By Roni Sofer | ynetnews.com

ADDIS ABABA, ETHIOPIA – In the first visit of an Israeli minister to Ethiopia in five years, Regional Cooperation Minister Silvan Shalom blocked an anti-Israel decision from being passed at a the Assembly of the Inter-Parliamentary Union (IPU), which met Monday in Addis Ababa.

Shalom arrived in the Ethiopian capital as head of a Knesset delegation to the event, accompanied by MK Shlomo Mula (Kadima) and Cabinet Secretary Eyal Yinon.

He told Ynet that the delegation succeeded in blocking an Iran-led effort to add to the agenda at the last minute a discussion on Israel’s recent operation in Gaza.

According to Shalom, the objective of this discussion was to pass an anti-Israel statement and his meetings with the president of the IPU and other representatives put an end to the effort to change the agenda in this way.

However, the possibility of adding the issue to the agenda will be reassessed at the IPU’s next meeting, scheduled in six months in Geneva.

Shalom met Tuesday with Ethiopian Prime Minister Meles Zenawi, as well as with Ethiopian Foreign Minister. He told them that Israel’s government “seeks peace” and emphasized the importance of strengthening ties between Israel and Ethiopia.

“Israel sees an ally in Ethiopia, in the struggle against radical Islam and the Iranian threat,” he said.

Zenawi wished the new government well and said he was committed to improving ties between the two countries, saying that ending the conflict with the Arab world, it would be much easier to transfer the focus to the fight with extremists.

It was agreed at the meeting that Israel would transfer medical aid package of $100,000 to Ethiopia.

Following the meeting, Ethiopian representatives joined the delegation in a visit to Addis Ababa’s synagogue, where they met members of the local Jewish community. Shalom brought them matzot.

EDITOR’S NOTE: Ethiopia’s Meles Zenawi, Azeb Mesfin, and the whole Woyanne mafia will no doubt face similar justice, sooner or later.

LIMA, Peru (AP) — Former Peruvian President Alberto Fujimori was convicted and sentenced to 25 years in prison Tuesday for death squad killings and kidnappings during his 1990s struggle against Shining Path insurgents.

Outside court, pro- and anti-Fujimori activists fought with fists, sticks and rocks. About 50 people chanted “Fujimori killer!” while several hundred chanted “Fujimori innocent!” before riot police separated them.

The court convicted the 70-year-old former leader, who was widely credited for rescuing Peru from the brink of economic and political collapse, of “crimes against humanity” including two operations by the military hit squad that claimed 25 lives. None of the victims, the three-judge court found, were connected to any insurgency.

Presiding judge Cesar San Martin said there was no question Fujimori authorized the creation of the Colina unit, which the court said killed at least 50 people as the government battled Shining Path terror with a “parallel terror apparatus” of its own. He sentenced Fujimori to 25 years in prison, only five fewer than the maximum.

Victims’ family members nodded with satisfaction and shed tears in the courtroom as the verdict was read.

“For the first time, the memory of our relatives is dignified in a ruling that says none of the victims was linked to any terrorist group,” said Gisela Ortiz, whose brother was killed.

Fujimori, who proclaimed his innocence in a roar when the 15-month televised trial began, barely looked up, uttering only four words _ “I move to nullify” _ before turning, waving to his children, and walking out of the courtroom at the Lima police base where he has been held and tried since his 2007 extradition from Chile.

His supporters in the courtroom shook their heads in disgust and groaned in exasperation. Fujimori’s congresswoman daughter, Keiko, called the conviction foreordained and “full of hate and vengeance.” She said it would only strengthen her candidacy for the 2011 presidential race.

“Fujimorism will continue to advance. Today we’re first in the polls and will continue to be so,” she said outside the courtroom. She has vowed to pardon her father if elected.

But some political analysts think Keiko Fujimori, 33, is more likely weakened by the verdict and would become a one-issue candidate. Her party has, after all, just 13 seats in Peru’s 120-member congress.

“It’s one thing to capitalize on the romantic image of the daughter defending a presumably innocent father, another defending a sentenced criminal,” said Nelson Manrique, a Catholic University professor.

Human rights activists heralded the case as the first in which a democratically elected former president was extradited and tried in his home country for rights violations.

Although none of the trial’s 80 witnesses directly accused Fujimori of ordering killings, kidnappings or disappearances, the court said the former mathematics professor and son of Japanese immigrants bore responsibility by allowing the Colina group to be formed.

It said Fujimori’s disgraced intelligence chief and close confidant, Vladimiro Montesinos, was in direct control of the unit.

