Over the past decade, the Ethiopian government has remained hesitant to engage in governance reforms with the EU. It reluctantly started to engage in the early 2000s, and became more open ahead of the 2005 elections. After the 2005 election crisis, it at first refused to cooperate and then until the 2010 elections only reluctantly engaged. Between 2011 and 2014, the government has again become slightly more open to cooperation. What explains this overall reluctance and the slight changes over time?

This chapter argues that Ethiopia is an example of a country where the EU’s good governance strategies only partly converge with the preferences of the government. Due to specific structural conditions, the Ethiopian government generally has a strong interest in building an effective state and investing in public goods provision, not unlike Rwanda. Similar to Rwanda, the government faced opposition from within the ruling elite in the early 2000s. In response, the Ethiopian government also invested in making state institutions more effective. In contrast to Rwanda, however, the Ethiopian government faced mass opposition and direct threats to regime survival, notably during the 2005 elections. In the aftermath of the crisis, it used low-intensity coercion as a response to opposition. Moreover, the leadership used the state as an instrument of cooptation and expanded the influence of the party on the state and society. In this context, the EU’s good governance strategies caused some costs in the early 2000s and substantial difficulties after 2005.

Ethiopia is considerably dependent on aid. In the early 2000s, the EU became one of the largest donors to Ethiopia. In the aftermath of the 2005 election crisis, Ethiopia’s aid dependence slightly increased as output legitimacy became more important for the government. Moreover, the EU raised aid levels, providing aid through aid modalities and to sectors that matched the preferences of the government. Ethiopia’s (aid) dependence thus explains why the government continued to at least reluctantly engage with the EU in governance reforms after 2005, even though cooperation generated significant costs.

Access to cooperation with China was limited in the early 2000s. Since the 2005 election crisis, however, China has become an alternative partner for the Ethiopian government. Yet, the Ethiopian government has continued to at least reluctantly engage with the EU, which gives substance to the argument that the presence of China only had a small effect on the willingness of African governments to engage with the EU in governance reforms between 2000 and 2014.

4.1 Structural Factors Shaping Ethiopia’s Survival Strategies

When the EPRDFFootnote 1 overthrew the militarist Derg regime in 1991 after 17 years of armed struggle, the new regime had to transform the state and the economy from a feudal system into a modern state. The new government embarked on an economic reform and modernisation programme. It inherited a relatively efficient bureaucracy that was prepared to work for the successor regime. The army was replaced by the armed wing of the Tigrayan People’s Liberation Front (TPLF) and the new government quickly gained the monopoly on power over most of the territory (Clapham 2009, 185; Young 2004).

The Ethiopian leadership faces several interrelated structural challenges that impact on the government’s basic choice of strategies for remaining in power. The political coalition that sustains the EPRDF regime is relatively broad compared to its predecessors: the militarist Derg regime and the monarchy under Haile Selassie . The core elite consisted primarily of the TPLF—those Tigrayans who led the struggle against the Derg. However, to broaden its support base and to expand its influence throughout the country, the TPLF developed alliances with several regional parties in the early 1990s. Under the umbrella of the EPRDF, the TPLF thus took charge of a party coalition rooted in different regions (Clapham 2009, 184f; Young 2004, 35ff; Vaughan 2011, 626ff).Footnote 2 The EPRDF and particularly its TPLF members remained influential in the security forces and the army (Lyons 2011, 11). The EPRDF has a key role in economic activities through its influence in parastatal companies,Footnote 3 party-affiliated companiesFootnote 4 and cooperatives (Vaughan and Gebremichael 2011; Furtado and Smith 2009; Altenburg 2010). Beyond the core elite, the EPRDF’s main constituency are peasants; the EPRDF sees neither the (relatively small) private sector nor the urban middle classes in Addis Ababa as its natural allies (Vaughan and Gebremichael 2011, 26).

Territorial integrity constitutes an important challenge to the Ethiopian leadership. In a multi-ethnic state and within a region prone to insecurity, state failure and violent conflicts, national unity is one of the main pillars of the EPRDF’s legitimacy. Between 1998 and 2000, Ethiopia and Eritrea fought a war, during which about 100,000 people were killed and one million displaced. Since then, the conflict has remained deadlocked (Clapham 2009, 186).Footnote 5 Domestically, the government maintains its monopoly on power over most of the territory, except for the Ogaden region close to the border with Somalia where the government has been fighting a counter-insurgency campaign (Abbink 2009, 20).

While the Ethiopian leadership needs substantial means to sustain its relatively broad support base, the government has little access to natural resources to generate revenues. Some oil and natural gas deposits may be situated in the Ogaden region. However, prospecting has only progressed slowly, not least due to the difficult natural environment and insecurity in that region.

In light of these interrelated challenges, the Ethiopian government has a fundamental preference for building effective state institutions to generate revenues and provide public goods. However, the following sections will show how imminent threats to regime survival during the past decade further shaped the government’s survival strategy and its willingness to engage with the EU.

4.2 Ethiopia Reluctantly Engaging with the EU in the Early 2000s

The EU’s relations with Ethiopia were limited in the 1990s. However, after the end of the war with Eritrea, in light of Ethiopia’s strategic importance in the war on terror after 9/11, and due to the Ethiopian government’s willingness to align with the priorities of the MDGs and the international aid effectiveness agenda , the EU intensified its cooperation with Ethiopia in the early 2000s. In parallel, support for governance reforms became more important in the EU’s engagement with Ethiopia.

4.2.1 The EU’ Good Governance Strategies Between 2000 and 2005 The EU’s Approach: Promoting Democratic Government

Between 2000 and 2005, the EU adopted a broad strategy, promoting democratic government with some elements of democratic governance. The country strategy paper, signed by the EU and Ethiopia in 2002, reflects a broad understanding of good governance (Ethiopia and European Community 2002). The EU sought to promote input legitimacy by strengthening democratic institutions that hold the government accountable to national and international laws, by supporting elections, justice sector reform and the independence of the judicial system. It promoted output legitimacy by supporting public financial management and civil service reforms. The EU earmarked USD36 million in aid funds to advance these objectives (Table 4.1). Food security, transport, macro-economic reform, healthcare and education accounted for the largest shares of EU aid to Ethiopia (Ethiopia and European Community 2002, 2007).

Table 4.1 EU governance aid to Ethiopia 2000–2014 (in USD million and in per cent)

In the early 2000s, the EU hardly used the transnational channel. The country strategy paper presented civil society organisations as important partners in promoting governance reforms in Ethiopia. Yet, only little aid was allocated to support civil society actors. With funds from the Ninth EDF, the EU started building up a small Civil Society Fund to strengthen NGOs’ capacities for service delivery, human rights, governance and conflict prevention and to empower them vis-à-vis state actors (Ethiopia and European Community 2002; MWH, ODI, and ECDPM 2004, 40f). Civil society organisations that promoted human rights and helped prepare the 2005 elections received some assistance through the EIDHR (European Commission and Ethiopia 2009, see also Table 4.3).Footnote 6 Compared to other traditional donors, the EU was not very active in defending the cause of civil society organisations (MWH, ODI, and ECDPM 2004, 40). The EU’s Instruments: Cooperative-Critical

Similar to Rwanda, the EU also adopted a cooperative-critical strategy in Ethiopia in the early 2000s. The EU made governance reforms a key issue during both the formal political dialogue meetings that were launched in 2001 and its aid policy dialogues (Ethiopia and European Community 2008).

In 2004, the EU and other donors agreed to substantially increase the share of aid channelled through budget support (Schmidt 2005). Besides, the EU publicly raised concerns about the governance situation and issued several critical statements regarding the human rights situation, for instance, in the UN Human Rights Commission (Table 4.2).

Table 4.2 EU statements and démarches related to governance reforms 2000–2012

4.2.2 The Ethiopian Government’s Responsiveness: Reluctant Engagement Between 2000 and 2005

The Ethiopian government reluctantly started to engage with the EU in the implementation of governance instruments in the early 2000s. It has been slightly less willing to engage than Rwanda, but more forthcoming than Angola. Ethiopia’s Responsiveness: Political and Aid Policy Dialogues

The government agreed to launch a formal Article 8 political dialogue in 2001. Until 2005, Ethiopia agreed to hold dialogues on a regular basis and to send high-level representatives. Dialogues took place twice a year with Prime Minister Meles and twice a year with the Minister of Foreign Affairs (Ethiopia and European Community 2007). Dialogues covered a broad range of issues including human rights, governance and democratisation, the establishment of democratic institutions such as the Ombudsman and the Human Rights Commission, the upcoming elections in 2005, the death penalty or the ratification of the Rome statute. Regional peace and security issues, notably Ethiopia’s relations with Eritrea, also figured prominently in the dialogue (Ethiopia and European Community 2007). Official documents indicate that both the EU and the Ethiopian government considered the quality of political dialogue to be relatively good and steadily improving: It was perceived to be open and mutually beneficial (European Commission and Ethiopia 2002). Ethiopia explicitly highlighted the importance it has been attaching to political dialogue (European Union 2004).

In the early 2000s, the Ethiopian government agreed—albeit very reluctantly—to address governance issues as part of its aid policy dialogues with donors. Similar to Rwanda, Ethiopia and the EU started to institutionalise different formats of aid policy dialogues alongside commitments made under the international aid effectiveness agenda (Furtado and Smith 2009). However, Ethiopia was clearly less willing to address governance reforms as part of these aid policy dialogues than Rwanda. For instance, the Ethiopian government was very reluctant to engage in questions related to governance reforms during the budget support policy dialogue. Only after the first two dialogue meetings did the government agree at least to address questions related to public financial management reforms or the fight against corruption and the atmosphere of the dialogue subsequently improved (Schmidt 2005, 61f; 101f). Moreover, similar to Rwanda, the EU and other donors initiated specific dialogue formats to better coordinate their aid to governance-related sectors, such as justice reform, civil society organisations or democratic institutions. In contrast to Rwanda, Ethiopia refused to engage with donors in these meetings (DAG 2005b). Ethiopia’s Responsiveness: Positive Conditionality and Governance Aid

In the early 2000s, the Ethiopian government reluctantly agreed to engage in the implementation of governance aid and inclusion of positive conditionality in its engagement with the EU.

