; in mediaeval times Abyssinia was known to Europe as a half-fabulous land of riches and power reigned over by a legendary priest-king, Prester John. Fable gave way to hard fact in the last century, when the territory now known as Ethiopia (including Eritrea), after a period of feudal anarchy, was consolidated as an empire and, under the Emperor Menelik, was the only country in Africa which stood out successfully against the European powers in the period of imperial expansion (except for Eritrea, which was occupied by Italy). Ethiopia was recognised as a sovereign state by these powers at the turn of the century, and it stepped onto the international arena in the 1920s when it pined in the first attempt at a world organisation devoted to securing peace, the League of Nations.

In modem times, unfortunately, Ethiopia has had a more unhappy reputation as a victim of foreign interference and internal oppression or as a country constantly appealing for outside help. Three thousand years of independence ended when fascist Italy attacked and seized Ethiopia in 1936, followed by a period from 1941 when it was virtually a British protectorate. Under the restored rule of Emperor Haile Selassie, a feudal pattern of landowning persisted, with a small elite of nobles and gentry living on the surplus produced by millions of peasant farmers. The aristocracy gradually lost their traditional military and administrative powers, however, to the monarch, who, under the Constitution of 1955, promulgated laws in his own name, overrode the verdicts of the courts and concentrated all executive and policy decisions in his own hands. Added to this social and political imbalance was the destabilising effect of an economic structure relying overwhelmingly on agriculture and a laissez-faire attitude to the development of wealth creating industry. Discontent at the general stagnation grew among the technocratic elite, military and civilian, which the Emperor had himself created in a halfhearted drive to modernise the country and on which he had hoped to rely as a counterweight to the landed aristocracy. After a failed coup by the monarch's bodyguard in 1960, secessionist rebellions broke out on the peripheries of the country, while territorial war flared with neighbouring Somalia. In an atmosphere of frustration and disillusionment, Marxist-Leninist ideas Imported through contact with radical movements in the West took hold among students and the military. The stage was set for the military and urban based uprising which overthrew Haile Selassie in 1974.

Power was taken bye provisional administrative council of soldiers known as the Derg (meaning the Committee), which set about establishing socialism under military rule. A power struggle led in 1977 to the emergence of the communist Lt. Col. Mengistu Haile Mariam as head of state and chairman of the Derg, followed by a brutal campaign of 'red terror' in which thousands of his ideological opponents were killed or tortured. Mengistu's years in office at the head of a totalitarian junta were marked by the mass militarisation of the country, with Cuban and Soviet backing, for the purpose of putting down insurrections by certain of Ethiopia's nationalities, particularly in Eritrea, and carrying on war against Somalia over possession of territories inside Ethiopia inhabited by ethnic Somalis. The failure of political attempts to win over disaffected nationalities by reorganising the state into autonomous regions was paralleled by the Derg's inability to win support from the general population for its programme of collectivisation. Disastrous droughts and famines struck in the 1980s, killing unknown numbers of people and prompting the government to move hundreds of thousands of peasants to allegedly less vulnerable areas, mainly by force. Food aid was slow in coming as the international community was suspicious of the Derg's military dependence on, and ideological subservience to, the Soviet Union.

The country's economic collapse in the late 1980s paved the way for the Derg's military and political downfall. Government forces suffered defeats at the hands of rebels in the northern region of Eritrea in 1988 and lost Tigre, the region worst hit by the droughts, in 1989.

Mengistu wasted opportunities to reach a political accommodation with the Eritreans and the Tigre People's Liberation Front (TPLF), the left-wing secessionist organisation which was gradually advancing on Addis Ababa from the north, and the TPLF joined up with other nationality-based opposition movements to form the Ethiopian People's Revolutionary Democratic Front, the EPRDF. The prime demand of the new Front was now no longer national self-determination but the removal of Mengistu and the establishment of democracy in Ethiopia as a whole.

In 1990 the Eritrean People's Liberation Front cut off the Ethiopian army's supply lines to Eritrea by capturing the Red Sea port of Massawa, and the government was forced to move troops south, where they were needed to defend Addis Ababa against the advancing EPRDF. To conciliate opposition groups, Mengistu invited them to join a unity party and renounced Marxism - but it was too late. The army was no longer able or willing to fight, while the collapse of communism in Eastern Europe had left the Derg with no overseas support, just as a slump in the price of Ethiopia's main export earner, coffee, was devastating the country's economy.

A new start

On 21 May 1991 Mengistu fled the country (he sought political asylum in Zimbabwe and now lives there in exile) and a week later the EPRDF finally reached Addis Ababa. Talks sponsored by the United States in that month led to the formation of an interim government in July, including the EPRDF, its ally the Oromo Liberation Front (OLF) from southern Ethiopia and two other Oromo groups. The EPRDF had already abandoned the communist ideological model (at the same time as Mengistu), and the programme for the future was for a liberal, pluralist political and economic system.

The task facing the new government was enormous. The country's economic infrastructure had been ruined by mismanagement during the imperial period, compounded by the distorting effects of the Derg's command economy and the crushing cost of attempts in both periods to hold the country's diverse regions together by military force. Prosecuting the Derg's wars had absorbed 60% of the national budget. A huge and demoralised army of doubtful loyalty was scattered throughout the country, with many of its leaders arrested. Ethiopia's foreign alliances had collapsed and it had few friends among its neighbours or in the wider world. Periodic famines had left much of the population dependent on external food aid, while negligence, deliberate concealment of the scale of the disaster, sullenly resisted collectivisation and enforced resettlement of peasants had weakened the agricultural sector's ability to cope with any future droughts. Some private-sector trade and industry had managed to struggle through the 17 years of communism but was minute in scale, hopelessly undercapitalised, uncompetitive and operating at 10% of capacity. Human rights had never been respected by any previous regime and the ordinary people were hardly involved in decisions concerning their lives. The administrative structure of the state was unmotivated, antiquated and bureaucratic. The new government had both a vision and ideas for fuming it into a reality, but only minimal resources of skilled manpower and money with which to set up practical policies.

The Transitional Government

A first start was made on establishing a viable system for governing the country. in July 1991 the EPRDF called a national conference of some 20 political organisations and ethnic groups to discuss the country's political future and set up a government to oversee the transition to full democracy. The Transitional Period Charter presented to the conference by the EPRDF and duly adopted established a Transitional Government of Ethiopia (TOE) headed by the chairman of the Front, Meles Zenawi, now President. His deputy, Tamrat Layne, became Prime Minister, at the head of a Council of Ministers whose 17 seats were divided among seven different organisations. The legislative branch of government for the transitional period, which was set at two years with the possibility of a six month extension if required, is the Council of Representatives; the Charter stipulates that this must include representatives of national liberation movements and other political organisations, as well as otherwise unspecified 'prominent individuals'. Of its 87 seats, 32 went to the EMDF's component parts, 12 to the OLF and 15 to four other Oromo groups, with the rest shared out among some 26 other political organisations. An important function of this body was to set up a Constitutional Commission whose task was to draw up a draft constitution for the longer-term future. Elections to a National Assembly, the Charter said, would be held on the basis of this new Constitution, no later than the end of the transitional period.

These institutional arrangements have worked less well in practice than the national conference of 1991 hoped. The most obvious malfunction is that the two year period, plus extension, expired in January this year before arrangements to hold the promised elections had been made and the TGE simply decided it would therefore remain in power until elections to the Constituent Assembly could be held; a date has now been set for these on 5 June this year, nearly six months after the agreed deadline. Parties opposed to the EMDF have accused it of holding onto power illegally and called for the formation of a national unity government including themselves, but have been ignored.

Towards a democratic Constitution

Observers of the political scene in Addis Ababa say the delay is more probably due to organisational obstacles or simple inefficiency than anything deliberate. To begin with, creating a Constitutional Commission which represented Ethiopia's different nationalities and political parties and included a fair spread of special-interest groups (notably women and professional categories) took longer than expected, in a country where no such body had ever existed before. Then, before putting together the draft Constitution to be submitted to the Constituent Assembly once that was elected, the Government decided to seek the public's views on what should go into it and compiled a list of questions for countrywide debate about such fundamentals as the electoral system, accountability of public officials, respect for human, political and civil rights, land ownership, the right of secession and the status of languages. The public were also given an opportunity to say whether they want a constitutional monarchy, a parliamentary democracy or a presidential system, and whether Ethiopia should be a unitary state or a federation. As the Chairman of the Constitutional Commission, Dr Kifle Wedajo, put it, 'There are as many versions of democracy as there are people, so we haven't tried to define the concept of democracy' - but some components are not up for negotiation: it is felt that any Constitution must include provisions for regular elections by universal suffrage and secret ballot, a definition of the limits on government power, the inviolability of human rights and an independent judiciary. The Constitutional Commission accordingly had to consult representative of Ethiopia's more than 80 ethnic or linguistic groups through a system of grass-roots representation which divides the population into more than 20 000 administrative units: understandably, it has found organising this, and collating the results, an uphill battle.

Regionalisation

A serious and basic political split emerged in the TOE's first year in power. Its leading figures are convinced that Ethiopia cannot survive as a nation-state with a single system of government from the centre. In the rest of Africa and much of the Third World, the nation-state is perceived as having failed to deliver peace, prosperity and democracy, and, in Ethiopia specifically, Eritrea's long war for independence and the history of the very liberation movements making up the TGE are seen as the best proof that the country's many different nationalities have different, sometimes competing interests which need to be accommodated in a decentralised framework.

Right from the outset, the TGE recognised Eritrea's right to decide its own future, and allowed the former province to secede last year (in the teeth of protest from many quarters, particularly opponents of the TGE operating from abroad). To promote self-determination for all Ethiopia's 'nations, nationalities and peoples', the EPRDF wrote into the Charter a guarantee of respect for each ethnic group's culture, history and language and of its right to administer its own affairs within its own defined territory, while participating in the central government as well. to achieve this in practice, the Front set up a federal system based on 12 new, self-governing regions and two chartered cities (Addis Ababa and Harar) and or ganised local elections for April and May 1992. However, the boundaries of the new regions were considered to favour the Tigreans, the dominant nationality in the EPRDF, and to penalise widely dispersed groups such as the Ambara, who had dominated Ethiopia under the Emperor and the Derg and were generally among those who favoured a centralised state. As a result, the ethnic conflict already raging when Mengistu fell continued into 1992, especially in Oromo territory in the south and east, and although a ceasefire was agreed with help from the United Stat" and the Eritrean People's Liberation Front, EPRDF activists were alleged to have intimidated opposition candidates and supporters in both the local elections and the run-up to the regional elections which followed in June. In protest, the Oromo Liberation Front boycotted the regional elections, and then left the Government altogether. Other groups which refused to take part in the elections included the All Amhara People's Organisation, a mainly urban-based grouping - a sign, in that particular case, of a wider dissatisfaction among the urban educated classes at the EPRDF's lack of a policy to protect their interests and its concentration on meeting the needs and wishes of the rural peasantry. The regional elections nevertheless took place and regional governments have been set up, though the precise division of powers between them and the central government will not become clear till Ethiopia finally has its Constitution.