And it noted that Fujimori freed jailed Colina members with a blanket 1995 amnesty for soldiers while state security agencies engaged in a “very complete and extensive” cover-up of the group’s deeds.

The Colina group was formed in 1991. In its first raid, using silencer-equipped machine guns, the group killed 15 people at a barbecue, including an 8-year-old boy. The intended victims, it turned out, lived on a different floor. The following year, the group “disappeared” nine students and a leftist professor at La Cantuta University.

In both cases, the killers targeted alleged sympathizers of the Shining Path, which was killing Peruvians with nearly daily car bombings. The group was devastated by the September 1992 arrest of its charismatic leader, Abimael Guzman, but some 500 Shining Path remnants remain active in Peru’s jungle, financed by the cocaine trade. Fujimori also was convicted of two 1992 kidnappings: the 10-day abduction of opposition businessman Samuel Dyer and the one-day kidnapping of Gustavo Gorriti, a journalist who had criticized the president’s shuttering of the opposition-led Congress and courts.

In the trial, prosecutors presented declassified cables showing that U.S. diplomats including then-Ambassador Anthony Quainton repeatedly questioned Fujimori and his aides about reports of extrajudicial killings by his military.

“He never wanted to talk about it very much. He always, of course, said that human rights abuses were not tolerated by his government,” Quainton, now an American University professor, told The Associated Press by phone from Washington.

Fujimori has already been sentenced to six years in prison for abuse of power and faces two corruption trials, the first set to begin in May, on charges including bribing lawmakers and paying off a TV station.

His 10-year presidency ended in disgrace in 2000, when videotapes showed Montesinos, now serving a 20-year term for corruption and gunrunning, bribing lawmakers and businessmen. Fujimori fled to Japan, then attempted a return five years later via Chile.

“We understand Mr. Fujimori will appeal the ruling,” said a Japanese foreign ministry official who declined to be named in line with department policy.

“The Japanese government will watch legal procedures for Mr. Fujimori,” the official said.

Fujimori remains remarkably popular and his successors have maintained his market-friendly policies. Peru had Latin America’s strongest economic growth from 2002-2008, averaging 6.7 percent. A November poll found two-thirds of Peruvians approve of Fujimori’s rule.

In his final appeal Friday, Fujimori cast himself as a victim of political persecution, saying the charges against him reflect a double standard. Why, he asked, isn’t current President Alan Garcia also being prosecuted, since it was from Garcia, who also preceded him in office, that Fujimori inherited the messy conflict that would claim 70,000 lives.

Garcia denies responsibility for human rights abuses during his 1985-90 administration — and has the power to pardon Fujimori.

Human rights advocates called the verdict historic.

“What this verdict says is that these crimes did in fact happen and that Fujimori was in fact responsible for them, and that’s something Peruvians needed to hear,” said Maria McFarland, senior Americas researcher at Human Rights Watch, who was in the courtroom.

“For so many years, certain sectors in Peru have said that you have to look the other way and refused to acknowledge what happened.”

(Associated Press writers Carla Salazar and Andrew Whalen contributed to this report.)

ADDIS ABABA (AFP) — Ethiopia’s dictatorial regime said Tuesday it did not intend to nationalize the coffee sector after revoking licenses of six exporters for hoarding the beans.

Communications Minister Bereket Simon said the government will now market the product after the move last month which saw the closure of the exporters’ warehouses.

“There is no intent to nationalize this sector. No programme of nationalization,” Bereket told a press conference, insisting the state would act a market regulator.

“The marketing is now done by the government… and whatever money is received will be given back to the owners of the coffee,” he added.

Coffee accounts for more than 60 percent of the Horn of Africa nation’s export revenues and provides income for more than five million Ethiopians.

“An unregulated market can bring chaos. The government is in a position to identify the proper size of its intervention (and) will not intervene in the disadvantage of the market,” Bereket said.

Prime Minister Ethiopia’s dictator Meles Zenawi had warned the exporters against hoarding coffee, accusing them of speculation in the world markets.

In 2007-2008, the country exported 171,000 tonnes of arabica coffee, almost 15 percent of the world production, and earned more than 500 million dollars (380 million euros).

ADDIS ABABA, ETHIOPIA – The plan by Unity for Democracy and Justice (UDJ) to hold a march in Ethiopia’s capital Addis Ababa this coming Thursday to protest the arrest of their leader Wzr. Birtukan Mideksa has been banned by the Woyanne regime.

Vice-Chairman of UDJ, Dr Hailu Araya, told Awramba Times today that the authorities have denied them permission to march.

