By Jason McLure | Bloomberg

Ethiopia’s dictatorial regime may prosecute six of the country’s largest coffee exporters after the government said they have been hoarding beans bound for export, Prime Minister dictator Meles Zenawi said.

The government shut the exporters’ warehouses last month and suspended their licenses after accusing them of illegally stockpiling coffee and selling export-grade coffee on domestic markets. Some exporters were holding beans in anticipation of a currency devaluation, Eleni Gabre-Madhin, chief executive officer of the Ethiopian Commodity Exchange, said last month.

“I would not be surprised if some of them were to be taken to court,” Meles said in a press conference yesterday in Addis Ababa.

Coffee is Ethiopia’s largest export, accounting for 35 percent of the country’s export earnings last year. Stockpiling by exporters has “put pressure on the country’s foreign currency reserves,” the agriculture ministry said in a statement March 30.

Ethiopia’s agriculture ministry warned on March 30 that it had also taken unspecified “similar measures” against 88 other coffee exporters, of about 120 in the country involved in the business.

The prime minister said the 88 exporters wouldn’t face prosecution “whatever shortcomings they have had” in the past and that he expected they would learn from the crackdown on the other six exporters.

State-Owned Enterprise

Following the seizures, state-owned Ethiopian Grain Trade Enterprise said earlier this month it would begin exporting coffee from the country, Africa’s largest producer of the beans.

Meles said yesterday that the state-run grain importer had entered the market because the remaining private coffee exporters might not have the capacity to export Ethiopia’s coffee crop.

“The preference will be to the private sector actors,” he said. “There is no intention to establish a public monopoly in any of the agricultural markets.”

Ethiopia’s coffee exports have declined more than 10 percent to 76,674 metric tons in the first eight months of the fiscal year that began in July, compared with the same period a year earlier, according to trade ministry statistics.

The nation’s coffee export income has fallen to half the government’s target amid a decline in world prices and a ban on Ethiopian beans in Japan. Japan, which purchased about 20 percent of Ethiopia’s coffee shipments in 2007, banned imports last year after finding elevated residues of pesticide in a shipment of the beans.

Auction System

Ethiopia’s trade minister said the residues probably came from bagging coffee in sacks that had previously held chemicals and that the government has corrected the problem. Gabre-Madhin also said a change this year from a state-run auction system to an open-pit commodity exchange for trading beans temporarily interrupted supplies.

The government devalued the birr against the dollar in January in an attempt to build foreign currency reserves. One dollar buys 11.18 birr, compared with about 9.5 a year ago.

By Wondwossen Mezlekia

An internal feud between Ethiopian private exporters and the government caught the media spotlight recently but, as usual, limited journalism coverage derailed the attention off the fundamental issues.

On March 25, 2009, the government seized 17,000 tons of coffee beans from six exporters, and revoked their licenses. The government is now considering selling the seized stocks itself on the international market. The licenses of additional 88 independent traders had also been cancelled for failing to heed the authorities.

This happened after Prime Minister Meles Zenawi accused some coffee exporters in January of having been reluctant to sell stocks through the Ethiopian Commodity Exchange (ECX). He warned them of conspiring and disturbing the integrity of the ECX system by supplying and then buying back their own coffees to sell coffee meant for export on the domestic market, threatening to “cut off one of their hands” if they did not behave.

The exporters deny these accusations.

When the media picked and wagged a thread, the news spilled over to global markets and sent a shockwave across the specialty coffee community. Some importers of specialty coffees got worried that the new coffee law may put an end to direct sourcing of beans and severely impacted the already scant traceability of Ethiopia’s coffee beans.

In all this, the farmers’ voice is drowned out and their concerns left unnoticed.

As it happens, the recent development in Ethiopia’s coffee sector has more ramifications to the national economy than on the specialty coffee industry. Importers and roasters interviewed for this report confirmed that their sourcing is unaffected while the feud continues.

To understand the underlying reasons for the private exporters’ frustrations and the government’s heavy-handed actions, one needs to look at the history of coffee in Ethiopia and what changed in recent years.

Political Crop

Ethiopia, the birthplace of coffee, is the sixth largest coffee producer and the seventh largest exporter worldwide. It is the largest coffee producer and exporter in Africa. Exports between March 2008 and February 2009 were 2,679,155 bags of coffee beans, a share of 2.73 percent in global coffee trade.

The fine quality of its coffees and the distinctive features of the sector, including its genetic resources, abundance of wild coffee trees, and the organic coffee production, earned Ethiopia a unique place in the global coffee marketplace.

Coffee is the backbone of Ethiopia’s economy. In the 2007/2008, coffee export fetched more than 525 million dollars, accounting for about 60 percent of the country’s hard currency earnings. Moreover, coffee provides an important source of income for a large portion of the population and is an important source of tax revenue to the government.

Coffee holds a strong political significance in Ethiopia because of its tremendous importance in the economy and its political purposes for the regime. The ruling party ensures the centralized collection and controlling of foreign currency in order to stay in power.