The government hesitated to include indicators related to democratic reforms in its agreement with the EU and other donors on direct budget support. The EU and other donors insisted on introducing indicators on elections and human rights (Schmidt 2005; Bergthaller and Küblböck 2009). Yet, the government objected to these requests and the final agreement that was signed in April 2004 had no targets related to democratic reforms (Schmidt 2005).

Ethiopia was reluctant to cooperate with the EU on the implementation of governance aid. Annual reports on the implementation of EU aid and secondary sources indicate that the implementation of governance aid faced considerable difficulties. Similar to Rwanda, the Ethiopian government was willing to engage in the implementation of aid geared at supporting the effectiveness of government institutions. Compared to Rwanda, Ethiopia was less willing to cooperate on the implementation of aid targeted to support democratic reforms.

One case in point is the justice sector. While the government insisted that the EU should support the justice sector by funding the Public Service Capacity Administration Programme (PSCAP), which also entails capacity-building for justice institutions, the EU was hesitant to increase support for justice sector reform through PSCAP, as this programme mostly aims at strengthening technical and financial capacities rather than the independence of the judicial system. As a result of these diverging preferences, most of the EU’s aid earmarked for justice sector reform between 2000 and 2005 was not disbursed.Footnote 7

Another example is the EU’s assistance for democratic institutions. With support from the EU and other donors, the government developed the legal foundation for establishing a Human Rights Commission and an Ombudsman’s office in the late 1990s (MWH, ODI, and ECDPM 2004). The Ethiopian parliament passed the relevant legislation in July 2000. The EU and other donors subsequently urged the authorities to proceed in appointing the Commissioner and the Ombudsman (European Commission and Ethiopia 2004). Yet it took until late 2004 for both to be appointed, only a few months ahead of the 2005 parliamentary elections (Government of Ethiopia and United Nations Development Programme 2007). Some observers argue that the delay resulted from the government’s reluctance to support these institutions, as it had to expect criticism for its human rights record (Rahmato and Ayenew 2004, 42f).

The government was clearly reluctant to engage with the EU in the implementation of aid geared towards civil society organisations. The EU issued feasibility studies to design a strategy on how to support civil society in Ethiopia, but the proposed Civil Society Fund could only be launched in 2006 (Ethiopia and European Community 2002; European Union 2004).

We can conclude that between 2000 and 2005, the EU sought to promote democratic government. The EU aimed at promoting input legitimacy by strengthening democratic institutions that hold the government accountable to national and international laws, by supporting elections, justice sector reform and the independence of the judicial system. The transnational channel did not play a prominent role in the EU’s strategies. The EU mostly used public statements and declarations to criticise the governance situation in the country. The Ethiopian government started to reluctantly engage. Whereas the government became more forthcoming in cooperating with the EU ahead of the 2005 parliamentary elections, the post-election crisis marked the end of this period.

4.2.3 The Ethiopian Government’s Survival Strategies Strong Threats to Regime Survival: A Split in the Ruling Elite

In the early 2000s, the EU’s strategies to support governance reforms in Ethiopia coincided with a period of domestic instability, a reorganisation of the regime’s support base and a restructuring of the relationship between the EPRDF and the state. Disagreements within the TPLF, and more generally the EPRDF, about the war with Eritrea (1998–2000) caused a split in the TPLF central committee in 2001 (Tadesse and Young 2003; Tronvoll 2009). A majority within the TPLF favoured an aggressive military strategy towards Eritrea to assert Ethiopia’s strong position on the Horn of Africa and to demonstrate that Ethiopia does not give in to Western pressure. Instead, Prime Minister Meles supported a moderate approach and a negotiated settlement of the border dispute rather than the elimination of the Eritrean regime by military means. Meles was apparently more vigilant about the economic and diplomatic repercussions that the war had on Ethiopia and the regime’s stability (Tadesse and Young 2003, 396; Tronvoll 2009, 465). The crisis positioned Meles as the undisputed ideological leader of the party and the government. Survival Strategies I: Subordinating the Party to the State

In response to the split in the TPLF central committee, the Ethiopian leadership embarked on a state modernisation programme and carefully allowed for political liberalisation ahead of the 2005 general elections. The 2001 split in the TPLF leadership thus did not only affect power relations within the EPRDF but also altered the relationship between the EPRDF, the state and society (Tronvoll 2009, 466; Tadesse and Young 2003, 401).

The split in the central committee and the expulsion of the dissidents were followed by a comprehensive ‘cleansing’ of the political and military apparatus during which thousands of their (suspected) supporters were eliminated (Tronvoll 2009, 465). The way that internal disagreements were handled alienated important segments of the population in Tigray—Prime Minister Meles’ core support base—where many of the dissidents were popular due to their participation in the armed struggle against the Derg and the Eritrean war (Tronvoll 2009, 466).

After the 2001 split, the EPRDF leadership carefully introduced several measures to enhance formal state institutions and to secure the pre-eminence of the state over the party. To bolster the EPRDF’s power base in rural areas, local state structures were reinforced to bring the state closer to the people and to make government service provision more effective. The district level (Woreda) received more influence in implementing social services and spending financial resources that were formerly managed by the regions (Furtado and Smith 2009; Peterson 2010, 9f). On the other hand, power and control of the local and regional level was again more strongly centralised within the state and in Addis Ababa (Vaughan 2011, 629ff).

Among the measures to strengthen the state, ‘capacity-building’ gained particular prominence. The leadership developed a comprehensive civil service reform programme that entailed reforms related to urban management, greater prevalence of information technology, the justice sector and tax and public financial management. This civil service reform programme was later developed into the PSCAP project that the government jointly managed with the World Bank, which the EU and other donors supported (Vaughan 2011, 630f; Peterson 2010). Similar to Rwanda, some experts point out that external support for tax and public financial management reform in Ethiopia was more successful than in other African countries because these reforms were designed by the government and not by the donors (Peterson 2010). Overall, the government’s reforms quickly showed results. In the early 2000s, the effectiveness of the Ethiopian government considerably improved if measured in terms of Ethiopia’s ranking in the WGI (Fig. 4.1).

Fig. 4.1
figure 1

Government effectiveness and control of corruption in Ethiopia

Source: Author’s compilation, based on World Bank (2016b), Worldwide Governance Indicators

New government institutions such as the Federal Ethics and Anti-corruption Commission of Ethiopia (FEAC) were created in the wake of the split in the central committee. One of the FEAC’s first measures was to purge high-level party members on the basis of corruption charges. Corruption charges have therefore been widely perceived among the general public as politically selective (Vaughan and Gebremichael 2011, 30). In the early 2000s, the level of corruption did not improve as a result of building up institutions to fight against it (Fig. 4.1).

Tadesse and Young (2003, 401) recapitulate the measures induced after the party split: ‘As a result of the defeat of the dissidents, the state is now unquestionably the dominant organ of governance in Ethiopia and the party is assuming the role of servant to the state’. Survival Strategies II: Managing Arenas of Contestation and Low-Intensity Coercion

Opposition parties had boycotted th e parliamentary elections in 1995. The 2000 parliamentary elections were therefore the first elections where opposition parties participated. While the government firmly controlled political spaces, the opposition was relatively unorganised. Opposition parties therefore clearly did not constitute a viable threat to the ruling EPRDF in 2000. They only gained 12 seats in the House of Representatives, indicating the EPRDF’s strong grip on power (Tronvoll 2009, 454, 464).

In the early 2000s, the Ethiopian government used measures of low-intensity coercion to limit opportunities for the media, civil society organisations or opposition parties to challenge the EPRDF. The regime change in 1991 had clearly not been accompanied by higher levels of political liberalisation. After the party split in 2001, the government relied on low-intensity coercion to limit the chances of defecting party members and other opponents to mobilise mass support.

Just ahead of the 2005 elections, the Ethiopian government slightly opened up political spaces. The campaign for the 2005 parliamentary elections saw a relatively free debate and slightly more openness than previous elections, generating a spirit of optimism (Abbink 2006, 176; Tronvoll 2009, 454f; Aalen and Tronvoll 2009, 194ff). The Ethiopian government invited a number of international observers, including those from the EU. They noted shortcomings with regard to respect for human rights, the rule of law and basic democratic principles during the election campaign. However, opposition parties had unprecedented possibilities to engage, particularly in Addis Ababa and other urban areas. Furthermore, the opposition was much better organised and stronger than during the previous elections in the mid-1990s and in 2000 (Tronvoll 2009, 464).

In the years between 2000 and 2005, the EU and other donors’ demands for political liberalisation only partially aligned with the EPRDF’s strategy to reorganise state-party relations. Those parts of EU governance aid geared towards strengthening effective government—for instance, support for anti-corruption institutions, public financial management or decentralisation—were largely in line with government priorities. However, other activities that were more clearly targeted towards democratic government caused considerable adaptational pressure. It is surprising that the Ethiopian government still, albeit reluctantly, started to engage with the EU in these activities. One therefore also needs to consider Ethiopia’s interest in engaging with the EU ‘beyond’ governance reforms.

4.2.4 Ethiopia’s Economic Dependence on the EU Between 2000 and 2005

Ethiopia has been strongly dependent on development aid. It has historically received low aid volumes compared to other African countries. As it has never been colonised, it had no special relationship with a former colonial power (Furtado and Smith 2009). Aid flows increased when the EPRDF came to power in 1991. However, during the Ethiopian– Eritrean war, most donors went back to limiting assistance to humanitarian aid. Since Ethiopia viewed Eritrea as the aggressor, the Ethiopian government felt it was punished unjustly (Furtado and Smith 2009).