The UDJ leaders had taken extraordinary measures to make sure that the march would not be banned by the dictatorial regime. One of the measures they took is to limit the number of participants only to 250 registered members of the party who are in leadership positions. They also requested the Federal Police (the notorious Meles Zenawi’s death squads) to help them make sure that only those who have badges to participate in the march.

Woyanne was not impressed by UDJ’s tail wagging. Under the Meles regime any march by UDJ is going to be a march to Kality.

Click here for more from Awramba Times

By Fekade Shewakena

Some people in Ethiopia on the religious fringes are playing with fire. I have received emails of videos and audios circulating over the internet as evidences of Christians being attacked by Muslims and Christians attacking Muslims in Ethiopia. It appears these documents are being sent out by each group to garner sympathy for their cause. I cannot finger point to who started this stupidity as I have no detailed information. But I don’t think it is even important to know who started it. None of it comports with Ethiopia’s history of religious tolerance. I have also heard stories of sporadic attacks by these fringe fanatics in different parts of Ethiopia. The {www:Woyanne} regime of Ethiopia also has issued incoherent statements about it, in some cases blaming it on its political opponents as it often does. Whatever its magnitude, and whoever the culprit instigating it, these developments are downright scary and extremely disturbing and they should stop.

Trying to widen it, parading ugly statements coming out of the mouths of these fringe elements, playing tit for tat and taking it out on the innocent, is plain stupidity and no one is going to benefit from it both spiritually and materially. Forming interfaith groups and having honest and intelligent discussion can help not only stop these fringe elements, but also goes a long way to find the real culprit trying to saw the seeds of discord among the two religions who have uniquely cultivated a long tradition of tolerance and living in peace in Ethiopia. The elders in the leadership of both religions should be reminded that they have a huge responsibility to stop this madness.

Yes, religions have not been treated equally throughout our history in Ethiopia. Christianity has been dominant in Ethiopia for centuries. Yes, there are historical reasons for this inequality. But our Muslim brothers and sisters have every right to demand equality now. It is their country and they deserve no less. We still have to go some length to attain religious equality in Ethiopia but this can only be done by first establishing a system under the rule of law. It has to be clear to all of us that those responsible for the unequal treatment of and inequality between religions were never once the ordinary people of Ethiopia of any faith. It was the rulers who use religion for political ends. Any religious discord in Ethiopia can directly be traced to the manipulative works of the rulers and not to any group of ordinary people. It is undeniable that there is a lot of progress toward religious equality in Ethiopia since the seventies, particularly since the coming of the Derg in 1974. But unfortunately, both Christians and Muslims ended up getting the short end of what we sought.

The dawn of our genuine demand for equality was marked by the 1974 Muslim-Christian historic demonstration in Addis Ababa in support of the demand for the equal treatment of Muslims in Ethiopia. Mengistu and the {www:Derg} answered our question by turning out to be equal opportunity killers and oppressors across religions. The Ethiopian Orthodox church lost most of its land and property and turned destitute overnight. Even the pope and many clergy were guillotined. Muslims and Christians were killed by the Derg at the same rates with equal disregard for our lives. This, of course, was not the kind of equality we wanted. But we can say we suffered equally.

The TPLF/EPRDF made a smarter choice than the Derg when it decided to control the administration and management of religious institutions and use them craftily for its political ends. They even made direct and indirect interference in the appointments of the leadership to lead both the mosque and the church. In cases where both the Christians and Muslims attempted to rebel against this meddling demanding independence, the TPLF never hesitated to desecrate the places of worship of both Islam and Christianity and used military force inside both mosques and churches spilling the blood of innocent believers. Have we forgotten? This happened not a long time ago.

I argue that the most serious problem that stands in the way of religious equality in Ethiopia now is the absence of democracy and rule of law. Religious conflicts are minimal or none existent in democracies. This is the key to forming a lasting equality. I met a Muslim Ethiopian friend who participated in a recent demonstration at the Ethiopian embassy in Washington DC. Among other questions, I asked him what they were doing at the embassy and why they did not call Christians to join them in the demonstration. He said the objective of the demonstration was to demand that the Woyanne government implement the articles in the constitution as regards religious equality. I asked him the responses they got. He told me that the Ambassador and embassy staff sweet-talked them and thanked them for their peaceful demonstration and even told them that their demonstration was a model for other demonstrations. I only hope my Muslim brothers and sisters who sincerely look for the right answers to their questions have not fallen for this cheap patronization. In fact, Ethiopian Muslims have more serious issues to worry about. They may need to be a little more wary of the government’s unnecessary intervention in Muslim countries to fight so called jihadism and the rhetoric Meles and Bereket use borrowing from the West. They should be bothered by the official use of such terms as Islamists, Islamic terrorism, jihadists etc. If I were an Ethiopian Muslim I would worry more about this kind of incendiary, mercenary government literature than what a lunatic Christian monk out from a monastery speaks of Islam. Thanks to the election of President Obama, these languages are now being discarded even in US officialdom.

