Spilling Bhd over Water? The Case of EthiopinHowever, there are political and economic risks associated with decen-
tralisation, particularly considering that regional administrative units are
formed roughly along ethnic lines. This may influence the allocation of
resources at the expense of some ethnic and religious groups, thereby lead-
ing to politicisation and mobilisation along ethnic lines. Decentralisation may
also threaten those who hold power at the central level. Another potential
cause of conflict may be that ethnic majorities in a given region may neglect
the concerns of minority groups inhabiting their region.
It is too early to determine whether the current policy of ethnic federalism
will minimise conflict in Ethiopia. As pointed out earlier, the policy itself
entails high risks relating to ethnic differentiation and the misallocation of
resources.
To date, Ethiopia has been involved in two interstate conflicts, with Somalia
to the east and Eritrea to the north. Officially, both conflicts were rooted in
competing territorial (boundary) claims. The sources of the Ethiopia-Somalia
war in the 1970s date back to the colonial period when the Somali people were
divided between Somalia, Somaliland, Kenya, Ethiopia, and Djibouti.
Following the establishment of the Somali Republic in 1960 and the beginning
of Somali nationalism, the government of Somalia claimed the Ogaden region
that was under Ethiopian administration. The government in Somalia wished
to consolidate the different Somali clans under one Somali nation. Somalia ini-
tially occupied most of the Ogaden and penetrated further into other towns in
the eastern part of Ethiopia (but eventually was defeated by Ethiopia in 19781,
which were aided militarily by the Soviet Union. Tense relations between
Somalia and Ethiopia have existed since the war in 1977-1978.
Although boundary conflict and nationalist fervour were the sources of the
conflict between Ethiopia and Somalia, access to and conirol of resources
were closely related to competing claims to the Ogaden.
The immediate cause of the Ethio-Eritrean conflict was over a contested
border. However, many assert that the real cause of conflict between the two
countries goes beyond the border dispute and can be traced to the prior rela-
tionship between the two government^.^' Before coming to power, the TPLF,
which is the dominant party in the present ruling party, the EPRDF, and the
EPLF, were allied in armed opposition to the Dergue. Moreover, Eritrea gained
independence through a referendum in 1993 that was supported by the pres-
ent government.
Throughout the period prior to the border dispute, relations between the
two governments were cordial both on the political and economic fronts.
Relations soured in 1997 when the Eritrean government introduced its own
currency, the Nakfa. This prompted Ethiopia to state that trade between the
two countries should be made in hard currency. Controversy also emetged
over port procedures and charges in the Eritrean ports of Massawa and
Assab. Ethiopia also found it expeditious to import oil products and other