The end of the war between Ethiopia and Eritrea in 2000 coincided with the beginning of reforms in the international aid system. Similar to the Rwandan President Kagame, Prime Minister Meles also took a very active stance in the international aid effectiveness agenda from the very beginning and sought to use the reform dynamic to attract greater aid flows (Furtado and Smith 2009). In the early 2000s, donors rapidly scaled up aid and the government’s aid dependence increased considerably. The share of aid in GNI peaked at 19 per cent in 2003 (Fig. 4.2). Grants constituted the second-largest share of government revenue between 2000 and 2005, after trade taxes.

Fig. 4.2
figure 2

Net ODA as a share of GNI in Ethiopia

Source: Author’s compilation, based on World Bank (2016a), World Development Indicators

The EU institutions were one of the largest donors to Ethiopia between 2000 and 2005, providing about 17 per cent of total DAC donors’ aid (Fig. 4.3). Moreover, the modalities by which the EU provided aid largely matched the preferences of the Ethiopian government. In 2002, shortly after the end of the war, the EU resumed general budget support. Similar to Rwanda, the EU was one of the driving forces among the budget support donors to negotiate a new harmonised budget support contract with the Ethiopian government (Schmidt 2005; Bergthaller and Küblböck 2009). In 2004, only one year before the 2005 elections, the EU and other donors reached an agreement with the Ethiopian government on a new budget support contract. The share of aid channelled through budget support was supposed to rise considerably as a consequence of the agreement (Schmidt 2005; Bergthaller and Küblböck 2009).

Fig. 4.3
figure 3

ODA to Ethiopia, selected donors (disbursements in USD million)

Source: OECD CRS aid statistics (2016), author’s compilation

Between 2000 and 2005, the EU had been the most important destination for Ethiopia’s exports. Ethiopia exported more to the EU than to the rest of sub-Saharan Africa. Exports to the USA were marginal (Fig. 4.4). Moreover, companies from Europe—if taken together—were the largest investors in Ethiopia. Trade and investments, however, constituted a small share of GDP.

Fig. 4.4
figure 4

Ethiopia’s exports to selected partners (in thousands of USD)

Source: Author’s compilation, based on UNCTAD statistics (2016)

In the early 2000s, when the EU’s support for governance reforms did not entail substantial costs, Ethiopia’s access to EU development aid and to a lesser extent trade and investments easily outweighed the risks of engaging in governance reforms, which explains why the Ethiopian government did reluctantly start engaging with the EU.

4.2.5 China: Limited Engagement Between 2000 and 2005

At the turn of the century, when the EU started to make support for governance reforms a more prominent issue in its cooperation with Ethiopia, the government had very little access to economic cooperation with China. China was no alternative partner.

Ethiopia has not only actively sought to strengthen economic cooperation with the EU and other traditional partners but also with China and other emerging economies. Ethiopia’s external relations strategy identified China as one of its key partners as early as 2002 (Information 2002). Moreover, according to Ethiopian and Chinese officials, Ethiopia was a driving force behind the FOCAC meetings from the beginning. The second meeting in 2003 took place in Addis Ababa. Ethiopia co-hosted the third meeting that took place in Beijing in October 2006.

The Ethiopian government’s attempts to reinforce its relations with China did not immediately result in closer economic cooperation. In the 1990s, economic exchange mostly consisted of a few aid projects, for instance, to improve water supply (Hawkins et al. 2010). In the early 2000s, the Chinese government financed some road projects and other infrastructure development in Addis Ababa, and it sent medical teams. But Chinese aid remained limited. Chinese direct investments and bilateral trade were also insignificant in the early 2000s (Fig. 4.4). According to the MOFCOM, Chinese investment stocks in Ethiopia stood at less than USD50 million in 2005.

The EPRDF and the Communist Party of China established relations shortly after the EPRDF came to power in 1991. However, if measured in terms of the number of bilateral visits, contact has been relatively limited during the 1990s and between 2000 and 2005 (Fig. 4.5).

Fig. 4.5
figure 5

Annual bilateral visits EPRDF–CCP

Source: Author’s compilation, based on analysis of New Reports; International Department of the Chinese Communist Party

4.3 The 2005 Election Crisis: A Turning Point in EU-Ethiopia relations

In 2005, the EPRDF leadership was for the second time seriously challenged. In contrast to the party split in 2001, this time it was not by members of the core elite, but by the political opposition outside the EPRDF. The parliamentary elections in May 2005 thus marked a watershed for the Ethiopian government and for the EU’s strategies for engaging with Ethiopia.

After a doubtful process of recounting and revoting in some constituencies, the national electoral board declared an EPRDF victory. Yet, according to the official figures the opposition gained about one-third of the votes. The Coalition for Unity and Democracy, the largest opposition party, received about 20 per cent of the seats, the United Ethiopian Democratic Forces most of the other 10 per cent (Tronvoll 2009, 455). When the National Electoral Board announced the results, turmoil broke out. During protests in June and November 2005, about 200 people died, and 20,000–30,000 opposition members and sympathisers were jailed (Tronvoll 2009, 455; Abbink 2006).Footnote 8

4.3.1 The EU’s Good Governance Strategy

The Ethiopian government’s response to the crisis took the EU and other donors by surprise. After the end of the war with Eritrea, Ethiopia was perceived by donors as a ‘model pupil’. Ethiopia made progress in poverty reduction and increased spending in social sectors, in line with the international development paradigm as it had evolved with the MDG agenda. The government emphasised the importance of good governance in its relations with donors; initiatives such as the PSCAP programme suggested that the government indeed had a strong interest in capacity-building. Moreover, it very actively engaged in the international aid effectiveness agenda, the G8 meetings and other international fora (Furtado and Smith 2009).

In response to the crisis, the EU used a cooperative-conflictive approach. It tried to mediate (Abbink 2006), while also putting substantial pressure on the government. As the crisis escalated, the EU postponed a decision regarding a €155 million aid agreement for the transport sector in autumn 2005. In December 2005, the EU decided to freeze the remaining €95 million in budget support. Other donors also suspended their budget aid (Ethiopia and European Community 2008).

4.3.2 The Ethiopian Government’s Response: Indifference

The Ethiopian government showed little willingness to reconcile with the opposition in response to the EU and other donors’ pressure. Moreover, it refused to engage with the EU and suspended political and aid policy dialogues. Tim Clarke, head of the EU delegation summarises the situation:

The door is closed.…It takes two to tango. A dialogue requires trust and I can understand that on their side they were wounded. Suddenly the doors were closed, or at least half closed, and although we have been pushing for openness and a dialogue, we haven’t seen that happening as fast as we want.Footnote 9

Prime Minister Meles in turn set conditions for resuming political dialogue:

We are eager to engage the donor community in dialogue, but we would want to establish that dialogue on the basis of a number of principles…the first is predictability. Development assistance should not be turned on and off.Footnote 10

4.3.3 The Costs and Benefits for Ethiopia of Ceasing to Engage with the EU

For the Ethiopian government, engaging with the EU and other donors during the crisis and complying with their demands to cease coercive measures and release political prisoners were perceived as a direct threat to regime survival.

The strong gains for the opposition during the elections took the EPRDF by surprise (Abbink 2006, 179f; Aalen and Tronvoll 2009, 196). In spite of irregularities in the run-up to the elections, on election day and during the vote counting, available data do not suggest that the opposition actually won the elections (Tronvoll 2009, 463). Still, the election results demonstrated that the EPRDF had considerably under-estimated the dissatisfaction with its political record and the perception within the population that economic achievements were poor and biased towards the EPRDF, particularly in rural areas. The elections confirmed that the EPRDF had little support from the middle class and in urban areas of Addis Ababa as well as from the private sector. However, particularly the loss of support from the peasants, its core power base, shocked the EPRDF (Abbink 2006, 179f; Arriola 2008). Due to the government’s control of the local level and its declared commitment to agricultural policies and rural development, it expected that the peasants and rural population—who make up about 85 per cent of the total population—would vote for the EPRDF. It had thus not expected that opening political spaces in urban areas would turn out to become a potential challenge to regime survival (Aalen and Tronvoll 2009, 197). Some point out that the EPRDF was so confident to emerge victorious in rural areas that it had barely campaigned there prior to the elections (Lefort 2010, 440).Footnote 11

In this context, the Ethiopian government perceived engaging with the EU as a direct threat to regime survival. In an open letter published in the Ethiopian Herald on 28 August 2005, Prime Minister Meles criticised that the presence of the EU election observer mission had encouraged opposition demonstrations and that the EU had thus contributed to fuelling the crisis. The EU election observer mission was perceived to be siding with the opposition candidates and thereby bolstering the opposition’s domestic legitimacy. Moreover, preliminary results from the election observer mission were leaked before the government published its final results. The opposition used the mission’s report to claim having won the elections.

On the other hand, the Ethiopian government had reason to expect that donors would not cut aid altogether, not least because Ethiopia had become an important international partner for the EU institutions and some member states such as the UK during the previous years (Furtado and Smith 2009). Indeed, the EU institutions did not reduce aid funds, but channelled budget support through other aid modalities with stronger earmarking and monitoring procedures attached. Yet, the usage of aid as a lever for change put the Ethiopian government in a precarious situation—at least in the short- to medium-term. Not only had aid dependence considerably increased during the previous years; the shift towards general budget support also meant that as a result of the EU withholding funds, the government could not cover parts of its expenditure. Moreover, threats to cut budget support funds came in the midst of the Ethiopian budget planning process and thus exposed the government to a great deal of uncertainty (Bergthaller and Küblböck 2009).