If our Moslem brothers and sisters think that the statements on religious equality stated in the constitution can be selectively implemented while other parts of the constitution keep being violated by the regime every day, I think they are wasting their time. It is like they are asking the lady to be half pregnant and give birth to a normal child. Either the constitution is respected as a whole or there will be no respect for any part of it. I think both Muslims and Christians should get this clearly. Only the prevalence of the rule of law can guarantee equal treatment.

Ethiopia has enough space to accommodate all religions equally if our rulers do not violate our values and the laws in the books. At different times the regime has used our differences, religious and ethnic, for political purposes. Differences are the nutrition over which the Woyanne thrive, can’t you see it? A Muslim who demands better for himself cannot get it if the Christian is not guaranteed of the same rights and vice versa. Our rulers, including the TPLF are not worried about giving religions equal playing field. Their preoccupation is over how to use them for their political ends.

The last time I checked the list of the 193 people murdered by Meles Zenawi after the ill fated May 2005 election, it contains an equal mix of Muslims and Christians at least as can be seen from their names.

Decrees and constitutional amendments or oral promises from powerful despots cannot guarantee equality and freedom, only a collective decision by people and an absolute guarantee of the rule of law do. Whether we like it or not we have to learn to share the space God gave us without encroaching on each other’s spaces. So the best place to spend our emotions and energy is on seeking and building democracy and the rule of law. That is the ultimate weapon that would make all of us equal. Despotic rulers have a vested interest in our division and inequality. Read history.

Or learn from me, a Christian and Tahir my Muslim childhood friend. We were about six or seven year olds then. Tahir and me, both of us were born in Debre Sina, that beautiful town at the foothills of Tarma Ber in northern Shewa. We were neighbors. Our mothers were friends. Tahir and me always play together and love soccer a lot. We eat in each other’s homes. Our mothers and everybody in our homes cares much not to mix our plates. Living in our neighborhood was also a bully named Negash. Negash is a little older and bigger than both me and Tahir. There was hardly any kid who hasn’t tested Negash’s boots on his butt (the calchio). He sometimes beats you for no reason and calls you any name he wants. Negash also loves to have us fight with one another. He often asks, “Which of you two is stronger?” (“mann yashenifal”), he would say, and goads us to wrestle and fight. Tahir and me have wrestled more than once to show him which one of us are stronger. Negash does this to many kids in the neighborhood. One day, while I and Tahir were playing “goalkeeping” with the rubber ball Tahir’s father gave us from his store that morning, Negash came. Negash grabbed our ball and kicked it hard that after making some bounces it ended up in the compound of people who had a dangerous dog. Both me and Tahir who have not even had fifteen minutes with our new precious ball were mad as hell and demanded that Negash gets our ball back for us. Tahir and I have grown in a community where boys were not allowed to cry and run home to seek help or hide. We had to stand on our feet and fight. Going home crying will result in you getting whipped more. I picked up a few stones and demanded that Negash gets our ball back. Tahir too filled his pockets with stones and held two big ones in both hands. While Negash was taking strides to catch and beat us, we rained our stones on him and knocked him down. We frisked his head and he was full of blood. We did not want to take a chance and wanted to make sure that he doesn’t get up and beat us. Negash was crying in his pool of blood when we were all over him giving him the {www:calcho} he loves to give to others. Some adult passerby stopped us and Tahir and me went home with our heads up but without our precious ball. Negash was taken to the clinic by his family. Our family and Negash’s heard the story of what happened. Tahir and me told our story to our families as is. Negash’s family pressed charges against our families. Finally, other people in the neighborhood intervened and made peace — I hardly remember how they did it. On the day of peace the three of us were made to kiss one another’s chicks and told to never quarrel again. From that day on, Negash became a different person for us. He started respecting not only Tahir and me but also his other victims in the neighborhood.

That, my friends, is how you sometimes get your freedoms back.

(The writer can be reached at [email protected])

By Seid Hassan | Murray State University

The latest reports from Ethiopia indicate that Prime Minister Meles Zenawi has revoked the licenses of six of the country’s main coffee exporters, accusing them of hoarding the coffee supplies. Similar threats were passed on by the Ministry of Agriculture and Rural Development (MoARD) during its meeting with over 90 coffee exporters that was held on March 26, 2009. It is now being reported that the government has confiscated 17,000 tons of stock of coffee involving about 88 other traders and has begun exporting coffee via the state-owned Ethiopian Grain Trade Enterprise.