Currently, the government is strapped; its foreign currency reserve is at its lowest level of $850 million, enough to cover only a month’s imports. The foreign exchange shortage was exacerbated by declines in global coffee prices, poor harvest, and contraction of sales following the loss of Japan’s market due to the ban imposed in May 2008 by Japan after finding “abnormally high” pesticide residues in a shipment of the beans.

Under these circumstances, coffee can be extremely appealing to the government.

The Ethiopian Commodity Exchange (ECX)

The Ethiopian Commodity Exchange (ECX), a government owned central trading system, meant primarily for grains, began trading coffee in December 2008. Launched in May 2008, the trading platform was set up to replace the murky auction system often abused by market participants.

During the ECX rollout, which happened to coincide with the global economic turmoil where domestic and global prices were sharply rising, there was severe shortage of grains flowing through the exchange.

Although it is authorized to trade in both spot and futures contracts, ECX announced in April 2008 that it intends to start off with only spot contracts for immediate delivery (as a strategic driver of the ultimate futures trading) and impose compulsory delivery of grains.

In August 2008, the government swiftly enacted a new coffee law in order to provide ECX with the necessary legal framework that would enable it, among others, to impose compulsory delivery of coffees. This law requires all coffees to be traded through the ECX – the only outlet to international markets.

The New Coffee Law

The new coffee law, as some call it, is believed to be what sparked the outcry among private exporters in Ethiopia and the specialty coffee community. Outside Ethiopia, there is confusion on whether or not the law prohibits direct sourcing of single origin coffees.

The law, formally known as the Coffee Quality Control and Marketing Proclamation (No. 602/2008*, declares all coffee trade “shall take place in lawful coffee transaction centers.”

More specifically, Article 10(1) reads:

“Any person involved in the roasting and grinding of coffee for selling shall purchase the coffee for such purpose only from auction centers, the Ethiopia Commodity Exchange or wholesalers.”

But Article 11 appears to be leaving room for direct sourcing:

“Any coffee producer shall: 1/ without prejudice to Article 6(1) of this Proclamation, have the right to directly export coffee from his own farm, only after submitting the same to the coffee quality liquoring and inspection center for grading before and after processing for export; and 2/ sell coffee by product in auction centers or the Ethiopia Commodity Exchange only upon examination and approval of the coffee quality liquoring and inspection center.”

This provision makes it easier for coffee farmers’ cooperatives and marketing unions to transact with importers directly. Some of the cooperatives and unions that are reasonably equipped and well positioned to handle export orders will hopefully reap the benefits of direct marketing.

Meanwhile, farmers that are not organized in cooperatives, which constitute the majority of the farming community, are disadvantaged, as dealing with importers from thousands of miles away would be challenging, if not impossible. However, importers do have the option and abilities to initiate and enter into contracts with all producers and access their favorite coffee origins by establishing direct relationships with producers. This approach helps the poor farmers dig themselves out of the traps of poverty and eternal exploitation.

The law abolishes the old practices by some exporters of handholding coffee bags from farm gate to export. Now, they will have to compete with other exporters if they need to buy specific bag of cherries supplied by suppliers or “akrabis.”

In this respect, the Coffee Quality Control and Marketing Proclamation and ECX call for segregation of duty at all levels of the value chain. It appears, though, the government is now in violation of this noble code of ethics.

Conflict of Interest

The present-day domestic marketing chain in Ethiopia is as old as the export trade itself. The bean passes through numerous market participants before arriving at the central auction centers: collectors or “sebsabis” collect the beans at local stations from rural merchants or farmers and sell it to suppliers or “akrabis”; akrabis deliver the coffee en masse to the auction centers; private exporters or local distributors buy from auction centers. Suppliers and exporters are not allowed to bypass the auctions and exchange directly.

With the introduction of the new exchange system the auction centers are replaced by the ECX, while all other participants continue to function as is, but with one fundamental change: transparency. The previous auction system was marred with loopholes that seem to have allowed some exporters holding dual licenses to purchase back their own coffee in the auctions, thereby enjoying too much control over coffee prices. Supposedly, ECX’ introduction of rules of trading, warehousing, payments and delivery, and business conduct principles will seal off those loopholes. This seems to have upset a few exporters and fired back at by the government accusing them of engaging in conflict of interest.

But the government’s reactions were even more troubling. It not only confiscated coffee beans from the exporters but also tasked the state owned Ethiopian Grain Trade Enterprise (EGTE) with exporting of coffee.

This measure throws privatization and domestic market liberalization out in the window.

Ethiopia’s coffee market has always been a relatively private business, with the exception of limited government interventions to enforce quality standards, etc. This was true even during the days of the communist regime that “nationalized” almost every sector in the nation.

EGTE’s slated assignment marks a detrimental precedence in the nation’s history. The government’s engagement in exporting beans produced by smallholder families while it controls almost all means of production in the country, including the distribution of farm inputs, capital, and the land, is inconsistent with principles of a free market system.