4.3.4 China’s Support During the 2005 Election Crisis: Reducing Donor Pressure

Largely unnoticed by the EU and other traditional donors, China extended its first substantial loan to Ethiopia in early 2006, a few weeks after the EU and other donors had decided to freeze budget support. Alongside the EU and other traditional donors’ decision to suspend general budget support and before the Ethiopian government agreed with donors that budget aid should be rechannelled to a new programme, China offered Ethiopia a loan facility. In January 2006, Ethiopia’s Minister of Finance, Sufyan Ahmad, travelled to China (BBC 2006).Footnote 12 China extended a mixed loan facility, amounting to USD500 million and consisting of grants, interest-free loans and concessional loans. The Ethiopian government presented a list with potential projects; but the precise activities financed with the loan were agreed upon only later. The volume of USD500 million equalled the volume of funds that the Ethiopian government would have been losing if the EU and other donors had not only withheld but actually cut development aid. Relatively unobserved by the EU and other traditional donors,Footnote 13 economic cooperation with China thereby reduced Ethiopia’s dependence on its traditional partners at a critical point in time.

4.4 Ethiopia Reluctantly Engaging with the EU in the Late 2000s Despite China’s Strong Presence

Between 2006 and 2010, the EU broadened its approach towards promoting democratic governance and has again adopted a cooperative-critical strategy. The Ethiopian government, in turn, was highly reluctant to engage in governance reforms.

4.4.1 EU Good Governance Strategies and Ethiopia’s Responsiveness The EU’s Approach: Promoting Democratic Governance

After the 2005 election crisis, the EU redoubled its efforts to promote input legitimacy . Governance reforms became a more important issue in EU–Ethiopia relations. In the country strategy paper, governance reforms were highlighted as an important area for bilateral relations; support for governance and macro-economic reform became the third focal sector of the EU’s aid to Ethiopia.Footnote 14 The EU sought to promote elections, justice sector reform, the independence of the judiciary and the involvement of civil society organisations (Ethiopia and European Community 2007; annual joint reviews EU aid to Ethiopia, various years).

OECD DAC data indicate that the EU has slightly increased the volume of aid that it has allocated to governance reforms since 2006 (Table 4.1). Whereas in the early 2000s the EU had spent most of its governance aid on output legitimacy, it has committed most of its governance aid to input-related reforms since the mid-2000s.

In pushing its good governance agenda, the EU has increasingly relied on the transnational channel. The EU finally launched the Civil Society Fund, financed through the EDF (about €10 million for 2008–2013). The fund seeks to support the capacities of NGOs with a view to empowering them to engage in dialogue on policy and political reforms with the government at the national, regional and local level (Ethiopia and European Community 2007). The EU has also sought to enable NGOs to participate in the political dialogue between the EU and the Ethiopian government. Beyond direct assistance and the inclusion of civil society organisations in its dialogue with the government, the EU has pushed for improvements in the institutional environment in which Ethiopian NGOs operate. The EU raised concerns when the Ethiopian government issued a new NGO law shortly before the 2010 parliamentary elections, because the law was perceived to restrict the space of civil society organisations to engage in governance issues. The EU’s Instruments: Cooperative-Critical

After the election crisis, the EU resumed its strategy of promoting governance reforms through a cooperative-critical strategy. The EU made several attempts to strengthen political dialogue and address governance reforms as part of aid policy dialogues. In parallel, the EU continued to put pressure on Ethiopia, signalling to the government that the EU does not agree with the governance situation. In contrast to Rwanda, the EU allocated only a medium-sized governance incentive tranche to Ethiopia in 2006. It argued that budget support could only be resumed once the governance situation had improved, even though Ethiopia meets all other eligibility criteria (Ethiopia and European Community 2008). In the mid-term review for the 10th EDF, the EU justified its decision not to increase EDF funds by referring to the difficult governance situation. The EU made several critical public statements (Table 4.2). It criticised the closing of an independent journal, raised concerns that the new civil society law substantially limits spaces for civil society, and that the 2010 parliamentary elections did not meet international standards. However, the EU clearly did not move beyond a ‘cooperative-critical strategy’: the EU did not reduce aid and it did not threaten to reduce aid if the governance situation was not improving.

4.4.2 Ethiopia’s Responsiveness Between 2006 and 2010: Reluctant Engagement

Immediately after the 2005 election crisis, the Ethiopian government was almost indifferent towards EU demands to engage in governance reforms. Only towards the 2010 elections did the government again agree to at least reluctantly engage. It was clearly more willing to engage with the EU on effective as opposed to democratic governance. In the late 2000s, Ethiopia was visibly less open for cooperation than Rwanda but more forthcoming than Angola. Ethiopia’s Responsiveness: Political Dialogue

Even though formal Article 8 political dialogue eventually resumed at the end of 2006, it did not take place very often in the following years. In contrast to Rwanda, Ethiopia has been definitely more reluctant to engage in dialogue since the mid-2000s. Between 2007 and 2010, the Ethiopian government held dialogue only once and sometimes twice a year (Ethiopia and European Community 2007). During those meetings, Ethiopia engaged at the highest political level—with the prime minister or the minister of foreign affairs. In the course of dialogue meetings, the government agreed to address a broad range of issues, including the human rights situation, media reforms, the rule of law, economic governance issues, migration as well as regional peace and security. The government also discussed sensitive and difficult issues, such as the new civil society law or the 2010 election process.

Participants and observers of the political dialogue meetings describe the atmosphere as frank; the government has been willing to address sensitive issues even if no consensus could be reached.Footnote 15 However, some European participants and observers perceive the dialogue as having very little impact on the government’s position. Ethiopia has not agreed with the EU on concrete reform objectives during dialogue meetings. While democratic governance issues had been brought onto the agenda mainly at the request of the EU, the Ethiopian side appears to have been more interested in discussing regional peace and security issues.Footnote 16 Ethiopia’s Responsiveness: Aid Policy Dialogues

The Ethiopian government reluctantly agreed to discuss governance reforms during aid policy dialogues. Statements by interviewees, public documentation of these meetings and secondary literature suggest that Ethiopia was clearly less prepared to institutionalise aid policy dialogues on governance reforms with the EU and other donors between 2006 and 2011 than Rwanda.

One case in point are the high-level forum (HLF) meetings. They brought together the government and donors between one and four times a year. The government accepted making governance issues a topic on the agenda, for instance, after the proclamation of the new civil society law (DAG 2011). The HLF meetings, however, mostly provide a forum for the EU and other donors to convey messages to the government, rather than to actually engage in dialogue (Furtado and Smith 2009).

More importantly, the Ethiopian government has not agreed to set up a specific governance dialogue with the EU and other donors.Footnote 17 Aid policy dialogues related to healthcare, education or transport take place regularly and are perceived to be functioning fairly well (Furtado and Smith 2009). Yet, despite the EU and other donors’ explicit demand for it, Ethiopia refused to set up a specific governance aid dialogue.Footnote 18 Relevant line ministries, such as the Ministry of Justice, also showed no great interest in setting up regular dialogues with the EU and other donors (DAG 2012, 25; European Commission 2009).

Finally, the shifting of modalities from direct budget support to the World Bank-administered Protection of Basic Services (PBS) programme closed another potential channel for dialogue on governance reforms. Even though budget support dialogue mostly focused on overall macro-economic issues, it also gave an opportunity for the EU and other donors to address issues of democratic governance. Policy dialogue under the new PBS programme instead mostly focused on budget issues at the regional and local levels (von der Heijden 2007, 3; ECO Consult et al. 2012). Some observers argue that this setting allowed the government to keep donors at arm’s length and avoid dialogue on sensitive issues. The government has therefore also not appeared to be too interested in the resumption of general budget support (Bergthaller and Küblböck 2009; von der Heijden 2007). Ethiopia’s Responsiveness: Positive Conditionality and Governance Aid

Between 2006 and 2010, the Ethiopian government has remained very reluctant to engage in the implementation of EU governance aid and to include positive conditionality in its engagement with the EU.

The Ethiopian government has been highly reluctant to develop a comprehensive ‘governance action plan’ to comply with the EU’s requirements for receiving a ‘governance incentive tranche’. The EU’s request for a governance action plan came at a point in time when the relationship between the government and donors was particularly tense as a result of the 2005 election crisis. The government was also in a process of drafting its new poverty reduction strategy paper (PRSP). At least partly in response to donor pressure, the government finally agreed to include some objectives related to governance reforms in its PRSP. These objectives were also used as a basis for the governance action plan for the EU (DAG 2005a, 2006, 2009). EU officials argue that the governance incentive tranche thus contributed to convincing the government to include governance indicators in the new PRSP.Footnote 19 The government’s definition of ‘governance reforms’, however, was quite narrow and limited to capacity-building of government institutions (Government of Ethiopia 2006; Ethiopia and European Community 2007). Ethiopia’s governance action plan was clearly less ambitious than in the case of Rwanda.

After the election crisis, the Ethiopian government only reluctantly engaged with the EU and other donors in the implementation of governance aid. Interviews with EU and Ethiopian officials, an analysis of annual reports on the implementation of EU aid as well as an independent evaluation of EU aid, indicate that the implementation of governance aid met with considerable challenges. The government remained open for engaging with the EU in the implementation of aid geared to support the effectiveness of government institutions. However, compared to the early 2000s, it was even less willing to implement aid targeted at supporting the democratic quality of decision-making processes.

