Ethiopia: peace agreement reached but sanctions persist

Despite breakthrough peace deal reached between the Government of Ethiopia and the Tigray People’s Liberation Front, U.S sanctions targeting Ethiopian and Eritrean interests Continue

The peace agreement which has ended all hostilities in Northern Ethiopia has so far failed to nudge U.S policy makers in the direction of removing sanctions directed against Ethiopian and Eritrean governments accused of exacerbating the war. The agreement could resolve the human rights and humanitarian concerns that have been the basis for several measures the United States has taken against Ethiopia and Eritrea, including sanctions, trade restrictions, and visa restrictions. According to a recent report by law firm Foley and Lardner, LLP, “until a peace deal proves durable, current restrictions by the United States — and by other countries — will continue to create uncertainty for investors and persons seeking to do business in or with Ethiopia, Eritrea, and the Greater Horn of Africa region”.

Following the conflict in Ethiopia, the United States Government enacted several punitive sanctions which remain in place today.

• In May 2021, vista restrictions were announced by the State Department on unnamed Ethiopian and Eritrean officials, military commanders, and “individuals responsible for, or complicit in, undermining resolution of the conflict in Tigray.”
  • `Simultaneously, the State Department’s Directorate of Defense Trade Controls (DDTC) algo began implementing a policy of prohibiting the export of defense articles and services to Ethiopia
• In August 2021, The Office of Foreign Assets Control (OFAC), citing human rights abuses in Tigray, designated General Filipos Woldeyohannes, the Eritrean army’s chief of staff, as a target for sanctions under Executive Order 13818. President Donald Trump had issued E.O. 13818 in 2017 as part of the Global Magnitsky Act, authorizing sanctions against individuals responsible for human rights abuses and corruption around the world.
• In September 2021, President Biden issued Executive Order 14046, authorizing sanctions against entities and individuals responsible for alleged “widespread violence, atrocities, and serious human rights abuse” in Ethiopia.¹ OFAC did not yet designate any targets for sanctions under E.O. 14046. These sanctions later were codified in the Ethiopia Sanctions Regulations.
• In November 2021, the State Department’s DDTC formally amended the International Traffic in Arms Regulations (ITAR), codifying DDTC’s policy of denying licenses for exporting defense articles or services “to or for the armed forces, police, intelligence, or other internal security forces of either Ethiopia or Eritrea.”[2] 
• Also in November 2021, pursuant to E.O. 14046, OFAC designated four Eritrean entities and two Eritrean individuals as targets for sanctions. The entities were:
  • The Eritrean Defense Forces;The People’s Front for Democracy and Justice (PFDJ, Eritrea’s sole legal political party);The Hidri Trust (a holding company affiliated with PFDJ); and
  • The Red Sea Trading Corporation (a business management company affiliated with PFDJ).
• The individuals were:
  • Abraha Kassa Nemariam, the head of the Eritrean National Security Office; and
  • Hagos Ghebrehiwet W. Kidan, the economic advisor to the PFDJ and C.E.O. of the Red Sea Trading Corporation.
• In January 2022, the Office of the U.S. Trade Representative terminated Ethiopia from the Africa Growth and Opportunity Act trade program, ending the country’s duty-free access to American markets. The program had generated employment for 100,000 Ethiopians, mostly women, and had earned the country $100 million annually.

In addition, the year 2021 saw the U.S. International Development Finance Corporation (DFC) also delayed its previously announced $500 million loan to a consortium of companies that had agreed to invest in Ethiopia’s telecom sector. This caused postponement of Safaricom’s initial telecom venture into Ethiopia. According to the DFC, its delays in financing the investment dragged the project and raised serious concerns for investors. However, impediments to the consortium’s investment were eased, following the possibility of a China-backed competitor consortium winning license to operate in Ethiopia’s telecom market.

Under the terms of the peace agreement reached, in addition to both parties ceasing hostilities permanently, the Tigray rebel combatants are to disarm within 30 days after the signing of the deal, and the federal government of Ethiopia will take back control of main roads, airports and facility humanitarian aid access. The federal government has started work on reconnecting hitherto cut off telecom services. Furthermore, a transitional body will be established to oversee the region’s reintegration after two years of interruption

Although U.S officials have praised the African Union-led peace agreement that was signed in Pretoria, South Africa, little has been said about the easing of sanctions. Following the breakthrough peace deal, hostilities in northern Ethiopia’s Tigray region have dramatically diminished. Humanitarian aid to the region’s 6.5 million people has resumed. War rhetoric and vilifications from both parties have subsided significantly. Yet despite these promising signs foreign policy analysts question the stability of the truce.

Hardliners of the TPLF have latched on to doubts around the agreement by disparaging the merits of the peace agreement, which they view as favoring the Government of Ethiopia, whose defense forces has essentially defeated the rebels in battle and now controls over 70% of territory, including major towns and cities in the Tigray region. Previous truces and ceasefires were in fact easier to sidestep. However, given the current dominance of the Ethiopian National Defense Forces, the rebels will find it difficult to wiggle their way out of the terms of the agreement. Some say this provides guarantees for peace, particularly if Ethiopian authorities remain magnanimous and accommodating to the reintegration of Tigray.

Given the recent developments, lingering effects of U.S measures present mixed signals. Ethiopia remains excluded from the AGOA trade preference program, despite the fact that the program’s beneficiaries have nothing to do with the conflict. Moreover, the DFC’s delayed loan did not stop the consortium of telecom companies led by Safaricom gaining license to operate in Ethiopia for a fee of $850 million. The U.S. also continued to provide humanitarian assistance, giving more than $1 billion in Fiscal year 2021 to promote health, food security, basic education, support for women and girls, and human rights and democracy.