Kenya & Ethiopia: A Regional Power Dynamic Analysis

This Grey Dynamics African Intelligence Report analyses the regional power competition of Ethiopia and Kenya, this includes military, economic, and diplomatic power. Kenya’s challenge to Ethiopian regional power is analysed, as well external factors to the power dynamics such as Somalia conflict, Renaissance Dam dispute, Sudan border tensions, and US/China competition. 

Key Judgments

KJ-1. Ethiopia will almost certainly remain a strong military, economic, and diplomatic regional power in the East and Horn of Africa  in the next 0-5 years. It is unlikely that Kenya will overtake Ethiopia’s soft power position in the next 0-5 years but will likely reach a similar position in regional power in economic and military terms.

KJ-2. Ethiopia will likely seek to increase regional power, indicated by re-establishment of the Navy despite being a landlocked country. 

KJ-3. Kenya has increased military expenditure significantly since 2010 and is expected to surpass Ethiopia by the end of 2020. Kenya is also likely to catch up with Ethiopia in terms of GDP by the end of 2020. 

KJ-4. Despite competition, Kenya and Ethiopia maintain strategic partnership ties which are unlikely to decrease significantly due to economic and diplomatic ties. 

KJ-5. There are likely tensions from the presence of Kenyan and Ethiopian troops in Somalia, but Kenya is set to withdraw in 2021. Kenya supporting Egypt’s position over the Renaissance dam dispute is a realistic possibility for tensions increasing. 

Ethiopia Regional Power Status

Military

Ethiopia maintains a key regional power status as a military power, which is unlikely to change within the next 5 years. Ethiopia has 162,000 active personnel, 86 aircraft, 400 tanks, 114 armoured vehicles, 67 propelled artillery, 650 towed artillery, 183 rocket projectors. Much of the military equipment originates from Russian Soviet era equipment, meaning that quality maintenance issues are highly likely, decreasing full operational capacity. Ethiopia is expected to level out in military expenditure, with a $490.30 million expectation by the end of 2020. Ethiopia has historically shown aggressive willingness to protect national interests, from the 19th century against Italy up until recent examples such as insurgency in Ogaden (1995-2008), Eritrea-Ethiopia War (1998-2000), and its current presence in Gedo, Somalia. The Ethiopian Navy has also been re-established, reaching agreements with Eritrea over ports which link to economic and diplomatic power despite previous history. 

Economy 

Ethiopia has an estimated 109 million population and a significantly fast-growing economy which is likely to continue in the next 5 years. The new access to Eritrean ports of Assab and Massawa will highly likely stimulate international trade. Ethiopia has a high $105 billion GDP expected by the end of 2020, however Ethiopia has a poor per capita income of $790, and the highest poverty rate in the world, while it aims to reach lower-middle income status by 2025. This growth and aims depend on the government spending which can only be sustained by repayments. Ethiopia’s 9% projected economic growth for this fiscal year is expected to decline to 6% because of the current pandemic, despite this coffee exports grew by 16% and meat by 21%. Ethiopian banks also managed to collect $3.6 billion loan repayments and distributed $6.5 billion loans. Agriculture, manufacturing, construction, tourism, energy, resources, and food production are the main Ethiopian industries. If the Renaissance Dam is successful, this will highly likely change the regional energy economic system in favour of Ethiopia. Ethiopia’s economy influences its neighbours such as Kenya, Uganda, Tanzania, Sudan, South Sudan, there is a disparity in Kenyan trade, with a higher percentage of imported goods from Kenya.

Diplomacy

Ethiopia is highly likely to retain regional diplomatic power status in the region in the next 5 years. Ethiopia has a long history of diplomacy, being the oldest independent country in Africa. Ethiopia is a major economic partner of Djibouti and Sudan and has improved relations significantly with Somalia. Ethiopia has a history of close relationship with the USSR, and today maintains an economic relationship. With the US, ties are based on economic and military cooperation. Ethiopia’s active foreign diplomacy has placed the country in situations that raise tensions and the chance for conflict, recent developments such as the Renaissance Dam with Egypt indicate that Ethiopia still has a strong regional diplomatic presence, noticeable in Sudan’s support. China, which is Ethiopia’s biggest trading partner, and Italy have also given their backing. Ethiopia is now pressuring Somalia, Kenya, Uganda, to clarify their position. 