Consider the example of the PSCAP project. It became Ethiopia’s flagship programme for reinforcing the effectiveness of government institutions at the regional and local level. Among others, the programme has sought to promote civil service reform, strengthen revenue and tax administration, information and communication technology development as well justice sector reform. Observers highlight that the government had a strong interest in implementing this programme, particularly components related to the effectiveness of government institutions.Footnote 20 In contrast, those PSCAP projects related to input legitimacy such as justice sector reform made limited progress.Footnote 21

Another illustration is the support for democratic institutions. The Ethiopian government agreed to allocate €3 million to the democratic institutions programme, which it managed jointly with the United Nations Development Programme (UNDP). The objective of the programme is to strengthen the capacities of the Human Rights Commission, the Federal Ethics and Anti-corruption Commission of Ethiopia or the parliament. The EU and other donors would have preferred to use aid to strengthen the independence of these institutions and to empower them to hold the government accountable.Footnote 22 Ethiopia, in turn, had a clear preference for concentrating on the technical and institutional capacities of these institutions.

The Ethiopian government was very hesitant to invite another EU election observer mission for the 2010 parliamentary elections. It finally allowed a mission to monitor these elections. At the same time, it has not authorised the mission to present its final report in Addis Ababa —as had been planned (European Union 2010). In a press statement, the Ethiopian Ministry of Foreign Affairs criticised that the election observer mission had ‘chosen to publish a report which is nothing but a preconceived and biased political analysis on Ethiopia’ (Ministry of Foreign Affairs 2010). The EU thus could only present its report to an international audience in Brussels in November 2010. Ethiopia is the first country where the government prevented EU election observers from presenting their final report to the domestic audience in the host country.

Most visible and debated was probably Ethiopia’s resistance to accept aid geared towards supporting civil society organisations. The new civil society law, the Proclamation on Charities and Societies (CSO law), passed by parliament in 2009, initially put the EU’s (and other donors’) aid to civil society at risk entirely. For instance, the CSO law considerably challenged the implementation of the Civil Society Fund that the EU had set up. The CSO law restricts the amount of international funds for Ethiopian NGOs engaging on human rights, democracy or the rule of law to 10 per cent of their budget. Only after difficult negotiations did the Ethiopian government finally agree to grant the EU a legal exemption for the EU Civil Society Fund by considering it Ethiopian national funding.Footnote 23

The civil society law also affected EU support channelled through the EIDHR. As assistance through EU budget lines is considered international funding, the CSO law reduced the EU’s possibilities to use EIDHR funds to support civil society in Ethiopia. The volume of EIDHR funds had already dropped between 2006 and 2010 (Table 4.3) and reduced further after 2010 due to the CSO law. Furthermore, the Ethiopian government has been very hesitant to accept aid for civil society organisations spent through other projects, such as the Protection of Basic Services programme. The implementation of the PBS’ civil society component faced considerable difficulties.Footnote 24

Table 4.3 EIDHR projects in Ethiopia

We can conclude from this review that governance reforms have become a more important but also much contested issue in EU–Ethiopia relations between 2006 and 2010. The EU has slightly broadened its approach from democratic government to democratic governance. Moreover, similar to the early 2000s, the EU used a cooperative-critical strategy. The Ethiopian government, in turn, was highly reluctant to engage with the EU and other donors in the aftermath of the 2005 election crisis. The government only hesitantly resumed political dialogue. Compared to the early 2000s, it has accepted higher volumes of EU aid to be spent on governance reforms, but it has sought to direct governance aid towards capacity-building of government institutions to strengthen their efficiency rather than empowering them to fulfil their role in policy-making processes. Government initiatives such as the civil society law had a direct and negative effect for EU attempts to empower civil society organisations to hold the government accountable.

4.4.3 The Ethiopian Government’s Survival Strategies

After the 2005 elections and the resulting political crisis, public support for the government was at an all-time low. According to Gallup polls, only 32 per cent trusted the government in 2007 (Gallup 2013). To regain stability and prevent further challenges from the opposition, the government sought to broaden its support base and to reinforce the influence of the party at the local and regional levels. Moreover, the government introduced a series of legal measures to restrict political spaces. Survival Strategies I: Subordinating the State to the Party

Shortly after the elections, the EPRDF started to reinforce its party structures. It expanded its membership from 760,000 in 2005 to about four million members in 2008 and five million by 2010 (Aalen and Tronvoll 2009, 203; Vaughan 2011, 633). With a view to both increasing compliance of party members and coopting opponents, the EPRDF conditioned access to state employment and public services on party membership (Tronvoll 2009, 469; International Crisis Group 2009). At the rural level, the EPRDF coopted the leading farmers to expand its power base among the peasants (Lefort 2007). Mass youth and women’s organisations and trade unions were revived and expanded, forging a link between the party, the state and the people (Vaughan 2011, 634; Lyons 2011, 10). Furthermore, the Ethiopian government made less effort to invest in the effectiveness of state institutions; in contrast to Rwanda, the level of government effectiveness stagnated after 2007 (Fig. 4.1).

In the years between 2006 and 2010, the Ethiopian government expanded its investments in social services, not unlike Rwanda. After the election crisis, government spending on social services and infrastructure rose to over 60 per cent of government expenditure. For instance, the share of healthcare in government spending increased substantially from about 11 per cent in 2006 to about 19 per cent in 2011, according to the World Development Indicators.

However, in contrast to Rwanda, along with growing investments in public services, Ethiopia also expanded state employment in the social sectors. According to figures from the Ministry of Health and Education, the number of teachers and health education workers more than doubled from about 120,000 in 2004/2005 to over 250,000 by 2010 (Vaughan 2011, 643f). At the same time, access to basic services and university education has at least partly been conditioned to EPRDF membership (Abbink 2009, 17). Reports by Human Rights Watch (2010) and media reports (BBC 2011; IRIN 2013) argue that access to food aid and basic government services has been used to generate support for the EPRDF. In contrast to Rwanda, despite higher government spending, public satisfaction with social services remained quite low according to Gallup polls. In 2007, only 19 per cent were confident in the healthcare system; only 43 per cent were satisfied with the education system (Gallup 2013).

After the elections, the government faced a considerable dilemma. On the one hand, it needed to make more public investments in order to regain popular support. On the other hand, it could not easily raise more taxes to finance public expenditure. In a country where per capita GNI was as low as USD280 in 2008, the tax base is arguably highly limited. Furthermore, in light of the crisis, the government could not alienate strategic support groups any further by increasing taxes. In the first few years after the elections, the government reduced presumptive taxes to strengthen public support (Prichard 2010, 259f). Between 2005 and 2007, overall tax revenues fell sharply, at least in part due to the reluctance of the government to punish tax evasion (Prichard 2010). Only after 2008 did the government again make efforts to increase tax revenue (Prichard 2010, 262) and direct and indirect taxes rose considerably.

In light of the 2005 crisis, economic growth has become an even more important pillar of the regime’s legitimacy. The Ethiopian government’s poverty reduction strategy papers, published shortly after the 2005 election crisis and then again in 2010, put a much stronger emphasis on economic growth and investments in large-scale infrastructure, such as roads, power generation and telecommunications, than previous government strategies. Furthermore, heated discussions on the official growth rate figures between the opposition, the government, the World Bank and other donors illustrate how important economic growth is to the regime as a pillar of its legitimacy.Footnote 25 Whereas government figures suggest that growth rates have been high since 2005, the International Monetary Fund (IMF) and members of the opposition openly questioned these figures (EIU 2012). Survival Strategies II: Managing Arenas of Contestation and Using Low-Intensity Coercion

Along with strengthening party structures and increasing public expenditure, the government reduced political spaces through a series of new laws. The press law (2008), party law (2008), anti-terror law (2009), and particularly the civil society law (2009) have considerably limited the freedom of opposition parties, the media and civil society organisations. For example, the CSO law requires that NGOs have to register with the newly established Charities and Societies Agency. Organisations that receive more than 10 per cent of their funding from abroad are not allowed to engage in human rights, conflict resolution, justice and law enforcement activities. As most local NGOs rely heavily on international funding, the law has a tremendous impact. Two prominent civil society organisations—the Christian Relief and Development Association (CRDA) and the Ethiopian Bar Association (Ethiopian association for law professionals) faced particularly severe restrictions (Aalen and Tronvoll 2009, 199–202).

Moreover, in light of the 2005 election crisis, winning subsequent elections with substantive majorities was important for the government to regain stability. The local (Kebele) and district (Woreda) elections were widely perceived as a ‘test run’ for the government. They were at first delayed but then finally held in 2008. During these local elections, the opposition did not pose any considerable challenge for the EPRDF, partly because the opposition failed to reorganise and partly because the government had tightened its grip on local administrative structures (Aalen and Tronvoll 2009, 202–203). The EPRDF thus won the local elections with an overwhelming majority.

The run-up to the 2010 elections was marked by a tense atmosphere and severe restrictions on civil society organisations’ ability to campaign. The civil society, anti-terror and media laws (see above) were passed relatively shortly before the elections and allowed the government to limit political spaces. On the other hand, the main opposition parties were also less organised than ahead of the 2005 elections. The government eventually won the elections in a landslide victory and secured the EPRDF all but two seats in parliament. This almost Stalinist outcome signalled to opposition members or anyone among the elite who might have considered establishing a political alternative that the ruling party had regained its strength (Vaughan 2011; Tronvoll 2010).

From the mid-2000s onwards, the EU’s good governance strategies have clearly diverged from the Ethiopian government’s preferences. The EU’s support for effective government still matched the preferences of the government. But improving the effectiveness of state institutions had become less important compared to expanding party structures and coopting regime opponents and followers through these structures. On the other hand, EU support for democratic government, for instance, by assisting the Human Rights Commission or the parliament, induced considerable costs for the Ethiopian government. Moreover, the EU’s attempts to empower civil society actors clearly diverged from the government’s preferences. Only by closely involving the government in the management of the Civil Society Fund, was the government eventually persuaded to give the EU an exemption, allowing it to support civil society organisations. In light of the experience of the 2005 elections, inviting in another EU election observer mission for the 2010 elections could cause considerable threats to regime survival for the Ethiopian government. The government’s strong reluctance to invite this observer mission and its decision not to allow the mission to present its final results in Addis Ababa demonstrates how fragile the government’s position still was ahead of the 2010 elections. At the same time, it also suggests that EU support for the elections was perceived as potentially being dangerous to regime survival.