The EPRDF regards its settlement of the nationalities issue as the jewel in its political crown, and, if the commitments to democratic self-determination in the Charter are honoured in practice, there are hopes that the new system, with its opportunities for peaceful reconciliation of interests, will put an end to a problem of ethnic rivalry which has plagued Ethiopia for a hundred or more years. If it fails, Yugoslavia and parts of the former Soviet Union offer examples of the kinds of wars between small states or rival nationalities which pessimists fear could break out in Ethiopia. For almost the last two years, however, the Government says there has been no armed conflict between ethnic groups in the country, while the consensus view emerging from the constitutional consultation was, according to the Constitutional Commission, in favour of a federal system, not secession, so the omens for relatively peaceful political change are good. Politicians are, none the less, candid about the difficulties they face en route: in the words of Dr Haile Wolde Michael, a member of the Council of Representatives, 'Who knows what federalism is? It's a new concept for us and with good luck we think we might succeed. All we have at our disposal now is good will.'

Opposition

Progress towards democratisation in Ethiopia has released a variety of forces which were always previously suppressed. A vociferous independent press has emerged and carries a range of views opposed to those of the TGE, despite a press code which the Government has used against journalists guilty, in its view, of disseminating reports which jeopardise state security. Supporters of the fallen Derg are banned from political activity during the transitional period but some of them play an indirect political role through publications they control. Critics of the commercial press say it sensationalises in order to sell more copies; if so, the market was soon saturated, and dozens of newspapers and magazines have folded. Student demonstrations were a regular feature of life in Addis Ababa even under Haile Selassie, who ignored them, while during the 'red terror' of the Derg student leaders, like other protesters, were savagely put down. Under the TGE, clashes between students and the security forces (which, since the disbanding of the regular army, consists essentially of the TPLF's own, Tigrean-dominated militia) led to the closing of Addis Ababa University for three months last year and the dismissal of academic staff who had criticised government policies - another sign of the rift between the educated urban elite and a government whose first concern is improving the lives of poor farmers.

In the party political arena, lively opposition to the EPRDF, which originated in northern Ethiopia, is conducted mainly by parties representing urban interests or peoples in the south. Five parties from a coalition known as the Southern Ethiopia People's Democratic Union were expelled from the Council of Representatives in April 1993 for endorsing a resolution by exiled opposition groups in Paris condemning the arrangements for the transitional period - calling, in effect, for the dissolution of the government. Two junior ministers from the Union were expelled from the TGE at the same time. In December a conference of dissenting parties was held in Addis Ababa and passed a resolution calling on the TGE to stand down in the interests of uniting the country. The Government seems for its part inclined to tolerate but disregard the activities of urban-based politicians representing only a tiny minority of the population. On its new regionalisation policy, it maintains that it is not dividing the country but simply admitting that it has always been divided along ethnic lines and trying to make proper provision for safeguarding the interests of all nationalities, including the minorities living in areas which have been allowed to lag behind economically. And it draws a democratic lesson from the fact that protests against its policies have come out into the open: 'Transparency of political conflicts,' says the Vice-President of the Council of Representatives, Dr Fekadu Gedamu, 'is, we think, an achievement and a sign of political progress.'

Democracy and development

Democratisation and observance of human rights are, of course, linked to development cooperation by the fourth Lomonvention, and a characteristic comment from the TGE on its attitude to these issues came from the Minister of External Economic Cooperation, Dr Abdulmejid Hussein: We do not have problems of principle or clashes of direction with the European Union in the democratisation area, on human rights, on good governance. All these are tenets which we ourselves aspire to. We should have a set of standards that are accepted globally - but you can, of course, vary it according to conditions in your own country.' As to whether democracy is necessarily the key to economic progress, the Minister is in no doubt about the link between them: 'In some quarters we have been under pressure to say we have gone too far with this democratisation. Within the country itself, a lot of people who have been used to a highly centralised authoritarian style are saying this is too much democracy, this is destroying the country and we need a firmer hand and that's the only way to develop: look at South Korea, Taiwan, Singapore and so on. Some even say look at China: 13% GDP growth. But many of us in the Government - thank God, the majority of us - believe that development will happen even faster, and on a firmer base, if we allow more people in on decision making; and if you make it also at the grass roots, it might not be easy but once it takes off then you are assured that, regardless of who is in power, you don't need any strong, charismatic leader. The machinery will oil itself and it will go. If we look at other countries which have done it, in Western Europe and North America, that system works and in the long term it's more resilient.'

An ongoing food crisis

Ethiopia's top development priority is feeding its population. Media pictures of starving famine-victims were all too familiar in the 1980s, and evoked an unprecedented response from the public in the affluent North, but, as President Meles Zenawi explains in an interview in this country report, the problem has not been solved: Ethiopia is still chronically short of food. Self-sufficiency can only be a dream for the moment, and, according to the President's economic adviser Neway Ghebreab, the country will have to continue relying on foreign help 'entirely'. Despite good harvests in 1992 and 1993, structural food reserves remained low and half a million tonnes of food still had to be imported in 1993. Late rains, lack of fertiliser and attacks by pests have made the situation worse this year, and for 1994 the TGE has had to appeal for one million tonnes, but the response has been slow, and the Ethiopian Relief and Rehabilitation Commission warned recently that nearly seven million people were at risk of starvation. The worst-affected areas are, as in the past, Tigray and Welo, the regions in the north where support for the EPRDF is also strongest. The budget for the present fiscal year, however, contains no provision whatever for buying food for distribution to the needy. It is arguable whether free hand-outs of food are a proper use for a national budget; it certainly contains appropriations to pay for food-for-work schemes and public works programmes. Also, as part of the economic reforms, the country's farmers have lost the subsidies they used to enjoy on purchases of fertilisers and improved seeds, so productivity is low. Mr Neway sum up the government's position: 'If we were to attempt to import food, firstly our foreign exchange would not be enough, and secondly the budgetary implications would put a big strain on us at the very moment when we are engaged in putting into effect stabilisation policies, and these are very much dependent on controlling our budgetary expenditure.'

Economic policy

The TOE's economic plans for the transitional period are set out in a comprehensive paper published in 1991. The policy is the mix now familiar in the developing world, of a shift from a command to a market-oriented economy combined with stabilisation and structural adjustment, and the TGE has impressed the international financial institutions by coming forward with well-formulated plans of its own rather than merely asking for a funding package with a string of polity prescriptions attached. 'These programmes are ours and we own them,' in the words of the Minister of Finance, Alemayhu Daba. Ethiopia is eligible for the IMF's Structural Adjustment Facility, World Bank Structural Adjustment Lending and EU adjustment support under LomV (ECU 75 million were allocated for 1993 and 1994).

Economic reforms so far have included a deregulation of the agricultural and industrial markets by removal of price controls and, as the first step towards privatisation of government-owned enterprises, certain public undertakings, particularly state farms, have been made autonomous in terms of management and financing. They can now sell at any prices they like and the trend is for prices to fall. Capacity utilisation in industrial enterprises has risen from between 10 and 30% at the change of government to around 70 or 80% at present. me next step will be the actual trasference of property ownership, for which a privatisation agency has been set up. The TGE hopes to attract foreign investment, particularly in the agro-industrial sector, and says that Ethiopian traders and merchants, too, are showing interest and have cash and security for loans. The state will, however, retain control of electricity and water supplies, telecommunications and certain large-scale engineering, metallurgical and chemical plants and industries of strategic importance. The important road transport sector will be open to private participation but remain state-regulated, and mineral resources will remain public property to be exploited, largely by the state, for the development of the economy.

There is a government-funded safety net programme comprising cash payments and retraining schemes for workers laid off because of privatisation. To discourage retrenched workers from moving to urban areas and further overloading services which are cracking under the strain, the Government's investment code includes extra incentive to encourage investment and hence job creation in remote regions, and its development strategy focuses on distributing new roads, schools and hospitals as fairly as possible between the regions. Both capital and current expenditure are planned to be directed more and more towards the countryside, and the cut in military expenditure from 60% of the national budget under the Derg to 10% now, thanks to the peace dividend, has released funds to addres the major needs there, namely in education and health. Standards in both these sectors fell drastically in recent decades and the need is not just for materials and equipment but for instructors until there is a trained workforce which is self-reproducing.

Ethiopian industry relied too heavily in the past on imported inputs, for which sufficient foreign exchange was not and is not available, and the Government hopes there will be a shift towards domestically available raw materials, which are for the greater part agricultural.

Industry used to be protected from foreign competition by high tariffs and quotas, but will now have to become competitive by capitalising on Ethiopia's own resources.

Finances

This fiscal year the Government is not in competition with entrepreneurs for bank loans (future borrowing will depend, says the Finance Minister, on how revenue and the external assistance programme turn out). Under the Derg, the Minister of Finance used to chair the board of the National Bank of Ethiopia, making for a clear conflict of interest between fiscal and monetary policies, but now the Bank is to become more independent in monetary affairs, which its Governor, Leikun Berhanu, believes can only benefit the economy as a whole. The Bank has had a major say in formulating and overseeing the implementation of Ethiopia's economic reforms, and is satisfied that the policies already in place will allow the private sector to play an increasingly important role in the economy. Since the change of government the national currency, the birr, has been devalued by some 150%, in two stages, against the US dollar, making it more expensive for those who need foreign exchange to acquire it through the auction system but on the other hand boosting foreign-exchange-earning exports for the benefit of all. In a competitive environment, says Mr Leikun, the Bank is conscious of the need to impose only such controls on the use of credit as are compatible with macroeconomic targets. No distinction is made between public and private entrepreneurs applying for loans, provided their projects are bankable, and successful applicants may use the borrowed money as they wish. The state's monopoly of the financial sector is about to end in any case, as the Council of Ministers has approved a law which will shortly allow for private bankers and insurance companies to set up in business in competition with the state-owned financial institutions.

It is a matter of some pride in Ethiopia that it is almost the only country in Africa which maintains a strong currency without a parallel market. Inflation has stabilised at 10%.

Enterprise and land ownership

One obstacle to the emergence of private enterprise is a lack of experience of what it means. Under the Derg only merchants working with massive profit margins were allowed to flourish, and it may be difficult for them to revise their expectations down to more realistic levels - yet they are the ones who have some capital available. The Government hop" to see a new crop of small-scale businessmen emerging, engaging in commercial farming and spin-off industrial activities such as cotton ginning and oil milling. The potential is there, says the President's economic adviser, but 'most importantly, I think, it requires to be served by an honest administration which is not corrupt. One inheritance of the command economy is a situation where government has a lot of discretionary authority, and discretionary authority, particularly in relation to the economy, leaves much scope for getting abused. We are tackling that and it's getting narrower.'

The system of state ownership of all land, inherited from the Derg and continued by the TGE, is the one feature of the economic policy which seems, on the face of it, out of place in a free market system. President Meles, in his interview, defends it as a safeguard against the peasants being bought out and migrating to the cities, but private entrepreneurs regard it as a discouragement to capital investment.. The World Bank, on the other hand, points out that in many countries land tenure is essentially on a leasehold system. Whether it discourages enterprise or not depends on how much the leases cost and in how many instalments they have to be paid; these elements have not yet been made clear by the Government, and rumours abound.

Looking to the future, will political regionalisation fragment the Govemment's economic and fiscal policies? 'Not at all,' says Finance Minister Alemayhu Daba. 'Now people are allowed to manage their own affairs in their own regions and they have been given clear terms of reference. And the way revenue is to be collected and used by the central and regional authorities has been clearly demarcated.' And there will be no risk, he believes, of a regional government deciding to abandon the economic reforms and return to the command economy of the past. 'The general environment, not only in Ethiopia but in the world, favours the free market. The people of Ethiopia also have seen the other side of the market, the socialist planned system and regimentation. I don't think the people of Ethiopia will opt for that.'