Hoarding of Coffee Beans: A True Fallacy

What is hoarding and why do businesses opt to hoarding? In the business sense, firms are tempted to hoarding because of the simple fear that they are throwing away their resources unless they hold on to them for the time being. Assuming that the Ethiopian merchants have been “hoarding” their coffee beans, and there is a big assumption here, it would mean that they want to weather what they believe will be the worst trading conditions they ever have faced. This makes sense since commodity prices, such as coffee have dropped over 30% lower than what they used to be a few months ago. Those who are tempted to hoard also believe that the price of coffee will rise in the future. As a practical matter, if the hoarding effectively takes place, less of the commodity will be available now but also that more of the commodity will be available in the ensuing periods as the coffee merchants try to sell their stockpiles. Assuming that what the coffee merchants expected will be realized, the commodity will garner more revenue and more foreign exchange by the time it is put up on the market. This is a win-win situation for the coffee exporters, coffee growers and the government which will fetch more foreign exchange that it so desperately needs. From this standpoint, and if one has confidence in markets, it is difficult to object to hoarding.

Hoarding also implies that the owners of the coffee beans enjoy some kind of market power just like a cartel. But the realities on the ground indicate that coffee exporting cartel could not and do not exist. First of all, Meles’s total grip on the political and economic system of the country does not allow a cartel to exist in Ethiopia. Second of all, the excess supply of coffee beans would not allow the Ethiopian coffee exporters to enjoy advantages created by collusion and hoarding. The relatively huge number coffee exporters (over 94) and given the diversity of market participants (some of them being fringe players of the “game” and their temptation to “cheat” on the cartel), this fact pretty much rules out the chance of creating a cartel and existence of collusion, tacit or otherwise. Coffee merchants cannot control the supplies at the grower’s level either, for such control totally belongs to the cadres of the ruling party. Since the over 700,000 coffee growing peasants are scattered among many states (regions) of the country, it is impossible for the coffee exporters to control the supplies of coffee beans at the grassroots level. Knowing this to be the fact, the government has not accused the coffee merchants of collusion and cartel creation. It is highly irresponsible to accuse coffee exporters of hoarding without any factual basis. Consequently, there must be something else behind this mysterious accusation. To that end, I present one Ethiopian proverb which roughly goes as: “Dear hyena: I know your intension is to eat me. Go ahead and eat me but please don’t try to camouflage (cover up) your true intentions by creating excuses!” “Aያ ጅቦ ሆይ፡Eባክህ ሳታመኻኝ ብላኝ!”. This proverb pretty much captures how hopeless the merchants feel and this hopelessness is even vividly captured by following statement that one of the coffee business managers responded to the BBC’s reporter: “We haven’t hoarded anything… We have proof that we haven’t been hoarding…”

Meles Does not Believe in Markets

The problem is that Ato Meles Zenawi does not believe in the market system, despite his many attempts in faking it. Lest people would think that I am making this up, I ask them to look into what he wrote in his so-called upcoming book titled: “African Development: Dead Ends and New Beginnings.” In fact, I vividly remember well Mr. Zenawi’s interview with the BBC, describing himself as a proponent of the discredited Albanian communism and an extoller of the then Albanian strongman, Enver Hoxha. Meles’s dismantling of the free press shows that his government does not want the truth to be told. Only dictators and those of communist leanings fear the existence of the free press. It is only those kinds of people who impersonate as adherents of the market system in order to hoodwink foreign donors, but they always revert to what it is at their heart when the going gets tough.

Mr. Zenawi’s distaste of private ownership also reveals his increasing appetite to control the country’s economy using his TPLF-owned conglomerates as conduits to his brinkmanship. It is revealed by his government’s unwillingness, despite being in power for over 18 years, to return city dwellings to their rightful owners which were nationalized by its processor, the Derg. The same distaste is revealed by the government’s full ownership and control of the land which has led the peasants, constituting nearly 84% of the country’s population, to be constant recipients of international food aid, year after year. Thanks to Meles’s “control everything” policy, the peasants are unable to raise their own capital since the land does not belong to them. The government’s land policies have taken away the incentives of the peasants to take-care of the land. Moreover, as the CIA web site puts it, the country’s land tenure system “continues to hamper growth in the industrial sector as entrepreneurs are unable to use land as collateral for loans.” Thanks to this inhumane policy, the country’s agricultural sector is being plagued by periodic drought, soil degradation caused by inappropriate agricultural practices and overgrazing, deforestation, high population density and undeveloped water resources. It is sad to say it but it is the millions of Ethiopian peasants who pay their ultimate price for this inhumane and arrogant land policy. This price is paid by, among other things, their hunger and starvation, dislocation and untimely death.