4.4.4 Ethiopia’s Economic Dependence on the EU

Ethiopia’s economic dependence on the EU slightly increased following the election crisis. Ethiopia is fairly dependent on development aid, and the EU has remained one of its largest donors. Ethiopia’s exports to the EU increased and the EU continued to be an important source of direct investments. Moreover, due to considerable challenges from the opposition during the 2005 elections and very low popular support for the regime after the election crisis, output legitimacy through economic growth and the provision of social services has been even more important for the government since 2005 (see previous section). In this regard, aid, trade and investment from the EU (and other external actors) have become clearly more important for the Ethiopian government compared to the early 2000s.

If measured as a share of government revenue, Ethiopia’s aid dependence remained very high. Since 2006, Ethiopia has had more access to development aid. Between 2006 and 2010 grants still constituted the second-largest source of government revenue after trade taxes. However, the share of aid to GNI successively declined to 11 per cent in 2011, despite rising inflows of aid (Fig. 4.1).

Together with the USA, the World Bank and the UK, the EU institutions are the largest donors to Ethiopia (Fig. 4.3). Between 2006 and 2010, the EU institutions have again provided about 17 per cent of total DAC aid to Ethiopia. Compared to Rwanda, Ethiopia has a larger number of donors from which it receives development aid. Almost all EU member states are also involved in Ethiopia. The bulk of aid by European donors is provided by the EU institutions and the UK, and to a lesser extent by Germany, France and others. The EU as a whole (EU institutions plus member states) had been the largest donor to Ethiopia between 2006 and 2010 (Fig. 4.3). For the EU institutions (and several member states), Ethiopia has emerged as one of the largest aid recipients in Africa and also worldwide. Even though the EU and other donors put considerable pressure on the Ethiopian government during the 2005 election crisis, in the end, they did not reduce the financial volume of development aid. The EU institutions even slightly increased aid in the following years (Fig. 4.3).

Moreover, the modalities of how the EU provides development aid have largely converged with the preferences of the Ethiopian government. For instance, the EU has supported the PBS programme which has been quite important to the government. The PBS that replaced the direct budget support has functioned quite similarly to direct budget aid (Bergthaller and Küblböck 2009; Borchgrevink 2008), and the government apparently did not have a strong interest in resuming budget support (ECO Consult et al. 2012). PBS funds help the government in providing basic services at the local level. Similar to direct budget support, funds are channelled through the government. However, in contrast to budget support, PBS does not involve a high-level macro-economic dialogue with the government in Addis Ababa. Critics posit that PBS (and some other aid programmes) are used by the government to strengthen its grip on power (BBC 2011; IRIN 2013). Human Rights Watch (2010), for instance, argued that the provision of basic services at the local level is conditioned to support for the EPRDF. Some are critical that programmes, such as PBS, thereby boost the government’s authority structures, since funds are directed at regional and local government institutions, most of them controlled by the ruling party (Human Rights Watch 2010).

For the Ethiopian government, economic cooperation with the EU beyond development aid was also attractive. Since 2006, the EU has continued to be the most important destination for Ethiopian exports (Fig. 4.4) and the second-largest source of its imports. Ethiopia still exports only a few products; almost 80 per cent of these are (unprocessed) agricultural goods, most of it coffee. According to UN Comtrade statistics (2010), Germany has been the largest destination for Ethiopia’s coffee exports ahead of Saudi Arabia and the USA. Ethiopia’s coffee export markets are comparatively diversified. In recent years, Ethiopia could open some, albeit very few, new export sectors with respect to the EU, notably horticulture (flowers).

Ethiopia did not attract high levels of direct investments between 2006 and 2010. According to the World Development Indicators, direct investments accounted for less than 5 per cent of GDP. For most of the past decade, direct investments as a share of GDP were lower in Ethiopia than in the rest of sub-Saharan Africa. If companies from EU member states were taken together, the EU would still be the largest source of direct investments (European Union 2012). However, no single EU member state is among the top10 investors in Ethiopia (unlike China, as we will see below).

To sum up, the EU kept its position as one of the most important donors to Ethiopia since 2006. The sectors to which the EU provides its aid and the modalities by which it provides aid, largely match the preferences of the Ethiopian government. The EU, taken as a whole, is still the largest market for Ethiopia’s exports (mainly coffee) and the largest source of investments. One can thus argue that in the late 2000s, the Ethiopian government even had a stronger interest in cooperating with the EU beyond governance reforms. After the election crisis, however, the EU’s demands to cooperate on governance reform clearly diverged from the preferences of the Ethiopian government. In contrast to the early 2000s, access to EU aid could thus only partially compensate for the cost that cooperation would have generated, explaining why the government only very reluctantly resumed cooperation on governance reforms. This argument, however, would be even stronger if one could control for alternative explanations, such as Ethiopia’s access to cooperation with China.

4.4.5 China: Alternative Cooperation Partner Since 2006

China’s economic cooperation with Ethiopia has been rapidly expanding. By 2012, China had emerged as an alternative partner for the Ethiopian government. It does not only extend official flows on a par with EU aid. China also offers new trading opportunities and direct investments, much needed by the Ethiopian government to raise domestic revenues, promote economic growth and provide public goods. Moreover (and in contrast to Rwanda and Angola), China engages with Ethiopia in reforms of the ruling party and other parts of the government’s survival strategy. China: Becoming an Alternative Economic Cooperation Partner

Since 2006, Ethiopia has gained considerable access to official flows from China. Chinese official flows do not only align with the Ethiopian government’s preferences. They also target sectors and policy fields that receive less support from the EU and other traditional donors.

Chinese aid and loans have rapidly increased up to USD7 billion until 2012 (Table 4.4). By 2014, loans further surged to a total of USD12.2 billion, making Ethiopia the second-largest recipient of Chinese loans in Africa, after Angola (Brautigam and Hwang 2016). The former Chinese ambassador in Addis Ababa highlights that Ethiopia is the only African country that benefited from all eight FOCAC policy measures announced in Beijing in 2006 (Gu 2008); a clear indication of Ethiopia’s political importance in China’s Africa policy. Most of the projects and technical assistance provided under the FOCAC framework—such as rural schools, a malaria prevention centre, a technical and vocational training centre, an agriculture demonstration centre or scholarships for students to study in China—would be counted as aid under the OECD DAC definition.

Table 4.4 Chinese official flows to Ethiopia 2006–2012

Chinese official flows have also grown beyond the scope of these development aid projects, particularly since 2008. Although preferential and commercial loans are extended below market rates, they would not be counted as aid in the OECD definition, as they are aimed at supporting Chinese exports or their level of concessionality is not low enough. According to Ethiopian officials, preferential and commercial loans are allocated to large-scale productive projects; they have only been provided since 2008. Most of the official flows are allocated to large-scale infrastructure investments (Table 4.4). As part of the FOCAC measures, the EXIM Bank financed an expressway from Addis Ababa to Dukem with a USD350 million concessional loan. In 2006, the China Development Bank granted a USD1.5 billion loan for telecommunication (as an export seller’s loan). Chinese policy banks, mostly the EXIM Bank, but increasingly also the CDB and ICBC, have provided several loans to support hydro-power projects or transmission lines.

China extends some loans to Ethiopian parastatal companies—Ethiopian Road Authority, Ethiopian Electric Power Corporation, Ethiopian Airlines, Ethiopian Shipping Lines, Ethiopia Telecommunication Corporation and the Ethiopia Railways Corporation (Table 4.4). Some of these public enterprises also receive development aid from traditional donors. For instance, the EU and several others support the Ethiopian Road Authority; the World Bank finances hydropower projects for the Ethiopian Electric Power Corporation. However, many projects supported by China would not be funded by the EU and other traditional donors, because the required financial volume is too large or because their economic and social impact is contested (large-scale dams, for instance). Furthermore, China gives assistance to some parastatal companies that have not had access to official or private capital flows from other international actors such as Ethiopia Shipping Lines. While official figures are not available, interviews with Chinese officials indicate that for the Chinese EXIM Bank, Ethiopia has become one of the largest recipients of loans in Africa and one of the countries with the most diversified project portfolio.Footnote 26

Chinese support for infrastructure projects managed by Ethiopia’s parastatal companies gives the Ethiopian government access to strategic rents. Moreover, it expects that loans from China will play a key role in financing its ambitious development strategy, as outlined in the Growth and Transformation Plan.Footnote 27 In light of the government’s strong focus on economic growth and infrastructure investments since 2005, official flows from China have become an important alternative to the EU and other donors’ development aid.

Since 2006, cooperation with China has not only yielded important official flows for the government’s investments in infrastructure. Engagement with China has also generated revenues through trade and, to some extent, direct investments. While the EU has traditionally been Ethiopia’s largest trading partner, trade structures have changed considerably in the past few years. China was Ethiopia’s largest source of imports. Ethiopia imports electronic equipment, textiles, machinery and vehicles from China. On the other hand, China’s importance as an export destination has grown considerably, particularly since 2008 (Fig. 4.4). Given the pace at which exports have grown in recent years, China may overtake the EU as the main destination of exports in the next few years. Ethiopia’s exports to China (similar to those to the EU) mainly consist of raw materials. China has not yet become a major market for coffee exports.Footnote 28 Ethiopia’s exports to China include traditional export goods, such as leather, grain and gum.