Foreign relations

During the Cold War Ethiopia was of interest to both superpowers as a possible link in a chain of defensive alliances which each side wanted to forge against expansion by the other. Until the 1970s Ethiopia opted for a close association with the United States, for which it made a useful contribution to a containment strategy involving countries of the Middle East. At regional level, the American connection made Ethiopia anathema to the politically radicalised Arab states in its vicinity. At the same time, other, conservative Arab states which subscribed to pan-lslamism had territorial designs on Ethiopia's Muslim-inhabited lowlands and islands, leaving it with no possible ally in the Middle East but Israel. This alliance was severed after the Arab-Israeli war in 1973, in the face of Arab pressure through the Organisation of African Unity. In return, Ethiopia hoped for Arab neutrality on the questions of Eritrean secession and Soviet-backed Somalia's territorial claims on the Ogaden in southern Ethiopia, but those hopes were to be disappointed. Relations with the US then soured after the rise to power of Mengistu, who shifted the focus of Ethiopia's alliance to the Soviet Union and its satellite states and was to a large extent sustained in power with the help of supplies of Soviet armaments. After the Reagan-Gorbachev summit in 1988, however, relations with the Soviet bloc cooled, and in 1990 the Derg, its hand forced by changes in the communist world, renounced Marxism-Leninism and began to look for allies in the West. Turning his back on allies he had made among the radical Arab states, Mengistu had reinstated diplomatic relations with Israel at the end of 1989, in the hope of thereby winning US economic aid and support against the rebel movements advancing in Eritrea and Tigray. The US, on the contrary, took up friendly diplomatic relations with those movements, believing that any solution to Ethiopia's political problems must centre on them. It was eventually the US, after attempts to reconcile the Ethiopian government and the rebels had come to nothing, which invited the TPLF to enter Addis Ababa and take over power. Washington has continued to play the role of a broker under the new regime, this time between President Meles' government and the opposition.

Some of the opposition to the TGE comes from ethnic Somalis living in south-eastern Ethiopia who, like other national groups in the country, aspire to recover the autonomy which Emperor Menelik took from them a hundred years ago. When neighbouring Somalia had a functioning government, it used to support these aspirations and intermittently went to war with Ethiopia over its claim to the territories concerned. Now that Somalia has descended into chaos, it is vital to prevent the upheavals there spreading across the border into Ethiopia, and the TGE has been very active in trying to bring the warring sides in Somalia together to find a solution that will bring peace and stability to that country and remove any threat to the rest of the Horn of Africa.

Where to from here?

The period just before a national election is not the best time for assessing prospects for the future, as any guess may be overturned by the electorate, but it seems safe to say that Ethiopia will continue along the political and economic lines laid down by its Transitional Government. No other force, by itself, is well-organised and disciplined enough, or has enough support across the country, to challenge the leading political role of the EPRDF through the ballot box. Devolution of power from the centre, if it succeeds, will defuse the rivalries between Ethiopia's 15 major ethnic groups - and no other solution is on offer. The TOE's economic policies, insofar as they are based on the Transitional Period Charter, have the backing of all the groups represented in the Council of Representatives (plus some which left it), which means support from the majority of the political forces in the country. As to the prospects for development, Ethiopia is one of the world's least developed countries, and the international situation as regards outside help is not what it was. But the country has a hardworking, serious population, some potential for expanding agriculture and industry, a variety of climate which should protect it from ever being hit by a drought or famine across the whole country - and, for the first time many of its people can remember, there is an atmosphere of relative peace and stability in which Ethiopians can go about their business without fear. Yet the country has lost virtually a whole generation, and it could take another generation to turn the situation round. Both Ethiopia and its foreign friends realise that there are no easy solutions. Given the difficulties bequeathed to it by its past, perhaps the wisest forecast is a cautious one: with good luck and continued determination, at least things will not get any worse.
Robert Rowe

President Meles Zenawi

Democracy and development have to come from the grass roots

Meles Zenawi, chairman of the Ethiopian People's Revolutionary Democratic Front, was elected head of state in July 1991 at the national conference of political organisations and ethnic groups which established Ethiopia's Transitional Government. A Tigrean from the north of the country, he was one of the leaders of the armed uprising which had overthrown the Mengistu regime two months earlier. The President talked to The Courier about his government's basic thinking and its record in office.

· Mr President, your party came into power in Ethiopia after a long struggle and many sacrifices. Which of the lessons or philosophies of that time before 1991 are you now applying in government?

- Confidence in the ordinary peasant; confidence in the rationality of the ordinary Ethiopian; full trust in the wisdom of the ordinary Ethiopian and basing all our actions on the desires of the ordinary man. That has been the central theme of our approach to politics and developments as a whole.

· How do you apply this in practice?

- Well, the first thing that we have tried to do is to devolve power to the grass roots, the regionalisation policy. We devolved power not just to the various regions but also to the districts and the villages, and we have confidence that when power is devolved to the grass roots, on the one hand, democracy becomes meaningful to the ordinary Ethiopian and, on the other hand, the ordinary Ethiopian is empowered. And when the ordinary Ethiopian is empowered, we feel confident that the country will move in the right direction.

· How do the ordinary people to whom you are making this appeal react? Given the background history that they come from, are they perhaps inclined to think that anyone in authority has an ulterior motive or is not one hundred percent to be trusted?

- That indeed is normally the case when the ordinary Ethiopian is confronted with some change. Fortunately in our case we are not strangers to the ordinary peasant. We based our struggle on the countryside and we depended on their support for survival. It is because we got their support that we were able to overcome the biggest army in black Africa. And so a relationship of trust had already been established between our movement and the people in the countryside, at least in a very large part of the country. There are some areas where our movement was not actively engaged up to almost the very last part of the war, and in those areas it takes time to overcome the natural scepticism of the peasantry. Nonetheless, because we had already established the relationship of trust earlier on in a very large part of the country, and because we had the experience in dealing with the population in the countryside, we did not find that part of our programme all that difficult. Perhaps convincing the population in the urban areas in a similar manner was slightly more complicated, in our circumstances.

· What made the transitional government opt for a free-market economic system 7 Are you being coerced into it by the international and bilateral donors and lenders?

- In many countries where a structural adjustment programme is undertaken, it is assumed that it is imposed by the IMF and the World Bank. So far we have not done anything in terms of our economic reform programme that we are not completely comfortable with Whether the IMF and the World Bank have given us more leeway than other countries, I do not know, but in our case so far we have not taken a single action that the World Bank suggested and we did not like. All the actions that we have taken are actions that we are completely convinced are rational and important for our economy.

· How did you consult the people on the economic policy to arrive at this confidence?

- Most of the fundamentals in terms of policies affecting the countryside had already been established during the struggle. And so it did not require that much debate and discussion to convince the people in the countryside. The important change in terms of the countryside after the demise of the Derg regime is devaluation and that helps the peasants, especially those who export products. So it tallied with our approach of basing our actions on the desires and wishes of the majority of our population, which happens to be the peasants.

The problem in the urban areas is slightly different because there is the issue of retrenchment, both of government workers and of workers in state enterprises. There is the issue of privatisation, which affects employees. In this regard we have been cautious, and we are approaching it on a step-by-step basis. We concentrated on making sure that our factories and establishments operated at full capacity before we started the process of retrenchment. We are now approaching full capacity utilisation. In the meantime we hope that the economy will pick up and new job opportunities will be created, so the impact of retrenchment will be minimised. But in some instances we had to take some rather drastic actions of completely liquidating some state enterprises, including state farms. Most of the state farms that we have so far liquidated were liquidated by redistributing the land to the peasants. That again tallies with the desires of the peasants. It does not necessarily tally with those of the employees of the state farms. So we have had some resistance on the part of those retrenched employees. Perhaps that is the price that we have to pay. Nonetheless the impact has not been as bad as people had predicted. Usually when these types of programmes are implemented you do not see an immediate pick-up in terms of economic development. In our case our economy shot up by about 7.6 % in the first year of the reform, so that cushioned to a large extent the negative consequences of such reforms in the urban areas.

· In the urban areas, where the government's policy of encouraging the emergence of private sector business and industry will primarily apply, I suppose, businessmen and women c/aim that there are still too many restrictions, time consuming procedures, money-wasting delays by the banks and the public administration. Some of them say that you encourage them in theory but in practice the government is not yet creating the right framework for them to operate in freely. What do you say to this?

- Well, I think practice has to speak for itself. The economic reports that we - the government and our partners in development - all have indicate that there is a very sharp increase in private activity in the economy. Now it is perhaps to be expected that there should be some leftovers - after all, it is only one year and a half since we started the programme. It takes a lot of time to streamline the bureaucracy, to promulgate the necessary laws. Only three days ago we adopted a new law allowing local investors to invest in insurance and banking business. Now this is just a law, and it will take time before we have private banks and private insurance here. So there is this natural difference between desire and the capacity to implement one's wishes.

On the other hand, in the past 17 years the private sector that we had, such as it was, was based on rent-seeking activities. Now these opportunities are beginning to dwindle. Therefore I can expect some of the so-called private sector of the past 17 years to be worried about what we are trying to do now and to be quick in complaining. So there is both an inevitable and perhaps understandable need for time and, on the other hand, an understandable readiness on the part of those who are involved in rent-seeking activities to complain when they realise that the reform programmes might not encourage their previous activities - on the contrary, they might undercut the whole livelihood of a significant sector of the so-called private sector we have here. It is mainly a newly emerging sector rather than a continuation of the past.

· Something that sticks out like a sore thumb from the free-market economy is the system of state ownership of land which you inherited from the previous regime. Why have you perpetuated that system?

- Let me start with the political reasons. In the past, before 1974, that is before the land reform, land to the south of Addis Ababa was owned by northern landlords. The whole population of the south in the countryside were serfs. The land reform was extremely popular in the south in 1974 and people have to differentiate between the land reform and the policy of collectivisation and so on that followed it. The later policy was very unpopular. That does not mean the land reform itself was unpopular, because it released something like 70% of our population from serfdom. These people still remember the past and they feel that if people were allowed to sell and buy land, they would soon be dispossessed and they would soon go back, in effect, to the pre-1974 situation. So anybody who wants to allow land to be sold and bought in the south must be prepared to suppress that big majority of the population. Now that might be possible for an urban-based movement. For us it is neither possible nor desirable.

Then we have the social damage. We have a pauperised peasantry. The economy in urban areas has not yet fully picked up. The moment we allowed land to be sold and bought, a very significant section of the population in rural areas would descend on the towns, having sold their land, and that would create an explosive social condition that we cannot in any way handle. So in effect, not allowing land to be sold and bought is serving as a sort of social security system.

And then we have the economic damage. Economically what we are suggesting is that land should not be bought and sold but they can rent it. They can hire labour, which was not possible in the past. They are free to produce whatever they want, they are free to sell it at whatever price they can fetch, they will be able to inherit land and so on. So the state ownership of land simply means that you cannot buy and sell it. Almost everything else you can do. And, because of that, the negative effects of state ownership of land or the consequences that are associated with it, like the peasants not taking proper care of their land, do not apply in our case because they can pass it on to the next generation, they can rent it. All they cannot do is sell it.