Kenya Power Challenge

Military

Kenyan military expenditure and growth is likely to continue to grow in the next 5 years. While this is not a direct challenge to Ethiopia, it reduces some of regional power enjoyed for decades. This would, and already has, establish Kenyan influence in security issues to a further degree. Kenya has 24,150 active personnel, 150 aircraft, 76 tanks, 479 AVs, 30 PAs, and 25 TAs. Kenya benefits from low-maintenance equipment and has surged in modern military equipment spending, which increases full operational capacity. Kenya already has patrol vessels, for inshore patrol, but has little to no presence in the Red Sea. As this is inshore, potential clashing with Ethiopian vessels is highly unlikely. Kenya is on a military spending surge, with an estimated $890 million expenditure (pre-pandemic data) by the end of 2020. Kenya also benefits from US and UK special forces training and is becoming a better equipped and capable military force. This creates a potentially better trained, but smaller force compared to Ethiopia. 

Economy

Kenyan modernisation of its economy through e-commerce, financial and mining infrastructure development stimulate a realistic probability of becoming a challenge to Ethiopia’s economic power. Kenya is a key transport hub in East Africa which is highly likely to continue to grow, a $105 billion GDP was expected, matching Ethiopia by the end of 2020. In terms of economy, Kenya is now very close with Ethiopia in most sectors, and benefits from a growing tourism sector. Kenya’s main industries are agriculture, forestry, fishing, mining, manufacturing, energy, tourism and financial services. The mining, tourism, and financial services are a threat to the Ethiopian economy, a faltering agriculture makes Ethiopia more competitive in this industry. Ethiopia’s heavily state engaged approach to the economy however has allowed better infrastructure development. 

Diplomacy

Kenya is unlikely to become a direct challenge to Ethiopia’s diplomatic power in the region within the next 5 years. This is mainly due to Kenya’s foreign policy, which is more reserved compared to Ethiopia, rather than a lack of capacity. This approach however may benefit Kenya in sustaining economic stability, by distancing itself from conflict where possible. In Somaliland however, Kenyan Defence Forces have been active, but in the national interest and are set to be reduced as part of AMISOM withdrawal in 2021. On the contrary, Ethiopia practices a more active diplomatic role in the region and is more aggressive in this approach. Kenya has close ties with Rwanda, Uganda, Tanzania and South Sudan, which in future has a realistic probability of mitigating Ethiopian influence.

Power Dynamic Challenges

Somalia

Somalia is a likely source of tension between Kenya and Ethiopia. Ethiopia backs the Federal Government of Somalia which has tensions with Kenya. While Kenya backs the autonomous Somaliland region, creating tensions between the parties involved. 9th May 2020, a private Kenyan airplane carrying humanitarian aid was shot down by Ethiopian forces in Somalia. These power dynamics and lack of miscommunication have a realistic probability of creating similar future cases of limited clashes and diplomatic disputes. However, Kenya is set to reduce force presence and is leaving AMISOM. Ethiopia has taken a more active diplomatic role in Somalia. 

Renaissance Dam

The Grand Ethiopian Renaissance Dam dispute is a likely source of tension between Kenya and Ethiopia, depending on Kenya’s choice in diplomacy. The hydropower project threatens Egypt’s water security, which in turn affects their agriculture. While Egypt alleges that Kenya supports the Egyptian position, Kenya would also benefit from cheap electricity from this project. The dispute has escalated, and military action has been threatened, if Kenya were to fully support the Egyptian position, this will likely bring the nation into diplomatic conflict with Ethiopia. This scenario is unlikely, but backing Egypt is a negative factor in relations. The dam potentially makes Ethiopia a major energy hub in the region and would highly likely change the regional power dynamics. 

Grand Ethiopian Renaissance Dam, Power Dynamics, East Africa

US and China Competition

The US and China are increasing competition in the region, but this is unlikely to significantly change the power dynamics for Kenya and Ethiopia in the next 0-5 years. Ethiopia is closer to China, while Kenya is closer to the US. However, Ethiopia has been biding to boost investment from Europe to close the debt disparity with Beijing. While China has become Kenya’s biggest lender. US and China competition will more likely benefit both countries in terms of aggressive investment.

Conclusion

Kenya is unlikely to overtake Ethiopia as a regional power in the next 0-5 years. However, it is highly likely that Kenya will continue to now be able to compete with Ethiopia on economic terms, and likely be able to match military power by the end of the forecast period. A change in foreign policy after this period would likely see Kenya become a similar regional power through soft power, and if the economic and military growth continues, could potentially gain more importance than Ethiopia in the future.


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