Trade with China has also generated new export sectors, notably for oilseeds. Within a few years, Ethiopia has become the largest grower of sesame seeds in Africa and one of the largest in the world.Footnote 29 Oilseeds overtook coffee as Ethiopia’s largest export product in 2007. Oilseeds from Ethiopia are mostly exported to China.Footnote 30 In contrast to Rwanda, in Ethiopia, trading with China has thus provided the government with an important windfall. Foreign currency earnings from sesame seed exports are put in a bank account at the state-owned Commercial Bank of Ethiopia; they are then transferred to an escrow account with the China EXIM Bank to pay back Chinese loans for construction projects.Footnote 31 While the surge in sesame seed exports opens important additional sources of revenues, concentrating on China as the main export market is not without risks. Anecdotal evidence from interviews with Chinese traders suggests that Ethiopia’s exports of sesame seeds faced difficulties in competing with China’s domestic production and are only imported in case of a poor sesame harvest in China.Footnote 32

According to the MOFCOM (2010), Chinese investment stock in Ethiopia jumped from about USD100 million in 2006 to about USD360 million in 2010. The Ethiopia Investment Agency estimates Chinese investments to be considerably higher (about USD1 billion). Between 2005 and 2009, Chinese companies were the third largest foreign investors to Ethiopia, after Saudi Arabia and India, and ahead of Sudan and Turkey. Chinese companies mostly engage in manufacturing, and Chinese investments are spread across a wide range of projects (Geda and Meskel 2009; Ethiopian Economic Association 2009). A special economic zone that has been established outside Addis Ababa is likely to attract more investments from China (and other countries). The CADFund, an equity fund managed by the China Development Bank, opened an office in Addis Ababa in 2010 and began supporting Chinese investment projects in Ethiopia, for instance, a glass factory. Chinese small- and medium-sized enterprises and private companies see the country as a promising market and a ‘launch pad’ for their engagement in the wider region (Geda and Meskel 2009; Ethiopian Economic Association 2009). According to Chinese officials and business representatives, Ethiopia is an important market for Chinese provincially and centrally state-owned construction companies—partly financed by Western donors.

Other emerging economies, such as India or Turkey, have also invested in Ethiopia. Figures are difficult to obtain. Interviews with the Ethiopian Ministry of Finance and Economic Development, the Indian embassy in Ethiopia and the Ethiopian embassy in India indicate that compared to China, India’s assistance is still small and concentrated in a few policy fields, such as educationFootnote 33 (see also Greenhill et al. 2013). Investments are concentrated in agriculture, and particularly the sugar industry, where the India EXIM Bank supports several projects totalling USD700 million (India EXIM Bank 2013). Turkey, Qatar or Saudi Arabia also boosted their investments in Ethiopia. Even though the Ethiopian government actively looks for support from other actors, China thus appears to be the most important partner among the emerging economies in terms of assistance, trade and loans. Attractiveness of the China ‘Model’ and Support for Survival Strategies

In public speeches, but also in internal party debates, Prime Minister Meles repeatedly emphasised that China’s development provides important lessons for Ethiopia. From 2000 onwards, the Ethiopian government’s development strategy has been strongly inspired by development trajectories of East Asian countries—particularly China and South Korea (Fourie 2012). In public speeches and internal party documents directed towards both a domestic and international audience, Prime Minister Meles emphasised the importance of learning from China in order to promote development in Ethiopia. The Ethiopian leadership has sought inspiration from China’s economic development trajectory as well as its political institutions. The learning process is facilitated by close cooperation between the Chinese and Ethiopian governments and ruling parties.

China gives some technical assistance to support the capacities of the Ethiopian government. However, this assistance differs from the EU’s governance aid. China offers training programmes for various segments of the Ethiopian elite. Representatives from Ethiopian regional and national administrations or the media are sent to China for between 10 days and one month. According to Chinese officials, between 2006 and 2010, around 200 Ethiopians took part in these programmes every year.Footnote 34 After a government reshuffle, China may invite all newly appointed senior officials for a study tour.Footnote 35 Many participants of these training and exchange programmes are greatly impressed by China’s economic development. At the same time, several participants describe these exchanges as ‘visiting tours’ rather than training courses. The courses are probably helpful for improving knowledge about China and fostering both a positive attitude among larger parts of the Ethiopian elite and a supportive environment for Sino-Ethiopian relations. As systematic analyses on their effects are still lacking, their impact is unclear. According to Chinese and Ethiopian officials, beyond training and advice, China also offers material assistance to some ministries, for instance, office equipment for the Ministry of Foreign Affairs or the Ministry of Information. The volume of this aid was small between 2006 and 2012.

In contrast to the EU, the Chinese government has hardly relied on the transnational channel and engages very little with Ethiopian civil society organisations. Civil society organisations are not included in the negotiation and implementation of Chinese projects. The Chinese government started to invite NGO representatives for short-term visiting tours. In private discussions, some representatives from Ethiopian NGOs have voiced concern about Chinese engagement and highlight that China opens alternative sources of financial support that further empowers the government to the detriment of opposition forces. In the media and public debates, however, the government does not allow for controversial discussions on China’s engagement, and criticism is raised in private conversations only. Party-to-Party Relations

In contrast to the EU’s cooperation with Rwanda, party-to-party cooperation constitutes one important channel for China–Ethiopia relations. Since 2005, the number of party visits increased considerably. Between 2006 and 2011, Ethiopia’s Minister of Information, Simon Bereket, was been the most prominent actor engaged in EPRDF relations with the CCP; he led most official EPRDF delegations to China.Footnote 36

In 2005, shortly after the election crisis and alongside efforts to reinforce the influence of the party, the EPRDF established an office for foreign relations and started to intensify its engagement with other ruling parties. According to Ethiopian officials, the CCP has become the most important international partner for the EPRDF. For the CCP, the EPRDF is also one of the most important partners in Africa. If measured in terms of the number of bilateral visits, the EPRDF clearly figures above the average for sub-Saharan Africa (Fig. 4.5). Ethiopia is also one of few African countries where the CCP has dispatched a representative to the Chinese embassy.

Upon request by the EPRDF, both parties signed a MoU in October 2010 to further institutionalise and intensify party-to-party contacts. Not least in light of the EPRDF party reforms after the 2005 election crisis, for the EPRDF, party-to-party relations open an important channel to discuss experiences on development, the relationship between the party and the state, strategies on how to organise leadership succession, how to manage intraparty transition from one generation to the next or the role of mass movements, such as women’s and youth associations. As many of the party cadres who fought the liberation struggle are about to retire, maintaining loyalty and compliance within the party becomes a key concern for the EPRDF leadership. Upon request by the EPRDF, the CCP supported the establishment of the central party school. The CCP itself also has a strong interest in the relationship. Close party-to-party relations are perceived as an important foundation to strengthen economic and political cooperation between the two countries. Moreover, due to Ethiopia’s political influence in the region, cooperation with the EPRDF allows the CCP to learn more about African politics in general.

4.5 Brief Breeze of Change in EU–Ethiopia Cooperation Between 2011 and 2014

After the 2010 elections, the EU slightly modified its good governance strategy. It continued to promote governance reforms by supporting democratic governance. It continued to target not only the government, but also used the transnational channel, for instance, through the Civil Society Fund. The EU proceeded to support not only the effectiveness but also democratic quality of decision-making processes. However, at the same time, the EU shifted its strategy from cooperative-critical towards cooperative. The EU became more hesitant in issuing critical public statements and using aid funds to exert pressure on the Ethiopian government to open political spaces and cease coercive measures. Instead, between 2011 and 2014, the EU has mainly relied on political dialogue and governance aid to support reforms.

Between 2011 and 2014, the Ethiopian government has apparently once again become more forthcoming in engaging with the EU in governance reforms. It agreed to hold dialogue more frequently and to include the heads of relevant line ministries, such as the Minister of Justice or the Minister of Agriculture, depending on the specific topic under discussion. Moreover, the Ethiopian government has agreed to engage with the EU and other donors in a regular dialogue with civil society representatives (DAG 2012, 3).

What can explain Ethiopia’s renewed openness to cooperation? The landslide victory in the 2010 elections showed both the leadership and opposition parties that the EPRDF was clearly back in power. In light of the relatively secure position of the Ethiopian leadership and the EU’s modification of its good governance strategy, engaging in governance reforms with the EU was less challenging between 2011 and 2014 than it was before the 2010 elections. Moreover, although the sudden death of Prime Minister Meles in August 2012 could have put the party in a difficult position, the change in the leadership did not result in open power struggles or a split within the ruling party.

China has become even more important as a cooperation partner since the 2010 elections. The Chinese government started to assist key sectors of Ethiopia’s Growth and Transformation Plan, such as railways, a light railway in Addis Ababa and additional hydro-power projects (Table 4.4). In the second half of 2012, China extended loans amounting to USD612 million, making it the largest loan provider to Ethiopia (Tadesse 2012; Ministry of Finance and Economic Development 2013, 23). Financed by the CADFund, two Chinese companies set up a joint venture to invest USD2 billion to produce shoes in Ethiopia in 2012. The project created several thousand jobs and is one of the largest CADFund projects, according to Chinese officials.Footnote 37 Other emerging economies such as India have also become slightly more important in recent years. In addition to previous loans for the development of the sugar industry, India has approved a loan of USD300 million for the development of the railway system (India EXIM Bank 2013). However, as cooperation on governance reforms was less costly between 2011 and 2014 compared to the period between 2006 and 2010, China’s growing presence had limited effects on the Ethiopian government’s openness to engage with the EU in governance reforms.

4.6 Conclusions

Ethiopia only reluctantly engaged with the EU in governance reforms in the early 2000s. It became slightly more open to cooperation ahead of the 2005 elections. After the elections, Ethiopia was initially indifferent towards EU demands to cooperate. Towards the 2010 elections, the government again agreed to at least reluctantly engage. Only after the 2010 elections has it again become more open. What explains Ethiopia’s overall reluctance and these slight changes over time?