And then we need to develop large commercial farmers, private farmers. There are two options for doing that. One is dispossessing the peasants of their land: that is not the best way. The other option is breaking new land, and we have more than enough of that. So we can also satisfy our economic requirements by allowing the commercial farms to break new land and the peasants to be fully attached to their own land, because, apart from not being able to sell it, they can do everything else with that land. And so we think there is a very convincing political, social and economic reason for what we are doing.

· The rural population lacks a great many social facilities that other countries take for granted. I am thinking of primary education, health care, equal opportunities for men and women - I know these causes are very dear to your heart. How are you going to start doing something about it?

- We are going to try to do something about it by allowing the peasants to do something about it. For that we need to empower them politically, to allow them to make their own decisions about developments. Now the major asset they have is labour. They can be employed to build roads, they can contribute to the building of clinics, schools and so on. That is the primary weapon we have. That alone will not be enough. They will need technical assistance. They will need a certain amount of financial assistance. That is for us to provide to the best of our capacity. That capacity is not all that big at this stage. But for what it is worth, our focus is on the countryside. We have made it very clear in our development strategy, which we are presenting to the World Bank, that economic and social development in Ethiopia will be rural-based development. Develop the rural areas and then the urban areas will benefit from developing this huge rural sea in which these urban islands are situated.

· There are, of course, political interests in Ethiopia other than those represented in the transitional government. Are you afraid that the gap between the government and the opposition parties is becoming dangerously wide?

- In a certain sense it has always been dangerously wide with some elements of the opposition. As you can see, the type of reform we are trying to implement is in Ethiopian terms extremely radical, the devolution of power after a century of assimilation and centralisation. It is a fundamental break with the past. In these types of fundamental breaks with the past, we are bound to trample on some toes by the very fact of the reform. And sometimes these trampled toes react in an irrational manner. So there are those beneficiaries of the previous system who have not yet reconciled themselves to the facts of life as they are defined now. They know they cannot change this through the ballot box because we have got some 85 % of the population in the rural areas. They know they cannot change that through the bullet because they have already tried it and they were defeated. And in any case, be it through ballots or bullets, it is the peasants who decide in this country. And so now they are trying a third approach,that of conscripting forces in the international community and trying to utilise possible pressures from the international community to try to regain some of their lost positions. And so they start by boycotting the process and accusing us of not being all-inclusive. Now, if you boycott, by definition it will not be all inclusive, so you are engaged in a self fulfilling prophecy. Then they walk this tightrope between obeying the laws and engaging in criminal activity, thereby provoking a reaction from the government and then they can claim that they are being harassed, that they are being imprisoned and so on and so forth. That is the approach and it is not good for the development of a responsible opposition.

Nonetheless, I do not think it threatens either stability or the process of democratisation in this country. In terms of stability, this country will be stable so long as the rural areas are stable. If the rural areas are unstable, whatever happens in the urban areas, this country will not be stable. Now we are dead sure that the rural areas are stable and will continue to remain stable, and so it does not cause a real threat in terms of stability. In terms of democratisation, for us the critical things are the devolution of power and the building of institutions. We have developed power, which means we have made democracy relevant to the ordinary Ethiopian and that guarantees democracy in this country. One of the failures of democracy in Africa has been that it has been limited to the educated few, and the ordinary man did not differentiate between a dictator and a democrat. To all intents and purposes they were just as stupid, they were just as irrelevant, they were just as hostile to him. Now, we have devolved power. They are going to test it, to learn to appreciate it and they will not let it go. So democratisation as a whole is safe.

And we are also building institutions. For the first time in the history of Ethiopia people are now free to talk, free to express their opinion, free to criticise the government. Just a few years ago people were not even free to talk freely within their homes, just in case a child might overhear and report it. That is a major achievement as far as we are concerned.

· Your government allowed Eritrea to secede. What will happen if other regions want to follow Eritrea's example?

- They will tee free to do so, but I do not think it will happen.

· Why not?

- Because the situation in Eritrea is slightly different from the situation in Ethiopia. In Eritrea the process started 30 years ago. There was a 30-year war which had its own consequences in terms of the opinion of the ordinary people. We took pre-emptive action in Ethiopia before things got out of control. If we had waited for a few more years, we would have had Yugosiavia - but we opened up. Now people are free to use their own language and administer their own areas, this devolution of power has released the tension that was there. Now people are talking about development. When you start talking about development, you start talking about a wider economy, a bigger market and you cannot have bigger markets by dividing up states. That, we believe, even the peasant will understand.

· Is the food shortage in Ethiopia now a chronic state or have you a policy for tackling that?

- That is a chronic state. Once again, we want to have development that is rural-based, we start from the rural areas, we start by feeding ourselves, we start by feeding our urban areas, and to do that we have to start by developing the rural areas. So our total orientation in strategy for economic development is to start by developing the rural areas, meaning agriculture. The shortfall in our grain production is structural, it increases and decreases from time to time depending on the weather, but there is always a shortfall. And that shows how chronic the problem is. It requires the introduction of appropriate new technologies, the wide spread use of agricultural inputs and so on, and that takes time and money. Nonetheless we believe we have the right policy and the right strategy. It is only a matter of time.

· One of Ethiopia's largest partners in development cooperation is the European Union. Do you find it a satisfactory partner, and, in particular, do you and the European Union agree on the priorities for development in this country?

- On the whole, we agree on the strategy for development. The only thing I find difficult to understand, in view of the general efficiency of the European countries, is the delays that one faces in terms of dealing with the EU establishment. Every document has to be translated, I think, into nine or ten languages, every country has to make comments. So the disbursement of assistance is not as fast and flexible as it could be. Otherwise, as you say, the European Union happens to be our biggest partner in development and we are satisfied with the general conditions of that partnership. This problem is not peculiar to Ethiopia, I think, and I am sure many of the European leaders themselves feel frustrated.

· You have elections coming up in June. The foreign donors and lenders want the transitional government to succeed be cause they are very apprehensive of the effects in Ethiopia and in the wider region, if you fail. Do you share those worries?

- Well, I share the worries in terms of recognising what the impact of failure is going to mean. I do not necessarily share their apprehension in the sense of feeling that it is going to be a failure. I am sure it is going to be a success. Interview by R.R.

An interview with opposition leader Dr Beyene Petros

'To communicate takes two parties'

Three years since the fall of the Derg, democratisation and respect for human rights have made advances in Ethiopia. Though observers at home and abroad say there is still ground to be covered, a sign of progress was the holding in Addis Ababa last December of a Peace and Reconciliation Conference bringing together representatives of 48 political parties and other organisations which oppose the present government. The government rented premises to the organisers but refused an invitation to take part. Indeed, seven opposition delegates to the conference were arrested on a charge of advocating armed struggle against the government, and the government-controlled media portrayed the conference as a shambles.

The opposition has indeed found it difficult to reach consensus on the way forward, but 31 of the organisations attending the conference were able to reach agreement to set up the Council of Alternative Forces for Peace and Democracy (CAFPD), which will act as a political party in the run-up to the elections. Accusing the ruling party of aborting the democratisation process to consolidate its power, they called for the establishment of a new, broad-based government in which all political organisations, including the EPRDF, would be fairly represented, a demand which the government has ignored. The chairman of the conference and of the CAFPD is Dr Beyene Petros, leader of the Hadiya Nation Democratic Organisation, one of the many ethnic groups opposed to the EPRDF. The Courier asked him what united the groups in the CAFPD.

- What unites them currently is the question of democracy during the transitional period, human rights, the drafting and ratifying of the Constitution, and the social and economic issues that seriously affect the lives of millions of people in Ethiopia. In the name of structural adjustment we feel that there is a lot of damage being done in Ethiopia, and that there is carelessness in the planning and implementation of it. Once the question of democracy and human rights is out of the way, then each of these organisations will have the chance to get to their people, and it should simply be left to the people to decide who will come to power. The ground has to be prepared for free elections. That is really the central issue.

· The Transitional Government has announced elections for June 1994. Is that not satisfactory?

- An election can only be based on an accepted Constitution. We challenge the manner in which the government is approaching this question of drafting and ratifying the Constitution.

My organisation was, for example, a member of the constitutional drafting commission. Now we had differences even over how the commission was put together, in that it did not include all the organisations that needed to be included. However, even with that complaint we went in and tried to influence it in its democratic content and to give it professionalism, together with the traditional wisdom which should be in it. But in the end that was not possible. Now, against the guidelines for the drafting of the Constitution, they have come up and put forward what they call the constitutional ideas to be discussed by the people. That is to bypass the basic procedure of drafting. They have this approach of putting very sensitive issues for discussion to a local community where you have ten thousand people and only a hundred show up, and then they say: OK, now, land, would you like it to be under private ownership or government ownership? And they get them to vote. Or the rights of nationalities up to secession. And then they go back and say to the constitutional drafting committee: The people have decided, you cannot write anything else - land should be the property of the government, the government should have a broader influence in the country's economy. This again smacks of some kind of socialistic model for our economy. There are some constitutional issues that should be subjected to referendum, but this is not a referendum, it is only a select interest group which a majority of Ethiopians have avoided being part of because they don't accept the procedure.

The other problem we have is the ratification process, which will require electing the constituent assembly. We have all the proof now that the EPRDF is controlling all the countryside, the regional district administrations, as the result of the controversial or, rather, illegal June 1992 elections. With that now in place, they control the police, the courts, the administration. We don't think the election of the constituent assembly will stand any better chance than what we saw in June 1992.

I can tell you what the outcome of the constitutional process will be. Simply it will be something of EPRDF's liking. They have already established regional commissioners for election purposes, and the law which was passed by the Council of Representatives says these individuals should be acceptable to the regional administration. Now that is a single-party administration, and we have no confidence in it at all. So will this Constitution be a consensus Constitution? We say No, it excludes a lot of us, and the system is full of errors. I think it's simply another drama just to show off to the world.

· So what the EPRDF is doing, in your view, is creating a one-party state?

- That's right, and that's what we want the world to know - but it is too unfashionable for the EPRDF to go and state that outright. They want to pretend that there are some fringe parties who would really not win anything, so they want us to join the game, when we will have a very poor chance of gaining anything from such an exercise.

· But there's one party on their side and more than 30 on yours. Are you going to be able to organise effectively as an opposition?

- Yes, that is what we are hoping. The purpose of this Council of Alternative Forces for Peace and Democracy is to create a forum for these organisations in which we'll get to know each other, work together and also test each other on practical politics, rather than just simply carrying our individual lances and not meeting at all. So we hope, when the conditions are right, perhaps not all of the organisations will come under one umbrella, but at least the majority of them would evolve as a viable sort of Opposition.

· What is your view of the Government's record on human rights?

- One can pinpoint several human rights violations. For example, the natural right of a lot of Ethiopian professionals to serve their country by practising their profession through the Civil Service is being seriously undermined, and this is being done summarily, that is, they are being dismissed from their jobs or pensioned off prematurely. They have nothing to fall back on and their families and all their dependents are living in a very dire situation.

· On what basis are these people retired early and dismissed?

- The pretext is structural adjustment. The Government says: we want to improve the system or make it efficient. So they are expelling professionals and replacing them with junior, unqualified people with various allegiances, be they of party or from an ethnic point of view. And some of those dismissed cannot get employment in the nongovernment sector or international organisations either, because there is always a need for getting government clearance. A colleague of mine who used to be the Commissioner for Water Resources was expelled from his job on no substantial basis and he is a qualified engineer of more than 20 years' experience; now he cannot get any employment and himself and his family are starving. I think that would serve as a very good example of a lack of concern for human rights here.