The rush to the expropriation of the privately owned coffee exporting business would not be any different than ensuring the TPLF’s control of the “commanding heights” of the Ethiopian economy. The control of the “commanding heights” of the economy by the TPLF and its surrogates means that economic activity would be directed, more so from here on than in the past, neither by profit and loss nor by human needs and the satisfaction of those needs (as rationed by the mechanics of supply and demand) but by the directions of the TPLF, Mr. Zenawi being at the helm. Meles’s erratic behavior revealed by his angry responses to questions raised by some parliamentarians and by his expropriation of the privately owned businesses further reveals that the government has come to strongly believe that the pricing system would be unable to rationally allocate the scarce resources. With such a belief system, the economy will be abused by political pressure groups, such as his regional surrogates and political cadres. Unfortunately, markets don’t like coercion, and such interference in the market system will be replete of shortages and increased government controlled rationings. Meles’s actions to revoke the licenses of the coffee exporters and his confiscation of their coffee beans would indeed be cataclysmic.

Meles’s Action Could Abrogate Ethiopia’s Membership to the WTO

In addition to hampering the already malfunctioning economy, this expropriation of the privately owned businesses and the revocation of their licenses will send a chilling signal to those who want to invest in Ethiopia, which may include members of the Diaspora community. It raises what is known in international business as the political risk of investment. This risk covers the potential conflicts (both internal and external) and expropriation risk. The act will indicate to them that the government of Ethiopia interferes in business operations including the chance of the decision-making process being hijacked by special interest groups and angry politicians who always scapegoat others for their own policy failures. Investors will fear that such an irresponsible action will force them to lose money and the potential for political violence. In addition to negatively affecting the business climate, such an action will raise the interest rate charged by potential international lenders. Sadly, this act is also in contradiction to what Dr. Eleni Gabra-Madhin, the head of the Ethiopian Commodity Exchange, once said at the time of establishment of the ECX: the establishment of the ECX means that people and business are free to “what to buy, what to sell, from whom, to whom, when and how…”

Moreover, this illegal act against the coffee exporters is in contradiction to international norms of doing business. It is in contradiction to the principles of promoting free trade, competition, nondiscrimination, transparency, and the protection of private property rights that the WTO and other organizations, such as the UN promote. If the expropriation includes foreign-owned interests, the act will be in contradiction to the UN’s 1962 Resolution 1803, which states that, among other things, the owners would have to compensate appropriately. The same Resolution also stipulates that any expropriation or revoking of licenses should fully be debated by the parliament and approved by the courts. Alas, Ato Meles Zenawi making all the shots, not only he did not allow his rubber-stamping parliament and his regional surrogates to debate on the issue, but his ministries, such as the aforementioned MoARD, followed through his threats and “cut the hands of the merchants.”

The Roots of the Problem and the Contradictions

1. The meltdown in the global economy: The reasons behind the confiscations of the coffee beans and revoking of the coffee exporters’ licenses are different than what the regime is trying to tell us: hoarding. One obvious fact is that the regime has been facing foreign exchange shortages, to the point that the shortfall could only cover a mere one-month of imports of goods and services. But the coffee exporters could not be blamed for this, for the shortfall has been taking place over many years and both the IMF and the World Bank have been warning the government about the impending dire consequences of this problem. If coffee is to be blamed for the shortfall, the regime should have designed policies which would have diversified the country’s exporting opportunities. Of course, the global economic meltdown has exacerbated the foreign exchange reserve problem. The meltdown has led, as expected, a fall in commodity prices, which includes coffee, cut flowers and other nonmanufactured products. And this meltdown is not peculiar to Ethiopia either, for coffee farmers all over the world are facing similar difficulties. For example, one report indicated that the “price of Vietnamese export coffee has fallen by 34.7% from its peak last year, making it difficult for small and medium exporters to raise loans for further production and expansion.” But unlike the Ethiopian case, the government of Vietnam government is encouraging coffee growers and merchants “to keep coffee in stock to avoid the price fall!”