4.6.1 Why Has Ethiopia Only Reluctantly Engaged in Governance Reforms Between 2000 and 2005?

Ethiopia’s willingness to reluctantly engage with the EU in governance reforms in the early 2000s can be explained by a partial convergence of the EU and the Ethiopian government’s preferences, Ethiopia’s high economic dependence on the EU and the absence of alternative cooperation partners such as China.

In the early 2000s, the EU’s strategies to promote effective and democratic government and to use a cooperative-critical strategy produced some benefits, but also caused difficulties for the Ethiopian government. EU demands to cooperate on governance reforms came at a time of political instability, caused by the split in the TPLF central committee after the war with Eritrea. The Ethiopian leadership’s response to strengthen state institutions, to introduce decentralisation and promote output legitimacy partly matched EU demands to cooperate on effective government. However, its strategy to use low-intensity coercion to reduce the risk that defecting members of the elite mobilise mass support made cooperation on democratic government quite costly. In contrast to Rwanda, ahead of the 2005 elections, the Ethiopian government cautiously opened up political spaces for opposition parties, civil society and the media, allowing for some (limited) cooperation on democratic government.

In the early 2000s (and similar to Rwanda), the Ethiopian government also started to reach out to the international donor community—including the EU—to attract higher levels of development aid. Prime Minister Meles actively embraced the international aid effectiveness agenda from the very beginning. The EU’s willingness to increase development aid to Ethiopia was highly welcome and gave incentives to the government to reluctantly engage in governance reforms, despite the costs involved. On the other hand, Ethiopia still had very limited access to official flows from China and other non-traditional donors in the early 2000s, which potentially could have reduced Ethiopia’s interests in engaging with the EU.

4.6.2 The 2005 Elections: Cooperating with the EU on Governance Reforms Threatens Regime Survival

The 2005 elections marked a turning point for the stability of the regime as well as for Ethiopia’s openness to cooperate with the EU. During the 2005 election crisis, cooperating with the EU generated a fundamental threat to regime survival. The relatively strong election result for the opposition caught the EPRDF by surprise and significantly altered domestic political dynamics in Ethiopia. The government blamed cooperation with the EU for having contributed to the crisis. The EU election observer mission was accused of siding with the opposition, thereby encouraging the opposition to take its protests to the streets. Moreover, the EU and other donors’ decision to withhold budget support put significant pressure on the government. During a period when the government had to set up its budget and when output legitimacy became more important than ever, the EU and other donors’ decision to use aid funds as leverage put the government in a precarious situation.

Largely unnoticed by the EU and other traditional donors, the 2005 election crisis marked the starting point for China’s closer economic and political cooperation with Ethiopia. Simultaneously with the EU and other donors’ decision to withhold general budget support funds, the Chinese government extended its first substantial loan facility to Ethiopia, whereby it significantly reduced the Ethiopian government’s vulnerability to the EU and other traditional donors’ pressure. However, in 2005 it was still unclear to the Ethiopian government to what extent this ad hoc engagement would result in better access to economic cooperation with China in the medium to long-term.

4.6.3 Why Ethiopia Continued to Reluctantly Engage Between 2006 and the 2010 Elections

The 2005 election crisis had not only short-term effects but also increased the costs for the Ethiopian government to engage with the EU in the medium-term. In the aftermath of the 2005 election crisis, the Ethiopian government abruptly closed political spaces and expanded the influence of the EPRDF. The government used measures of low-intensity coercion, such as new laws on media, terrorism and civil society that substantially limited the freedom of the opposition. The EPRDF expanded its membership base. It introduced measures to link access to civil service and some public goods to party membership to broaden its support base and improve compliance. At the same time, and as political spaces narrowed, state modernisation and the provision of public goods became even more important to secure regime stability. In this context, the EU’s decision to broaden its good governance strategies and to promote not only democratic government but to also assist and empower civil society actors vis-à-vis the government entailed risks for the Ethiopian government. Moreover, the EU’s decision to combine cooperative with critical instruments, inflicted considerable costs as EU criticism tied in with domestic reform pressure and regime instability.

As cooperation with the EU on governance reforms was challenging for the government after the 2005 election crisis, one would have expected that Ethiopia would be indifferent towards EU demands to engage. To understand why the government still reluctantly engaged with the EU between 2006 and 2010, one thus needs to take into account its broader interests in cooperating with the EU. While output legitimacy became even more important for the Ethiopian government, the EU remained one of the largest donors to Ethiopia, one of the most significant sources of direct investment and an important trading partner. The Ethiopian government thus could not ‘afford’ to ignore EU demands to cooperate on governance reforms despite the fundamental costs that cooperation entailed.

However, since the 2005 election crisis, China also successively emerged as an alternative economic cooperation partner, reducing Ethiopia’s dependence on the EU and other traditional donors. Moreover, China has become an important partner for the Ethiopian government to support its survival strategies and the main partner of the EPRDF to engage in party reforms. In the case of Ethiopia, China has thus clearly emerged as an alternative cooperation partner to the EU between 2005 and 2011.

In this context, one would have expected that Ethiopia would refuse to cooperate with the EU on governance reforms, when China emerges as an alternative cooperation partner. However, Ethiopia has continued to at least reluctantly engage, going against the argument that China’s presence in Africa substantially influences African governments’ willingness to cooperate with the EU on governance reforms.

4.6.4 Why Has Ethiopia Again Become More Forthcoming to Engage Between 2011 and 2014?

After the 2010 elections, the EU has continued to promote democratic governance. But it has also modified its strategy from a cooperative-critical towards a cooperative strategy. The Ethiopian government has again become slightly more forthcoming and willing to cooperate on governance reforms. However, the slight modifications in the EU’s strategy alone cannot account for the changes in the government’s responsiveness. Instead, this change can be explained by greater domestic regime stability. The 2010 elections brought a landslide victory for the EPRDF, winning all but two seats in parliament. This overwhelming victory signalled to both the regime and the opposition that it had (at least partly) regained its strength, also giving it more confidence to engage with the EU and other donors in the aftermath of the elections.

4.6.5 What If…?

At least two counterfactual conjectures should be explored. First, what if the EU had continued to promote mostly democratic government or even narrowed its approach to effective government instead of broadening its good governance approach to democratic governance since 2006? In this case the Ethiopian government may have been more forthcoming in engaging with the EU. Parts of the EU’s good governance approach matched the preferences of the Ethiopian government. EU attempts to strengthen the effectiveness of government institutions and support capacity-building, for instance, in the context of the PSCAP programme, was very welcome to the Ethiopian government. Moreover, Ethiopia may have been more willing to engage in political and aid policy dialogues on governance reforms, if the EU had issued fewer critical public statements. As one EU official describes the dilemma: ‘We can have a political dialogue meeting with the minister or we can publish a critical statement, but we can’t have both’.Footnote 38 It can thus be argued that the Ethiopian government might have been more active in engaging with the EU in governance reforms, if the EU had narrowed its good governance approach and had refrained from adopting a cooperative-critical strategy. However, this would also have considerably limited the EU’s means of influencing political reforms.

Second, what if China had not emerged as an alternative cooperation partner since the mid-2000s? China’s growing role as a provider of official flows, a trading partner, a source of direct investments, and as a partner to cooperate on governance reforms has reduced the incentives for the Ethiopian government to engage with the EU. However, it seems unlikely that in the absence of China, the Ethiopian government would have been much more forthcoming and would have actively or even proactively engaged with the EU in governance reforms, given the high risk that this cooperation involved after the election crisis. This (again) illustrates the importance of the domestic survival strategies as the determining factor to explain differential response strategies towards EU demands to cooperate on governance reforms.

4.6.6 Outlook

As is the case with Rwanda, the example of Ethiopia demonstrates that the domestic logic of political survival in authoritarian regimes has important consequences for what the EU can achieve with its good governance strategy at a certain point in time. In Ethiopia, political spaces have also gradually reduced since the mid-2000s. However, Ethiopia was much less willing than Rwanda to engage with the EU (and other donors) in governance reforms. The Ethiopian government thus made it very hard for the EU (and other donors) to put governance reforms on the agenda of bilateral relations. Given that the government considerably depends on output legitimacy for which EU aid also plays a prominent role, the EU institutions—in close cooperation with EU member states and other donors—might have used their leverage more strategically and applied more pressure on the government not to close political spaces further. Providing large sums of development aid to Ethiopia without exerting substantial pressure for political reforms, while the government gradually closes political spaces and does not allow for any opposition, engagement of CSOs or debates in the media, raises serious questions regarding the EU’s contribution to medium- to longer-term prospects of inclusive and sustainable development in the country.

Sadly enough, recent events in Ethiopia seem to confirm those sceptics who argue that authoritarian regimes that focus on strong institutions and public goods provision while reducing political spaces will not be stable in the medium to long-term. The 2015 parliamentary elections demonstrated the EPRDF’s firm grip on power and a hardening of authoritarian rule: the EPRDF won all seats. This overwhelming victory thus signalled to the EPRDF and opposition members that the it has not lost its strength, in spite of the death of Prime Minister Meles in 2012. As formal channels to express dissatisfaction through the media, civil society engagement or opposition parties in parliament were no longer available, protesters took to the streets. The upsurge in demonstrations against the government since the end of 2014 indicates a strong dissatisfaction and public dissent with government policies. The government’s violent response illustrates the extent to which it is shaken by the protests.

These recent dynamics in Ethiopia thereby second the argument that the EU and other actors should not one-sidedly focus on enhancing the effectiveness of government institutions, but should in parallel promote the democratic quality of decision-making processes. In other words, these recent dynamics underscore the need for the EU to make support for democratic governance an integral part of its policies in order to positively contribute to sustainable and inclusive policies in the long run, particularly in cases where the EU at the same time provides large sums of development aid and by doing so—in any case—has an effect on domestic politics.