The other one is that people get imprisoned without charge. This is even more obvious around our political movements, opposition movements. A leader of the Gedeo People's Democratic Organisation has been in prison for the last two years and he has not been charged. The whole executive committee of one organisation, the Sidama Liberation Movement, is in prison at present. There are no court warrants, and they don't appear in court. Even after the attorneys say they don't have any case against these guys they are not released. This idea of the courts and the justice system being independent of the administration is laughable.

· Some of the people who came here as delegates for the Conference in December were arrested on the allegation that they were guilty of incitement to ethnic violence. What is your reaction to that?

- I don't know what the Government brings that kind of charge for. These individuals may be members of a particular political group and that organisation could be responsible but as for these individuals personally, I don't think that that kind of charge could be directly relevant to them. I think the truth is the leadership of these organisations, who may have some apprehension about such charges, did avoid coming to Ethiopia, but those who came are ordinary members who, it is perfectly well known, were acquitted of these charges. It's simply, I think, trying to dissuade such organisations from coming to Ethiopia and operating.

· Are your party activists able to operate freely?

- They are harassed and even jailed, lose jobs, are demoted, in places outside of Addis. In Addis I think we are tolerated, to the extent that we stay in our small enclave and are not visible. When it comes to our movements coming out in the open for mass rallies or other big gatherings, they do their best to undermine that kind of activity by using bureaucratic, administrative measures. For example, we requested a permit to hold the peace and reconciliation conference more than a month before, inviting the Head of State to give us a blanket OK because the conference was of an international nature, involving visas, and we wanted to avoid delegates getting imprisoned and all that. We also approached Addis Ababa municipality, but both of these responsible bodies just kept quiet. So we had to go around and ask the assistance of the embassies, saying: Could you just take this matter up and tell us what the feeling of this Government is - they just don't want to communicate. The municipality only gave us a permit 48 hours before the conference. The purpose was simply for us to get frustrated and give in.

Another incident: we had a big mass rally in December in support of the conference. There again they waited until the 11th hour, so we had serious difficulty because we don't have access to the mass media, we can't announce there is a rally. The media are taxpayers' property and now they are only at the disposal of the Government.

· You can't get your message onto the radio and television?

- No, you can't, you can't even pay, let alone having access as a news item. That would involve visibility, going out and doing big things. As long as we don't do that, we are left alone in these premises and they have not bothered us here, honestly speaking. But I think their concern is any serious act that will undermine their edge, and they are very sensitive about us going to the countryside. Their belief seems to be that they have the countryside in their hands, they don't care what we do with these little petite bourgeois in the cities - these will not make a difference when it comes to the vote. It is that kind of calculation they seem to have in their minds. So the only place really we can be active currently is in Addis.

· Do you have a base in the countryside, in fact?

- We do have bases - we operate through our regional offices. Our frustration is that all our formal offices are closed so our movements unfortunately have been pushed into a clandestine kind of situation. They closed all our offices after the June 1992 elections. They saw the kind of challenge that could be presented.

· What is your forecast, frankly speaking, for the outcome of the elections in June?

- My organisation was in the Council of Representatives until we were illegally driven out - that's another important aspect of the undemocratic nature of this Government: as a minority organisation in a parliament we had every right to hold different views, but on the basis of that the EPRDF voted to expel us. So I think what will happen is the EPRDF will run as a single party but probably it will face-save: they will do all in their capacity to force all dominant or significantly popular organisations out of the game and have some tiny nominal organisations which they will create for this purpose, so they can say this is a multiparty contest, and they will carry the whole thing. It's going to be a one-party show and one party winning.

Also they have made it extremely difficult to register. Any organisation which wants to be a national organisation, if it wants to register in Addis, must have registrations in four other regions as well. And you need to have the signatures of so many thousand individuals from each of these regions. They know perfectly well that most of these organisations will have serious difficulties in doing that because it will be difficult or too expensive for people to associate with the Opposition - because of the risk of loss of job, demotion and all that.

· To organise the Conference you had to appeal to the embassies. Do you still have to rely on that sort of help for your activities now?

- We want to avoid that. We should be talking to our Government straight, but to communicate takes two parties.

On the other hand the President has said: Instead of running around the embassies, why don't you come out to the countryside? We go to the countryside and the local stooge gives an instruction: You must leave this place within one hour. That has happened to a colleague of mine who was a member of the Council of Representatives, who was a Vice-Minister of Information. These young guys wielding guns tell you to leave the place within an hour, and the Government just sits and says: Now why don't you go into the countryside? They simply want to put us in a situation which would be personally dangerous, and we are not here for some kind of martyrdom, we just want to make a serious contribution to the political transformation and our approach is not that of wielding guns or testing our might along those lines.

The essential message is that the Government is not open to opposing views or dialogue.
Interview by R.R.

Reaping the peace dividend

Demobbed soldiers return to civilian life

Mengistu's military dictatorship maintained itself in power by force. and created the largest army in black Africa to try to put down the increasing number of ethnically and politically motivated rebellions which finally overwhelmed it. When the TGE took over, it inherited a demoralised force of 400 000 which, if left in place, might have fumed into a serious threat to peace and stability. Most of the men were unwilling conscripts uprooted from their home areas, used to put down uprisings by their fellow countrymen and dispersed all over the country. Rather than try to reorganise or reduce the existing armed services, the Government decided to dismantle them completely and start again from scratch (and on a much smaller scale). The disbanded ex-servicemen - and some 45 000 disabled war veterans - had first of all to be returned to their homes and then reintegrated into the communities with some sort of livelihood or support.

A special government department, the Commission for the Rehabilitation of Members of the Former Army and Disabled War Veterans, was set up to organise this vast process. The programme started with an order to the men to report to the military centres where they were based; there they were demobilised and taken to their home areas by the Ethiopian and International Red Cross. The Commission then reunited them with their families, and each man was given food rations for five months, in the form of food for work, while he was slotted into the appropriate part of the reintegration programme.

The start-up packages provided for men from rural areas, of whom 169 000 were settled on crop-producing land and 20 000 in coffeegrowing areas, comprised an ox and seeds bought from local suppliers and fertiliser and hand tools imported by the Ministry of Agriculture. One piece of land per man was allocated out of holdings assigned to local communities ('kebeles') and associations such as women's and youth groups by the communist regime; it was usually the most fertile land but, according to the Commissioner for Rehabilitation, Mulugeta Gebrehiwot, there was generally no resentment at this among local people, for two reasons: first, the ax-servicemen were their relations and second, there was an awareness that if the veterans were not allowed to farm they might become a threat to public order, as the only other training they had had was in fighting and killing.

Reintegrating men from urban areas was more problematic, as there were already (and still are) hundreds of thousands of unemployed people in the towns and cities. To start them off, the ax-servicemen were given seven months' subsistence rations and a small monthly allowance to cover outgoings such as rent and electricity. About 7 500 older ax-soldiers were able to retire on government-funded pension schemes, and the same number of younger ones resumed their studies, with a year's exemption from fees. Over 20 000 men who had the right qualifications found permanent skilled jobs in the public or private sectors, while others who had skills but no licence to practice were given the requisite certificates. Nearly 40 000 men found contractual work on building sites or picking coffee and other crops outside the towns; training these unskilled workers was a major achievement for the programme, as they had been spoiled for the labour market by years in the army, and the Commissioner hopes more work will be created for them as the (separate) Emergency Recovery and Reconstruction Programme progresses.

Reintegrated ax-servicemen have been encouraged to set up income-generating self-help groups and briefed on how to go about it. Nearly 600 projects, involving 12 000 ax-soldiers, are under way. The activities, which are screened and developed by government-run technical committees, include quarrying, running grinding mills, weaving and tailoring. Several Ethiopian and foreign NGOs provide help with rural development projects, such as terracing in Tigray, which rehabilitate not just the individuals concerned but the area and, by extension, the national economy. Projects of this kind were started off with a grant of three million birr from the state-owned Agricultural and Industrial Development Bank, though twice as much is needed for projects already appraised and approved. The Commissioner hopes more funds will be allocated from the government's 'safety net' programme, which was set up to help people adversely affected by economic reforms.

Very few of Ethiopia's disabled war veterans needed permanent care more complicated than what they could get at home; the majority required physical rehabilitation and/or reintegration into society. Medical care, physiotherapy and appliances were provided where needed, and three out of four men were given invalidity pensions. Vocational training in tie dyeing, silk screen work, weaving, tailoring, carpentry and metalwork was given for others in what had once been an Italian army camp in northern Ethiopia, and the Commissioner says results have exceeded all expectations. The Tigray Development Association has built workshops where men who have taken these courses can make a living from their new skills. This part of the rehabilitation programme caters primarily for disabled EPRDF fighters who took part in the struggle to overthrow Mengistu and were obviously not eligible for that regime's programmes. Commissioner Mulugeta pointed out, however, that all ethnic groups in Ethiopia suffered during the wars, so the programme as a whole is for all of them. It may not have to last much longer, in any case, he says: all the people it was set up to help have now been settled in one way or another, and the operation can probably be wound up this year.

The orphans and widows of soldiers who died under arms have not been so lucky, alas. The rehabilitation programme does not cater for them, and thousands have been reduced to begging in the streets. Their best hope for the long term is a revival in the economic situation which will bring them and other needy categories more government or private help, but that does nothing to make the struggle for survival easier in the here and now. R.R.

Motivating the peasant

European Union helps promote rural development

'We value each and every coin that comes from outside that is supposed to go to the peasant level. If the project changes the life of a peasant, we value it very highly.'

Dr Teketel Forsido, Minister of Agriculture

The road out of Addis Ababa into the province of Shewa, to the north-east, takes you quite suddenly from a huge, teeming metropolis of small industry and trade into another world of emptiness and silence. Rolling hills stretch to every horizon. Dry thistles and, in the hollows, occasional cultivated patches of wheat, sorghum and tees wave in the steady breeze. Everything else near the capital has been grazed to the quick by sheep and cattle or cut down for firewood, and every rainy season torrential downpours carry more of the topsoil away for ever.

As you leave this blighted scene behind, the road rises into the highlands and twists and turns dramatically as it clings to the mountainsides above deep ravines. There start to be more signs of a living being made from the land. Agriculture is the livelihood of 85% of Ethiopia's population, and it is very clear in that landscape of farmers and herders that no policy for sustainable development will work if it caters mainly for the urban business class: it has to be geared to the peasant, and motivate him to play his part. That is, indeed, the Transitional Government's policy, and the European Union too is reorienting its resources for Ethiopia towards rural development in just such areas.

Some 90 kiLomrs from the capital, and hundreds of metres higher, lies the region of Bulga. Its rugged mountains were a natural defence during the Italian occupation of Ethiopia in 19361941: Mussolini's armies were never able to penetrate Bulga, and for years it was a stronghold of resistance. Though it suffered badly, it remained free, but over the decades that followed the same impenetrable terrain made Bulga a prison in which the region's quarter of a million inhabitants languished in isolation from the outside world.