2. Mismatch between excess supply and limited demand: One should not disregard the supply factors either. Even before the world-wide economic slump, coffee growing countries and their farmers have been besieged by excess supply of coffee. As one source put it, ‘[C]offee production is consistently outstripping consumption, with the result that excess stocks are driving down prices.” i At the same time, food prices have been rising, thereby putting coffee growers at a greater risk. The same source reports: “The case of Ethiopia, where the first coffee crop originated, illustrates the problem. After years of war and repeated droughts, the country is now among the poorest in the world. Coffee is an integral part of the national economy and society. More than 700,000 households are involved in its production, and the livelihoods of 15 million people depend in part on the coffee economy. The crop accounts for about two thirds of export revenues. However, Ethiopia has lost almost US$300 million in export revenues over the last two years as a consequence of the slump in prices, an amount equivalent to half the country’s annual export earnings… Over the past three years the export price of coffee as a proportion of the retail price has fallen by half, to less than seven per cent.”ii This being the reality, one is forced to ponder if there are indeed some other reasons why the government of Meles Zenawi decided to use the coffee merchants as scapegoats. Let’s look at the some more of them.

3. Government control of coffee trade using Ethiopian Grain Trade Enterprise (EGTE): Those who know the matter indicate that the government has been planning to nationalize the coffee exporting business and put it under the control of the Ethiopian Grain Trade Enterprise (EGTE). In addition, the local newspaper, Capital had reported that the TGTE had informed Dr. Eleni Gabra-Madhin its intensions to be involved in the coffee exporting business. The newspaper has quoted her as saying that: “Months earlier the enterprise [that is, TGTE] told us about their intention to be involved in the coffee trading business and last week they came with their coffee trading license, so we allowed them to participate.”iii It is also reported that the government had decided to establish about seven coffee brands, mix the coffee beans from different growers, label and sell them under those brands. These imply that the government had planned to control the coffee trading business as it has done with the other sectors of the economy. Such a lack of transparency – saying something to the unsuspecting public, hiding the truth from them and doing entirely differently have been the trademarks of Meles Zenawi’s government. Moreover, as the BBC and the Bloomberg reporters reported on many occasions, the ECX is unpopular with exporters “as it does not yet allow the separation of specialty and organic coffees. These have to be mixed in with the rest and can no longer be sold to top-end buyers for premium prices.” If this is the case and there is a “free market”, the merchants should have been allowed to take care of their business!

4. Confusion and total chaos: As reported in the Seattle Times and elsewhere, this action is known to have angered the “specialty roasters who prefer beans from certain growers and processors, and sometimes have worked with them to improve quality.”iv Many observers, buyers, and the general public are also reporting that there is a lot of confusion and chaos in the country as a result of the government’s decision. The confusion involving the government authorities emanates from their lack of understanding how the Ethiopian Commodity Exchange system they set up last year works. On the other hand, the confusion involving the coffee importers and some of the unsuspecting public emanates from the fact that the government talks about something else – hoarding- while its real intensions are quite different as I described them above. Sadly, some of the coffee exporters are also talking about winning their case in the courts since they know they have “not hoarded anything!” Unfortunately, the case was settled at the higher ups way before Mr. Zenawi had said he would cut their hands! All of these clearly indicate that half- hearted believes in the market system, coupled with dictatorship are dangerous to the working of an economy.

5. The “hoarded coffee beans” are found: either they don’t exist or are smuggled or both! Moreover, a deeper scrutiny of the whole affair indicates that the coffee merchants are not the cause of the problem. As the Bloomberg reporter noted-quoting Dr. Eleni, the drop in income from coffee is due to “a poor coffee harvest, weak world prices and a ban on Ethiopian beans in Japan…”v This indicates that, if there are any coffee beans that are missing, they are missing at the grassroots level. Other reports also indicate that some of the coffee is being smuggled through the neighboring countries’ borders. Since the EPRDF is in charge of the borders, it is the government that is partly to blame. And since a good portion of the traffickers of “illegal goods” are members of the TPLF, the government of Mr. Meles Zenawi has to look into the mirror, stare at its face and honestly ask itself who is the culprit behind the “missing coffee beans” is. If the government interference does not allow the coffee producers to fetch the market given prices they deem necessary, production will fall and there will be increasing smugglings and further shortages. In particular, this move will anger the coffee farmers, who are being put at greater risk due to the ever increasing food prices, and will create a disincentive for increased production. The TPLF leaders and their cadres, whom I have heard boast coffee being their “black gold” will see less of it in the future if their blotted interference continues. Unfortunately, communists and dictators fail to understand this fact and repeat the same mistakes that their predecessors and their ideological leaders they so extol have committed.

