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Fighting in Ethiopia Stalls Somaliland’s Trade Ambitions

Berbera port is the main overseas trade gateway of the breakaway Republic of Somaliland. The port city is located on the Gulf of Aden – one of the globally most frequented seaways connecting the Indian Ocean and the Mediterranean. Only a few years ago, Berbera port was a dilapidated runway, originally built by the British empire, and then modernised first by the Soviet Union and later the US. The port is the lifeline of Somaliland, which imports most of what it needs, from food to construction material, cars and furniture. Its main export is livestock to the Arabian Peninsula. In 2017, a concession agreement was signed between DP World, Ethiopia, and the government of Somaliland to rebuild and modernise the port of Berbera. The 30-year concession involves: a commercial port, a free zone, a corridor from Berbera to Ethiopia’s borders, and an airport in Berbera. The concession allowed Somaliland’s government to retain 30% of the shares in the port, 19% for Ethiopia, and 51% for DP World. But in June 2022, Somaliland announced that Ethiopia had failed to acquire its 19% share of Berbera port. Ethiopia failed to meet the conditions. Somalilanders remain optimistic, nonetheless, expecting that especially trade from eastern parts of Ethiopia will redirected to Somaliland. But this plan is not without risks. The pandemic and war in Tigray has slowed down Ethiopia’s economic growth, and the stability of the country is on the brink.