Minister for Foreign Economic Relations Abdul-Mejid Hussein said on April 16 that Ethiopia has accepted a World Bank recommendation to devalue the birr. He told Reuter the details and timing of the devaluation, the first in more than two decades, is yet to be decided. “The principle has been accepted. We are committed to devalue, the birr.”
The birr has been fixed at 2.07 to the U.S. dollar for more than two decades. The government has been reluctant to seek more realistic valuations fearing major economic and social problem.
Abdul-Mejid added that transitional Ethiopian President Meles Zenawi had assured World Bank Vice President Edward Jaycox that the government now fully accepts the principle of a devaluated birr as part of a wider assistance package.
Other important elements of the World Bank and International Monetary Fund assistance package include adoption of conservative fiscal policies and a timetable for eliminating subsidies.
Abdul-Mejid said he hoped negotiations on the Structural Adjustment Program (SAP) would be concluded by the end of June.
In other African countries where SAPs have been implemented, two-tier systems valuation has resulted. Accordingly, individuals and private businesses use a rate more in line with the black market rate while official agencies use the established rate. The current black market rate is around six birr to the dollar. Official rates will gradually conform with the market rate.
“On the other hand, it may better to go to the whole way at once. Either way, the social dimensions of adjustment and the cost of it have to be agreed,” Abdul-Mejid said.
He said the transitional government has calculated a “safety net” of around 1.7 billion birr ($825 million) to alleviate the effects of devaluation.
Twelve Ethiopian-Somali clans have reportedly agreed to organize themselves under a single political group. A conference has been scheduled for July in Dre Dawa to draft the group’s political program and establish a committee to promote development and humanitarian assistance in drought and war-ravaged ethnic Somali areas.
In a resolution adopted last month, clan leaders promised to insure safe passage for United Nations convoys transporting relief supplies to famine victims and refugees in eastern Ethiopia.
Bandit attacks on relief supply trucks and the killing of foreign aid workers in eastern Ethiopia in recent months have severely disrupted relief to hundreds of thousands of ethnic Somalis.
At least 17 people were wounded as bombs exploded in early April in downtown Addis Abeba. The blast, which took place at the National and Adam Hotels also caused other property damages.
Mulugeta Seyoum, commander of the Second Police Station, suspects that the bombings might have been committed by agents of some political organizations which are active in the transitional government.
The wounded persons are now receiving medical treatment and the causes of the explosions are under investigation.
An Ethiopian man hijacked an Ethiopian Airlines plane to Aden on April 2. The hijacker later surrendered. The Boeing 727, which was on a domestic flight, was carrying 135 passengers and eight crew members. The plane was allowed to land in Yemen for “humanitarian considerations,” according to Yemeni television.
The man reportedly asked for asylum. The jet was allowed to return to Ethiopia. An Ethiopian airlines spokesman in Addis Abeba said the plane had been on a flight from Dre Dawa to Addis Abeba when it was hijacked.
Another Ethiopian Airline Boeing 727 plane carrying 105 passengers was hijacked to Jomo Kenyatta International Airport in Nairobi, Kenya on April 12.
The aircraft was on a domestic flight from Addis Abeba to Bahda in Northwest Ethiopia.
The hijackers reportedly demanded $5 million and fuel for the plane to fly to Canada. Initially, the hijackers refused to talk to Kenyan and Ethiopian officials. Later, they released some women and children, and one of the hijackers agreed to negotiate with Kenyan officials. It is reported that after the hijackers surrendered, two grenades were recovered from the plane.
The Ethiopian government has asked Kenyan authorities to extradite the four hijackers in accordance with international conventions against terrorism.
Ethiopia will take part in the 25th Summer Olympics in Barcelona, Spain in July, according to the Ethiopian Sports and Culture Ministry. The last time Ethiopia participated in the games was 12 years ago in the 1980 Moscow Olympics.
According to the Ministry’s officials, Ethiopia will participate in boxing, cycling and long-distance running.
The Ethiopian Olympic Team is planning sports festivals to raise money for participating athletes.
The widely reported tension between the EPRDF and OLF ever since the new government came to power turned to armed conflict last month. In a broadcast statement the EPRDF gave warning to the OLF that “a point has been reached where a choice has to be made between peace and war.” The EPRDF accused the OLF of instigating armed conflicts and engaging in economic sabotage, armed robbery and other subversive activities during the last nine months. The EPRDF also charged that the OLF has planned to form an independent Oromia government.
The OLF says the EPRDF is improperly using its responsibility for the security of the country, as agreed during the July 1 Conference, to try and extend its political influence into the south. “They have closed our offices and arrested our members,” OLF deputy secretary general Lencho Letta told Reuter.
The EPRDF also reported that it foiled a joint offensive launched by the Oromo Liberation Front (OLF) and the Islamic Front for the Liberation of Oromo (IFLO) on the town of Harer. Samora Yunus, transitional government commander of the Eastern Command of the Army, said that the two organizations staged the attack from Fedis Wereda and Boko localities.
Telecommunications between the capital city of Addis Abeba and Harer and other towns in the Eastern Ethiopia are reportedly inoperative. The traffic between the cities of Harer, Dre Dawa, Asseb and Addis Abeba has been virtually cut off following the destruction of a major bridge by OLF. Supply trucks have been stranded, and the delivery of relief supplies to refugee camps and drought-stricken areas will be stalled for some time, according to local authorities. Rail transport between Addis Abeba and Djibouti and relief shipments to the starving population in the southeast has been blocked by fighting.
Since the formation of the transitional government, the two sides have had differences over such issues as self-determination, regional and local elections and political and military power sharing.
The United States, the World Bank and other donors have threatened to cut off assistance to Ethiopia unless the government ensured security and stability.