Foreign Exchange Reserves Shortfalls

1. Fundamental reasons for the shortfall – the coffee traders have nothing to do with it! For those of you who may not know what is meant by foreign exchange reserves, in the simplest sense, they are just the foreign currency deposits and bonds held by central banks and monetary authorities of a country. These assets are dollars, euros, yens, gold and other similar currencies that the country owns. Now, everyone knows that the government of Meles Zenawi has been facing a shortfall of hard currency for a long time. The government has been replenishing this same shortfall using the money it receives from its bilateral and multilateral donors and lenders, the influx of remittances, selling everything it has on its hands, and as of last year, invading the black market foreign currency shops and confiscating the assets of private citizens.

The culprits behind the shortfalls of the foreign exchange reserves are many but they emanate from the sustained current account balance (a continuous imbalance between imports and exports), the existing problems exacerbated by the declines in export earnings due to the declines of commodity prices such as coffee, cut flowers, and other commodities that the country depends on for its exports. The meltdown in the global economy has also resulted in the decrease of donor aid and declines in the expected increases of remittances. In the process, the real exchange rate of the birr has been appreciating thereby making the goods and services that the country imports to be artificially cheaper. As long as these other imbalances not mentioned here continue to exist, and all indications are that they will, the country will continue to face shortfalls in its foreign exchange reserves. Given the unsustainable shortfalls of the exchange rate reserves which have existed for a long time, and given that the government has been soaking the economy with an excess supply of the birr, one could legitimately ask why the country had not faced a currency collapse. Fortunately, this has not happened yet, but we are not out of the woods, either. The high inflation rates (the country’s inflation rate being the second highest in the continent, following Zimbabwe) and the recent decline in the value of the birr are reflections of the aforementioned imbalances and the excess supply of money. The excess supply of money is partly due to loans extended to TPLF-owned parastatals at negative real interest rates! To overcome the shortfalls, the government may resort to accommodate the shortfall by further depleting its foreign exchange reserves, but there are almost none to be used. It may accommodate the shortfall by borrowing from the multilateral organizations just like the $50 million loan it obtained from the IMF. Thanks to the G20’s willingness to increase the IMF’s funding, the IMF may extend more loans to Ethiopia as Mr. Meles so begged by traveling to London twice in less than two weeks. [by the way: there two kinds of leaders who attend the G8 and G20 meetings. The first kinds are the ones whose stature has grown since their economies are to be reckoned with. The second kinds are those who go there to beg and/or whose county that they lead are known to give a headache to the world. Meles fits both of the latter and attended the meetings! This being the case, his attendance does not make him a good statesman!] But the assistance coming out of the coffers of the IMF may not be enough. Alternatively, the government may try to minimize the decline of the reserves by following protectionist policies or devaluing the birr. The government is already doing the latter, but it is evident that the devaluation by itself will not do the trick. The former may be difficult since the act would be against the WTO principles and the act may anger the country’s trading partners. Since this will require the curbing of imports, the pain will be on the people who depend on the imported goods and could be unacceptable to those people. [Is this the reason why Mr. Zenawi has been talking about public uprising lately?] The other two more alternatives are rationing the foreign exchange currency the country earns and tightening its foreign exchange controls. The government has been doing both of these. But these last two measures will worsen the shortfalls and increase the dual (black) market activities.

Now, one may be tempted to ask: “What do the coffee exporters have to do with this shortfall?” Good question, but hopefully this short article has helped you find the answers to this good question. In any case, the pain inflicted on the people and the country emanating from these shortfalls will be tremendous, unless some bold and drastic measures are taken to reverse the situation. Unfortunately, it is reported that the shortfall has already “led to rationing and shortages, including cement and medical supplies, because companies can’t import goods or raw materials.”vi God forbid!

2. The expected devaluation of the birr: Every rational person who knows how the exchange rate system works, knows that the birr’s real exchange rate is too high (the birr is overvalued.) The coffee exporters being some of these group of people who know and should anticipate this to take place, it has been reported that they were expecting the government to devalue the birr at least one more time. Their expectation of a further devaluation of the birr is, of course, as expected. And it is their right to act rationally, too! In fact, both Prime Minister Meles Zenawi and the trade minister, Ato Girma Biru, after devaluing the birr by 10% last January, had suggested that the government may further devalue the birr. Obviously, as exporters who earn their money in foreign exchange, the coffee traders were trying to minimize their losses due to this anticipated devaluation. The further devaluation of the birr would also allow them to export more coffee since the goods that the country exports would be more attractive to foreign buyers after the birr is devalued. Now, assuming that there are indeed “hoarded coffee beans” and again, there is a big “if” here, who is to be blamed here: the government which has triggered the expectations by telling the world that the birr would be further devalued or the coffee traders who are trying to minimize their losses? You be the judge.

(The writer, Prof. Seid Hassan, can be reached at: [email protected])