After years of official neglect, in 1971 a rural development association was set up to help the population gain access to schools, medical assistance and markets for their farm products by building the first road through the middle of Bulga, from Sembo to the market town of Arerti. The scheme was a private initiative which won the support of the government's highway authority, and soon enough of the road had been built to enable the local people to reach a clinic. Ordinary people saw what the road could mean to them and, as well as supplying labour, began to contribute small amounts of money from their meagre earnings. Clearing and gravelling were proceeding well when, in 1974, the Marxist regime of the Derg took over and everything came to a standstill.

When Mengistu fell in 1991 and private enterprise came back into favour, one of the original promoters of the road, Gaitachew Bekele, decided with friends to revive the project as a sign by 'concerned citizens of their sense of humanitarian and national obligation to assist the underprivileged section of the rural community'. Mr Gaitachew and others like him, veterans of the wartime resistance, had time and energy to dedicate to this task, but for money and equipment they applied to the government and appealed to the international welfare organisations and donor agencies for help. The Government allocated 1 m birr (ECU 160 000) for roadbuilding equipment, a figure almost matched by the European Union's contribution of 929 000 birr to pay for fuel, lubricants and workers' overtime payments through a scheme known as Shewa PADEP (short for Peasant Agricultural Development Programme). The remainder of the cost, 90 000 birr, is to be borne - when they can afford it - by the local communities who will use the road, as an incentive to them to take an interest in its success.

The 35 km, gravel-surfaced road links the highlands to the rift valley and snakes across mountains at altitudes of up to 3200 metres. About halfway along it, on a blues near the village of Sekoru, stands another 1970s project halted during the Derg's time and now completed with European Union help. Sekoru is a small community of subsistence farmers most of whose children receive no schooling at all except in traditional farming skills. Even now there is no compulsory education at any level, even primary - the government says it wants to motivate peasant families into having their children educated, not force them. So its policy, as with the road, has been to involve the local community by asking them to help build and then maintain the school. Now that the stone and breezeblock structure is ready for use, the Ministry of Education will supply teaching staff, and it is up to the 150 families in Sekoru and two neighbouring villages to send their children.

The problem is that during the period of the Derg peasant communities were thoroughly demotivated by a system of education which, where it existed at all, was tightly controlled from the top down by political appointees. In Sekoru a small school put up in the early 1970s was wrecked, and parents interested in having their children educated had to send them to boarding schools in the towns. Added to this was the Derg's policy of resettling peasants far from their places of origin, with the result that many of the people now living in Sekoru are from elsewhere and are not certain whether they will stay, especially while the state's intentions regarding the ownership of land remain unclear. Recent crop failures have also made it hard for the villagers to contribute their share of the construction costs, though local people employed on the site have agreed to accept half the usual daily wage for building work; and Mr Gaitachew says that if the school charges fees no family will be able to afford them. So the building stands ready for use, with its six classrooms end houses for the leachers, but poverty - and a lingering suspicion among villagers of projects sponsored by central government - cast a cloud over the school's immediate future. The difficult job of persuading local people how much their children can gain from education now has to be done.

Some kiLomes further up the main road lies another project financed partly from the European Development Fund, a sheep breeding station occupying 550 hectares at the town of Debre Berhan. Founded 30 years ago, this is the oldest established farm in the country, and conducts a programme to improve the productivity of local sheep breeds by crossbreeding with exotic imported types. By crossing Awassi rams from Israel and Hampshire rams from Kenya with local ewes, the ranch produces offspring which are twice as heavy as the local sheep, and distributes these animals to Ethiopian farmers to improve their flocks. An EU commitment to help improve the infrastructure as part of Shewa PADEP was given in the last years of the Derg but, owing to political unrest and lack of materials on the local market, the aid did not start showing results until 1992. The cost of sheep development and of upgrading the ranch is 400 000 birr (some ECU 65 000), including the purchase of 500 local ewes to add to the 2000 head of sheep already at the station. Given the size of Ethiopia's farming population, the amount of work to be done is still vast, but this is making a useful contribution to improving the lives of many peasant families.

The results achieved by a very ambitious rural development scheme on the other side of Addis Ababa have been more mixed. A programme to help peasant coffee farmers in south-western Ethiopia has been running since LomII and covers nearly a third of the country's main coffee production area. The aim is to meet growing domestic demand and produce larger volumes for export by expanding the area under coffee and greatly improving the yields from existing farms. Coffee production, according to the Minister of Agriculture, is not actually second or even third priority for the Government - self-sufficiency in food has to come top - but the coffee sector employs one in four of the population and therefore warrants encouragement, especially when it comes to upgrading the quality. A further incentive is that farmers are now allowed to sell their beans at auction to the highest bidder instead of at a fixed price to a government buying agency, so the price to the producers has doubled. And the devaluation of the birr has made Ethiopian coffee more attractive to foreign buyers, leading to higher export sales.

Coffee grows wild in the provinces bordering on Sudan and Kenya and since time immemorial has been cultivated as a livelihood. However, local farmers have missed out on improved yields by neglecting or being ignorant of such techniques as pruning, mulching, fertilising and spraying, and have overlooked or not had access to disease-resistant cultivars. One success of the coffee improvement project has been to establish simple but effective nurseries for top-quality seedlings, which are then planted out with guidance from extension agents. Existing plantations, however, have remained in poor condition, and the government and the EU have agreed that the programme will now have to place the emphasis on managerial and technical assistance. Again, it seems that 17 years of overcentralisation have discouraged farmers from acting on their own initiative and made them mistrustful of interference, however well-intentioned, in their traditional practices. Here, as elsewhere, a whole new spirit of enterprise has to be encouraged to emerge. R.R.

Reviving private business and industry

Small firms face the challenges of a restructured economy

'One major hindrance to economic development in the past was the restrictive policies imposed on the activities of the private sector. Without changes in the policy, efforts to realise economic recovery would be futile.'

So says the guide to 'Ethiopia's Economic Policy during the Transitional Period' which the government issued in 1991 six months after it came to power. A look at Addis Ababa's streets today offers colourful proof of the rapid shift that has taken place in economic policy in the past three years. Advertising hoardings which during the time of the Derg bore placards proclaiming the victory of socialism are now festooned with the praises of more mundane but tangible attractions: motorbikes, shoes, refreshing drinks. In government offices and wherever representatives. of the international aid donors and lenders meet, the words 'private enterprise' are on everyone's lips.

Official pronouncements are one thing, but what is happening on the ground? The Vice Minister for Industry, Girma Yigebru, says the Government is in favour of encouraging small and medium-sized enterprises (SMEs) because they are a good way of creating employment and encouraging technology transfer. The European Union, too, is among those who regard encouraging private-sector success as a priority for Ethiopia's economic development, with the focus very much on small businesses. In Addis Ababa there are several small firms which get, or hope to get, a helping hand from Europe as they make their contribution to Ethiopia's transformation into a free market economy. Their experiences illustrate some of the opportunities and difficulties the private sector faces.

Leather

One of the few raw materials the country produces in quantities above subsistence level requirements is hides and skins; in fact the sector is second only to coffee as a potential export earner. Apart from supporting herders in rural areas, it provides a living for urban dwellers who process the skins into garments, shoes and bags. Ethiopia's Ministry of Trade has selected three leather goods manufacturers, one public and two private, for support as part of a Foreign Trade Development Project which it is financing jointly with the European Commission. To help the companies make their breakthrough into the export market, the project has provided technical assistance in the form of a workshop for their designers, as well as helping their representatives attend the famous international fashion fair in Germany to prospect the market there and in Belgium.

One beneficiary of this scheme is Genuine Leather Craft, a private limited company operating in what used to be an apartment in the trading district of Addis Ababa known as Mercato. Its general manager, Teshome Kebede, says that with larger premises he could employ nearly twice the present workforce of 28 - and would dearly love to expand his export sales too, from the present 20% of output to 60%. As the European Union is the world's biggest buyer of leather products, he naturally has his sights set on consumers there, and aims to compete on price and quality with other developing country producers such as India, Pakistan and China. The problem is that big retailers in, for example, Germany only place huge bulk orders, which at the moment a firm as small as Genuine Leather Craft could not fulfil, so Mr Teshome is looking instead for outlets in specialist shops with a fast turnover - and lower mark-ups. Going up-market, of course, means the quality has to be improved - so a vital need is a higher standard of training for the leather workers, and here the EU has promised to help. Another requirement for expansion is more capital. But neither it nor the other two selected firms can put up the security the banks require for a large enough loan, so instead the three manufacturers are asking the EU to stand guarantor or lend them take-off money directly, possibly from Stabex funds.

Light engineering

'It was a bonanza!' That is how another businessman described the scheme to allow Stabex funds to be made available to private entrepreneurs. Iacona Engineering is a light industrial company in the suburbs of Addis Ababa which produces metal furniture for offices, hospitals, hotels, restaurants and schools. General manager Roberto Iacona says the firm employs 75 people, which makes it one of the largest SMEs in Ethiopia. He has used Stabex money to import raw materials such as steel box tubing and the EU's Centre for the Development of Industry (CDI) is using its good offices to help him make contact with European firms, as well as carrying out a study for him on the requirements for going into industrial, rather than artisanal, production and making his own components.

However, there are difficulties inherited from the pre-1991 period. Under the old regime it was impossible to raise enough capital to import new technology, so many of the processes at the factory are hand-operated. Mr Iacona now wants to expand the business so that he can export at least to the countries of the Preferential Trade Area in eastern and southern Africa, but to improve quality and increase output he needs, for example, electric-powered machines to bend metal tubing which cost $35,000 each. The legal restriction on using foreign exchange to import such machinery has gone, and dollars can be bought at auction, but, since the purchasing power of the birr was halved through devaluation in 1991, to take a bank loan in birr for this type of outlay, and at 14 to 15% interest, is beyond even a relatively successful small entrepreneur's means. The land leasehold system, in its turn, discourages borrowing to finance expansion: Iacona Engineering already occupies 6000 square metres and has plans to take over neighbouring land to put up more workshops, but Mr Iacona is unwilling to invest in fixed buildings on land which will not be his and plans instead to put up prefabricated buildings which can be dismantled and removed.

Furniture and fashion

A much smaller company which has been developed entirely with private money is the St George's Interior Decoration and Art Gallery, a luxury establishment whose owner and managing director, Saba Alene, produces furniture from local materials to designs of her own which she bases on traditional styles. Sales are largely to the diplomatic community locally, to foreign visitors and to Ethiopians living abroad, and the company provides a living for some 20 people. Mrs Saba has no problem finding outlets for her products, or for the paintings by local artists which she also exhibits, but she too says that state ownership of land and real estate makes it difficult to plan ahead. Her business premises are held on a short lease and, like other urban leaseholders, she still has no idea what it will cost to extend the lease, but cannot acquire the freehold of the building. Another constraint is the rising price of her raw material: government offices controlling the supply of wood do not have enough to meet the demand, and levy a tax on what they have, while private suppliers are prohibitively expensive. This problem will no doubt solve itself when competition among suppliers develops in the new free market climate, but surviving the transition is the immediate difficulty.

