The New Scramble for Ethiopia. BY STEPHANIE JAY

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The New Scramble for Ethiopia. BY STEPHANIE JAY

June 2, 2019| Arlaadi Online

Ethiopia’s prime minister is making headlines as a Trudeau-like liberal reformer. But behind his progressive sheen, his economic policies are set to accelerate inequality and poverty.

Ethiopia’s Prime Minister Abiy Ahmed (L) shakes hands with Chinese president Xi Jinping before their meeting at the Great Hall of the People in Beijing, China, April 24, 2019. Parker Song / Kyodo News – Pool / Getty

What happens in Davos, stays in Davos — at least for the majority of the Ethiopian public, who takes little interest in the exclusive annual gathering of the global financial elite. This year, however, the speech by Ethiopia’s new prime minister, Abiy Ahmed, at the 2019 World Economic Forum was shared widely on social media. Its spread highlighted the pop-star-like status that the country’s new, charismatic leader enjoys among Ethiopians, especially the country’s youth.

The forty-four-year-old prime minister addressed the World Economic Forum’s jet-setting global rich in their own language: literally, in English, but also in their neoliberal language of removing red tape for business, the power of the private sector, open markets, and integration (including Ethiopia’s commitment to joining the World Trade Organization).

Ahmed’s speech epitomized the usual pitch for global capital to come to cash-strapped developing countries (high returns! tax holidays!). But it also provided important insights on where the country may be headed, following its change of leadership in 2018 after years of protests.

The liberal establishment’s story of last year’s change in Ethiopia is a familiar one, told and retold countless times across the globe since the end of the Cold War. In 2018, this story goes, after decades of authoritarianism and a closed state-led economy, a new, enlightened leader finally arose to usher in a period of liberalization and the free market. Soon after, the World Bank approved US$ 1.2 billion in grants and loans in return for the standard package “towards supporting reforms in the financial sector including improving the investment climate.”

The new government already embarked on a partial privatization of key state-owned enterprises, as well as a hasty overhaul of the country’s regulatory framework in the hope of securing foreign capital for development. US trade delegations are ready to pounce on the lucrative state-owned Ethiopian Airlines, which will sell 45 percent of its stake to foreign investors.

Recently, the German development minister complained that Germany could not just sit back and watch the US and China making billion-dollar investments in Africa: Germany should be involved too. Earlier this year, the German president and key German industrialists visited Addis to signa memorandum of understanding between the Volkswagen Group and the Ethiopian Investment Commission to set up an automotive industry in Ethiopia. Nine months into Abiy’s new leadership, the new scramble for Ethiopia has already taken off.

Neoliberalism Versus the Developmental State

In order to make sense of the transformation underway in one of Africa’s fastest-growing economies, it’s important to understand Abiy’s political project, its social base, and how it operates within the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF).

It’s ironic that the new prime minister’s 2019 World Economic Forum address was received with so much approval from global financial elites. Only seven years ago, Ethiopia’s former prime minister Meles Zenawi hosted the 2012 World Economic Forum on Africa in Ethiopia’s capital Addis Ababa. There, he shocked the international financial elite by telling them that neoliberalism was a failed project.

Meles, who ruled as prime minister from 1995 until his death in August 2012, advocated instead his version of the “developmental state.” In this scheme, the state is in the driver’s seat of development, with ownership over key sectors and a tightly regulated private sector that serves to advance the overall national development agenda. Read more at The New Scramble for Ethiopia

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