Another businesswoman in Addis Ababa is Genet Kebede, a ladies' dress designer who markets her creations through a small company she has set up called Paradise Fashions. A show of Mrs Genet's glamorous collection was seen by the department for trade promotion of the European Commission's Directorate-General for Development, which is considering funding a showing of the dresses at the Paris prorter fashion fair this year. The styles incorporate Ethiopian cultural motifs and are pitched at the expatriate Ethiopian market, particularly in North America. Mrs Genet employs ten people, and on her small turnover a huge problem is the cost of travelling abroad to show her product: air tickets have to be paid for in foreign exchange and have become so dear since the devaluation of the birr that four out of five business people, she claims, have given up travelling altogether. Premises are a problem, too: last year she was engaged in buying land when the urban land leasehold proclamation was issued, and now she has no idea if she will get title to it - or a refund of the 85% of the price she had already paid when the law came out. A further catch is that the Commercial Bank refuses loans to business people who cannot produce a receipt for a paid-up lease (in any case, the proclamation does not state what leases are to cost, so none can be issued). And on the regulations governing imports, without which she cannot make her dresses, Mrs Genet says it is a case of 'today one thing, tomorrow another'. At present customs duty is a quarter of declared value, which for some entrepreneurs on slender margins is so high that they have been unable to redeem goods ordered from abroad when they arrive at the airport (to make matters worse the airport, not unreasonably, then bills them for storing the goods). At least Paradise Fashions can afford to import the materials it needs, but only because Mrs Genet's husband is an expatriate paid in foreign exchange.

A free market?

Ashenafi Shifferaw, the head of the Ethiopian branch of the CDI, says the number of socialist regulations which have not yet been revoked is a real obstacle to liberalising the economy: for example, public enterprises still get priority in buying supplies of raw materials and securing credit from banks. Some SMEs are so demoralised that they wonder whether the Government is setting up a freemarket economy at all. On the subject of their financial difficulties, the President's Economic Adviser, Neway Ghebreab, says that there is a great deal of liquidity available for investment from the state owned Commercial Bank. But, as Mr Ashenafi points out, the fact that even after the Derg the Bank will only accept fixed buildings or plant as collateral for a loan has discouraged anyone trying to start up in business with no fixed assets - one businesswoman who wanted to produce plastic buttons industrially was kept waiting for five years. And a manufacturer of plastic bottles imported up-to-date equipment three years ago but has still not been able to obtain foreign exchange to bring in technicians to train his workers to use it. Birr to buy the currency at auction can be borrowed privately, Mr Neway says. But high interest rates still put loans on the free market beyond the reach of many.

The lack of clarity about land and property ownership is another disincentive. In such a poor country the government has to set priorities, and is more concerned with improving conditions for the 85% of the population who live from subsistence farming than for manufacturers of in essentials living in urban areas, but entrepreneurs say it is the goods and services they supply which will get the economy moving for everybody and bring in hard currency. If the present uncertainties persist, to quote Mrs Genet: 'the middle classes will just give up.'

Coffee

Paradoxically, it was in the very export sector where stakes were highest that a more positive note was at last sounded. Coffee has traditionally accounted for more than half of Ethiopia's export earnings, and exports in the 1992/93 financial year (from July to July) were 92% up on the figure for the preceding year. One entrepreneur in the capital whose turnover has gone up fourfold since 1991 is Geoffrey Wetherill. This expatriate Englishman with 30 years' experience of life in Ethiopia has a coffee processing business, Ambessa Enterprises, where Arabica beans from the country, bought at auction, are graded, roasted and packed. The company operates two eight hour shifts a day and expects to process at least 3000 tonnes by the end of this year for the domestic and export markets. There was a high point in the 1980s, though, when the factory worked round-the-clock and handled twice that amount. Now there is a glut on the world coffee market and, like other exporters, Mr Wetherill is having to go for improved quality to attract foreign customers, primarily in the United States, Europe (particularly Germany), Japan and Saudi Arabia. But he sees great potential for expanding sales in Ethiopia itself.

'In a world of coffee overproduction,' he says, 'we are in a country where coffee is short, despite the fact that we're producing it.' In the last 20 years the population of Ethiopia has doubled, but the amount of coffee being produced is still the same. Every household in the country drinks it; at 10kg, say, per head, there could be a domestic market of half a million tonnes a year, far outstripping last year's exports of just under 70000 tonnes. Mr Wetherill is not bothered about who owns the farmland where the beans are grown or the urban land on which his factory stands, provided the present holders have a guaranteed right to continue using the land; of more concern to him is improving the whole operation from its starting point. So he is looking forward to investment in the form of joint ventures with foreign companies interested in providing services to farmers setting up in business (in fact he reckons there is room for ten to fifteen thousand small agribased industries in the country). The European Union could play a vital part, he believes, by giving more expert technical advice to farmers on pruning, picking, hulling and storing their crop, and by helping them acquire simple equipment.

Thinking along the same lines, Mr Iacona speaks for all his fellow entrepreneurs when he says he is grateful for EU aid, despite one criticism which his counterparts in many ACP countries (and some of their governments) might share: 'The procedures take too long. Businessmen want things immediately. We don't want to be assisted for the rest of our lives, but this is the moment when we can catch up and we need assistance to make us competitive, and not just in the local market. We need to be supported aggressively and with less bureaucracy to get the maximum effect.' Deregulation all round seems to be the key. R.R.

Freedom of the press - A contribution to the democratic process

Since the Mengistu regime was overthrown a very evident sign of liberation in Ethiopia has been a burgeoning of the press, with the private sector well to the fore. In the early days there were some. thing like 100 newspapers fighting for readers, primarily in Addis Ababa; market forces have decimated the field since then, but there is still more choice of reading matter and points of view than ever before in the country's history.

Press freedom was officially enshrined in a law decreed in October 1992 which also bans censorship. In democratic style, it provides for right of access to news and information from government and other sources, and lays down that publishers and editors shall not have to disclose their sources. The proclamation specifically lists criticism and expressions of opinion among the purposes of the press, and to such an extent has this been taken to heart that some independent newspapers have been described as being all editorials and no news. As well as the government itself, and professional journalists, the publishers include businessmen and even officials formerly responsible for propaganda under Mengistu.

Private-sector newspapers and magazines have been very critical of the Transitional Government's policies, particularly the nationalities policy, and were almost unanimous in opposing the independence of Eritrea. Here they start treading on risky ground, however, since the press law makes it a responsibility of journalists, editors and publishers to ensure that reports are 'free from any criminal offence against the safety of the State or of the administration' and 'any criminal instigation of one nationality against another or incitement of conflict between peoples'. There must also be no 'agitation for war'. Such wide and far-reaching prohibitions are obviously a solid inducement to self-censorship. But there are also persistent reports of writers and publishers in the independent press being detained by the security forces on the basis of these clauses and warned against covering certain subjects. The editor of the Amharic-language Ethiopis Ghazeta was detained at the end of 1992 for reporting that there was conflict in northern Ethiopia. His articles were found to be seditious by the court and the editor was jailed for two years this March. The editor of the weekly Eyetta was fined for publishing a speech by an exiled opponent of the Government which the court found to be 'a declaration of war' on the Government. The central or regional government prosecutor can actually intervene in advance to prevent the dissemination of any publication which he has reason to believe contains illegal material 'which may cause serious damage' - to whom, the law does not say. Should a writer or editor decide to use a pen name, that fact has to be prominently indicated in the publication concerned.

These measures amount to a pretty effective straitjacket on any newspaper wishing to discuss many aspects of government policy - and yet there are some bold enough to do it. This is where, according to these critical voices, the authorities start applying more insidious forms of discouragement. Private publishers have very little capital and have to rely on the Government's printing press; the charge for using it has been doubled in the last year and a half. The Government says the devaluation of the birr has made imported newsprint dearer - yet it contrives to sell its own papers, produced on the same press and newsprint, at much lower prices than the independent press has to charge to make a return. As far as reporting official news is concerned, private newspapers say the Government bans them from its news conferences and does not answer questions they put to it; this, too, puts the independent press at an obvious journalistic and commercial disadvantage, which is compounded by the fact that the government press also has a monopoly of official public announcements. Even independent photographers and newspaper vendors are, it is claimed, harassed by the police.

While dissenting from the government line in the written press is fraught with difficulties, via Ethiopia's broadcast media it is impossible. The Charter setting out government policies for the transitional period until elections says that the Council of Representatives is to 'provide the mechanism to ascertain the fair and impartial application of the mass media', but regulations to bring this about have not yet been issued and radio and television are still entirely state-controlled. Opponents of the Government claim their political activities are not properly reported, and that they receive no air time to put their own case and cannot even pay for announcements to be broadcast. They can and do, of course, talk to the foreign news media.

The government, on its side, is putting through a difficult programme of constitutional change and regional devolution which will not succeed if the country is torn apart by dissension fed by the media. Trying to suppress reports which it does not like could, however, be counterproductive. As a report on the human rights situation in Ethiopia published by the Ethiopian Human Rights Council in January puts it, 'One of the greatest services provided by the free press is that of dispelling doubts, rumours and speculation which undermine stability and confidence. It is helping the people to see the truth from different angles and contributing its share to the establishment of the democratic process. Such efforts should be encouraged by the Government instead of being stifled. R.R.

Profile

Map

Area: 1.13 million km²

Population: 53m. Growth rate 3.5% p.a. Rural population 85%.

Average life expectancy :46 years

Infant mortality: 125 per 1000 live births

Literacy rate: Estimated at between 23% and 62% (including Eritrea)

Capital: Addis Ababa (population estimated at 2.5m)

Other main towns: Harar, Dire Dawa, Makelle, Dessie

Religion: Orthodox Christian, Muslim, Animist

Languages: Amharic, Oromo, Tigre, Somali, Afar and numerous others; English widely taught

Political structure: Unitary republic with 14 regions. The Transitional Charter approved in July 1991 provides for a Council of Representatives of 87 members and a Council of Ministers. Elections for regional governments were held in June 1992. National elections are due in June 1994.

Head of State: Meles Zenawi, leader of the Ethiopian People's Revolutionary Democratic Front and President of the Transitional Government

Currency: Birr(B6.97 = ECU1,B5.13 = $1 in April 1994)

Inflation rate: (January 1994) 10%

GDP: $6.0 billion (1991)

Real GDP growth: 7.6% (1992/3 fiscal year starting on 7 July)

GNP per capita: $120 (1991)

Principal exports: Coffee (62%), hides and skins (21 %), gold, vegetable products (1990; includes Eritrea)

Principal imports: Machinery (44.5%), motor vehicles (28%), crude petroleum (27.5%) (1989; includes Eritrea)

Total value of exports: $177m (1992; includes Eritrea)

Total value of imports: $1.03 billion (1992; includes Eritrea)

Public finances: 1993/4 budget:

Expenditures: 8.4bn birr, broken down as follows:

- operating expenditure B4.578bn, investment B3.847bn, or
- central government B5.3bn, regional governments B3.1bn, or
- B1.49bn administrative and general services;
B3.67bn economic services; B1.74bn social services;
B1.57bn miscellaneous expenditure.

Receipts:

B3.8bn from revenues, indirect taxes, import duties, government investment;
B2.12bn from foreign cash grants, counterpart funds and technical assistance;
B2.3bn from capital revenues: local sources, foreign loans, counterpart funds.

EU-Ethiopia Cooperation: the largest support programme in the ACP

by Heino Marius

Ethiopia possesses a rich cultural heritage and a long history, the country was never colonised and its inhabitants are very independent in spirit. Over the last 30 years Ethiopia has attracted international attention mainly through social upheavals, extended warfare and pro. longed droughts. Following the feudalism of the imperial time and the red terror of the 'Derg' regime, the Transitional Government of Ethiopia (TGE), which took power in May 1991, inherited a devastated economy with one of the lowest per-capita incomes in the world. The country now enjoys peace and has initiated economic reconstruction.

After two decades of cooperation between Ethiopia and the EC, now the EU, this appears to be a special juncture, as both parties are in a position, for the first time, to combine their efforts within the framework of progress towards a market economy and a democratic political system.

Ethiopia occupies a unique position in the development cooperation structure of the European Union. Taking into account all instruments of assistance, including both programmable and non programmable resources, the country is the largest recipient of EU support, ahead of any other ACP state. Allocations of programmable aid amounted to:

- Lom	ECU 120 million
- LomI	ECU 141 million
- LomII	ECU 210 million
- LomV	ECU 265 million
	(1st Financial Protocol)

The LomV contribution includes ECU 225 million grant funds, out of which ECU 20 million have been earmarked for Eritrea, and ECU 40 million risk capital administered by the European Investment Bank (EIB).

Impressive non-programmable funds were designated in response to humanitarian needs and to compensate for losses in export earnings. Deliveries until 1993 total approximately ECU 600 million worth of food aid, ECU 120 million for emergency aid and ECU 250 million under the STABEX scheme. To this are added EIB loans out of regular resources and benefits from regional programmes. Total EU disbursements in Ethiopia have to date easily exceeded ECU 1.5 billion.

Historical perspective

Cooperation between Ethiopia and the EU dates back to 1973 when, still under the reign of Emperor Haile Selassie, the then Community supported a food aid programme to alleviate a serious drought affecting the northern regions at that time. In the event the Imperial Government was accused of ignorance of the plight of the affected populations, and this was one of the factors which led to the overthrow of the old regime by a group of junior army officers, later to become known as the Derg, who set the country on a socialist path. Negotiations for accession to the First Lomonvention were completed with the new Government, and Ethiopia has been a signatory to all further Conventions ever since.

Under Lom and LomI, collaboration focused primarily on the provision and upgrading of economic and social infrastructure to lay a foundation for the growth of the productive sectors. Major completed projects from this period include Addis Ababa water supply, Amibara irrigation, the Amarty hydropower scheme and the Ghimbi-Gambella road.

The LomII National Indicative Programme (NIP) was negotiated and signed in May 1986. In the aftermath of the 1984/85 famine the Government opted to give priority to agricultural development as the focal area for EC assistance. This approach corresponded with the LomII emphasis on food security and the move away from isolated projects towards support for policies and sectoral strategies. The resulting need for a more thorough policy dialogue led to some liberalisation in agricultural pricing and marketing, preparing the ground for a number of large rural development schemes, namely the Shewa Peasant Agricultural Development Programme (PADEP), a third phase of the Coffee Improvement Project (CIP) and the Lake Fisheries Development Project.

Confronted with steep economic decline towards the end of the 1980s, the Government, in what perhaps can be referred to as an Ethiopian version of perestroika, initiated the so-called New Economic Policy with a view to facilitating the participation of private-sector operators in the economy, while loosening the central planning doctrine. As a new feature of EC aid to Ethiopia this period saw the introduction of quick-disbursing operations through Sectoral Import Programmes in support of the productive sectors, which had the double effect of alleviating the foreign-exchange crisis facing the country while supporting selected budgetary targets through the generation of counterpart funds.

1991 witnessed a dramatic intensification of the civil war and the seizure of power by a coalition of rebel groups led by Meles Zenawi, the current President, in May of that year. Owing to these events, the initial version of the National Indicative Programme for the LomV First Financial Protocol signed on 23 February 1991 became obsolete. A completely revised NIP was concluded on 18 March 1992, with the Transitional Government of Ethiopia (TOE) advocating a gradual reduction of the role of the State while strengthening the market economy, as laid down in the Economic Policy for the Transitional Period adopted in November 1991. It was agreed that EC-Ethiopia cooperation would be based upon the implementation of new approaches consistent with priorities spelled out in the LomV Convention, in particular the active promotion of the private sector in agriculture, industry and services. Rural development and support to small and medium-scale enterprises were identified as focal areas. The parties further agreed that Community assistance would be placed within the context of a structural adjustment programme with major objectives outlined in a Policy Framework Paper (PFP).

From rehabilitation to structural adjustment

Initial priorities for cooperation with the Transitional Government were clearly focused on rehabilitation efforts. The EC responded swiftly to the precarious nature of Ethiopia's economic situation by participating in the multi-donor Emergency Recovery and Reconstruction Project (ERRP) with a contribution of ECU 98 million out of a ECU 550 million package. Funds were allocated from existing sources including STABEX, Sectoral Import Programmes, Food Aid, Shewa PADEP and others.

The ERRP was not subject to policy conditionalities but addressed urgent short-term needs such as import requirements to revitalise the productive sectors, both public and private, the rehabilitation of war-damaged infrastructure and the restoration of facilities in the social sectors. The component allocated to the private sector has been disbursed particularly fast.

Tableau 1: Total EU Assistance to Ethiopia (1975-1993) - (ECU millions)

At the time the ERRP package was negotiated it was already assumed that the TGE would prepare a comprehensive structural adjustment programme to ensure medium-term donor support. In parallel with the Bretton Woods institutions, Commission Vice-President Marin pledged ECU 75 million in EU structural adjustment support to Ethiopia in order to reinforce the country's macroeconomic reform process. The related Financing Agreement was recently signed and a first tranche amounting to ECU 40 million in balance of payments support was released in December 1993. The scheme is designed as a General Import Programme whereby the funds are channelled through the fortnightly foreign exchange auction system initiated in May 1993. Associated deposits in local currency will generate counterpart funds and contribute towards budgetary expenditure in the health and education sectors to offset possible negative social effects of the adjustment process.

The practicalities of the use of counterpart funds are set out in a Memorandum of Understanding (MoU) negotiated between the EU along with other major donors and the Government, allowing for the full integration of such funds as part of regular public expenditure while providing for periodic discussions on the substance and quality of the budget.

Rural development and food security

Agriculture remains by far the dominant sector of Ethiopia's economy and therefore deserves the priority attention it receives as part of EU Ethiopia cooperation. The large rural development programmes which were launched during the final years of the Derg were designed to increase crop yields in the target areas, thus containing the country's overall food deficit and, in particular in the case of coffee, enhancing foreign exchange earnings.

However, it is now evident that these programmes cannot be completed as originally planned, as they have become entangled in administrative complications and management difficulties. In the case of Shewa PADEP, the largest rural development programme the EU is currently funding in all ACP countries, the need for a reallocation of remaining unspent resources towards small-scale irrigation, soil conservation, afforestation and micro projects has been identified. A similar situation applies to the Coffee Improvement Project. It was agreed with the Government not to launch any new major rural development programmes unless it is assured that existing funds will be effectively disbursed.

Ethiopia is still unable to sustain its growing population through local food production. The deficit is largely made up by way of food aid imports. The EU as the biggest donor in this area contributed the equivalent of ECU 126 million in 1992 and 1993. As part of a global shift from relief to development assistance a pilot programme of structural food aid was implemented in various impoverished areas of Addis Ababa, whereby 50000 tons of wheat were sold at subsidised prices to needy target groups. It is anticipated that the EU's food aid policy will undergo a further reorientation towards food for work or cash for work programmes in order not to stifle domestic production of foods crops.

Private sector development and trade promotion

Following recent reform efforts, namely the lifting of investment restrictions and the liberalisation of trading activities, the EU has already contributed substantially towards the revival of the private sector in Ethiopia through foreign exchange allocations using Sectoral Import Programmes and STABEX funds. This commitment will be further consolidated through the promotion of small-scale enterprises, which are to benefit from a comprehensive support programme including policy advice, credit support, export promotion and entrepreneurship development. The European Investment Bank (EIB) plans to provide a credit line for medium-sized firms through a local handling bank.

The EU is Ethiopia's most important trading partner, yet the country's trade balance with the Union has undergone a substantial deterioration in recent years. The TGE and the Commission aim to address the structural weaknesses of the country's export sector through the Foreign Trade Development Programme by actively promoting non-traditional exports with hands-on marketing operations and by boosting the participation of private operators in export trade. Beyond that, the EU will continue to sponsor Ethiopia's participation in international trade events.

Under the Stabex scheme, a substantial part of foreign exchange allocations in compensation for export income losses is made available to enterprises engaged in the coffee, hides and skins, import substitution and export diversification sectors to enhance overall trade performance. For forthcoming trenches the Commission is currently looking into the possibility of integrating Stabex funds into general balance of payments support through the foreign exchange auction system.

Future plans

Although, owing to political and administrative changes, the implementation of the LomV National Indicative Programme is somewhat behind schedule, a variety of project preparatory activities have been carried out. These will bear fruit in the near future and should also have implications for cooperation under the Second Financial Protocol.

To complement the TOE's policy and strategy paper on transport the EU will carry out a road sector study to put its future assistance in this field on a sound basis. To date, agreements have been reached to rehabilitate the Addis-ModjoAwassa road and to prepare a feasibility study for the Addis-Jimma road.

At the regional level, studies will be carried out to assess the viability of the Ethiopia-Djibouti railway. This will include a comparative evaluation of road and rail traffic, an analysis of the institutional framework of the railway and the identification of emergency rehabilitation needs.

A further major infrastructure project will aim to improve the water supply and sanitation system in Addis Ababa, provided issues related to tariff structure and improvements in the management and operations of the city's Water and Sewerage Authority can be resolved.

The EU will continue to support human resources development activities in Ethiopia through the Integrated Training Programme. A new project about to start is the restoration and preservation of the historic rock-hewn churches in Lalibela in cooperation with UNESCO.

The country will also benefit from a special rehabilitation initiative for war affected African countries, recently launched by the Council of Ministers in Brussels, to provide additional funds in support of refugees, returnees and demobilised soldiers by way of NGO-implemented programmes.

Conclusions

Recent achievements of EU-Ethiopia cooperation have to be seen within the framework of the transformation of the Ethiopian economy from a centralised, war-focused structure to a decentralised, market-oriented system. Although the initial success of the reform process is commendable, it appears that the time required for transition will be longer than originally anticipated. The regionalisation policy, which involves the shifting of a major share of government responsibilities to local and regional authorities, has added further complexity to the process. The question is whether the TGE can sustain the momentum of reforms by further encouraging the involvement of so far neglected groups in the development process, in particular the private sector. Initial priorities in EU-Ethiopia cooperation after May 1991 were clearly directed at rehabilitation efforts to help ensure immediate benefits from the peace dividend. However, during the time of transition, the implementation and preparation of regular projects were affected by considerable uncertainty. A recent programme review mission from the Commission in Brussels held fruitful discussions with the Ethiopian authorities on how to increase the effectiveness of assistance and how to speed up programme implementation. Meanwhile, the preparation of future programmes has gained considerable momentum.

In view of the radical changes the Ethiopian economy has been through during the recent past, cooperation between the two parties has shown considerable continuity as well as flexibility in order to take account of new priorities on both sides. The partnership, which was initially based on the principle of ideological neutrality, has grown in quantity as well as in quality over difficult years, as more and more importance was attached to policy dialogue to fulfill certain performance standards in programme design and project implementation. The LomV Convention, with its enhanced emphasis on the private sector and human rights, puts the EU in a good position to support the country's new development path.