Drowned Out Voices

As usual, when those up in the value chain fight, in this case the government and private exporters, it is the farmers that suffer most. In Ethiopia, smallholder farmers produce about 95 per cent of the nation’s total coffee production and these farmers rely on the sale of their cherries for their families’ mere survival.

For generations, Ethiopian coffee farmers have been at the mercy of their marauders. In the long and inefficient marketing chain, each participant marks up their prices weighing down the burden on the farmers’ shoulders. Ethiopian farmers receive barely a small fraction of the value their produce is worth, currently around 40 percent of export prices, much less than the 70 percent that their counterparts in Central and South America receive.

A transparent and efficient exchange market system nurtures competition and benefits everyone in the value chain, from bean to cup. Farmers producing the finest quality coffee can get rewarded for their hard work as well as suppliers and exporters whose innovation and smart marketing skills pay off.

But, if given the choice, farmers in Ethiopia would choose direct marketing over a chain of licensees that add little value to the product. To that effect, ECX would be more beneficial to the farmers if its processes support and facilitate for more farmer-importer relationships.

Looking Ahead

The role of a centralized modern commodity exchange is indispensable for developing economies, such as Ethiopia.

The country’s coffee sector is highly dependent on international prices and the export is affected by the structure and workings of the world coffee market. The market participants need to understand that Ethiopia is competing with countries that have the abilities and the will to easily adopt innovative low-cost production and marketing systems.

The current bickering and prejudice will only affect coffee quality, weaken the country’s brands, deter potential importers, and put the sector at risk. The government needs to exercise restraint, listen to and address the concerns of all participants, from farmers to importers. Its obligation to protect the farmers from exploitation includes itself as well. Replacing private exporters by EGTE won’t lessen the burden on poor farmers.

The interests of all participants can be better served if the market functions, in the words from ECX’ mission statement, “based on continuous learning, fairness, and commitment to excellence.”

By Jonathan Tepperman | NEWSWEEK

Few people outside Ethiopia have ever heard of Birtukan Mideksa. And that’s just how the government wants it. Since December, Birtukan has been kept in solitary confinement, one of hundreds of political prisoners there. Her apparent crime? Organizing a democratic challenge to the increasingly iron-fisted rule of Prime Minister Meles Zenawi.

In the past year alone, Meles’s ruling party has rigged elections, effectively banned independent human-rights groups, passed a draconian press law and shrugged off calls for an investigation into alleged atrocities in the restive Ogaden region. Yet in the same period, his country has become one of the largest recipients of U.S. aid in sub-Saharan Africa, getting a cool $1 billion in 2008. The Bush administration claimed that Ethiopia was the linch-pin of its regional counterterrorism strategy and a vital beacon of stability. But the evidence increasingly suggests Washington isn’t getting what it pays for, and is supporting a brutal dictator in the process. Candidate Obama pledged to strengthen democracy in Africa; if he’s serious, this is a good place to start.

America’s warm relations with Ethiopia date to the days after 9/11, when the country’s Christian-dominated government came to be seen as a natural U.S. ally in a region targeted by Islamic extremists. After disputed elections in 2005, however, Meles—once hailed by President Bill Clinton as part of a promising “new generation” of African leaders—began clamping down on dissent.
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Yet Washington tolerated his lapses because it needed his help fighting Qaeda-linked Islamists in next-door Somalia. In December 2006, Ethiopia’s U.S.-trained Army duly invaded its neighbor, ousting the radical Islamic Courts Union government there. But the adventure hasn’t worked out as planned. No sooner had the ICU been toppled than an even more radical group, Al-Shabab, sprang up to fight the invaders. And although Seyoum Mesfin, Ethiopia’s foreign minister, recently told NEWSWEEK that the Islamists have been militarily “shattered,” they now control much of the country’s south and have tightened links with Al Qaeda. Meanwhile, the Ethiopian troops have pulled out, and the country they left behind has been thoroughly devastated. Two years of fighting forced about 3.4 million Somalis, some 40 percent of the population, from their homes. Yet only a few high-ranking terrorists were eliminated, and Russell Howard, a retired general and senior fellow at the Pentagon’s Joint Special Operations University, says the occupation only “empowered” the radicals.

Such failures—and Ethiopia’s growing repression—suggest Washington should rethink the relationship. Just what Ethiopia offers the United States today is unclear. Addis Ababa has contributed troops to U.N. peacekeeping forces in Darfur and Burundi and plays a large role in shaping the policies of the African Union. But this shouldn’t earn it unquestioning U.S. support.

To reset ties, the United States should push Ethiopia to democratize. And it must urge it to reconcile with its archnemesis, Eritrea. Resolving the conflict between the two states is key to addressing a whole range of threats to U.S. interests. Tiny Eritrea won independence from Addis Ababa in 1993, but the two countries fought a 1998–2000 border war and relations have remained hostile ever since, in part because Ethiopia, with tacit U.S. support, has ignored an international ruling that redrew their border. Too weak to challenge Ethiopia directly, Eritrea has funneled support to its enemy’s enemies—including Al-Shabab and its America-hating foreign fighters. Eritrea also recently instigated a border conflict with Djibouti, home to an important U.S. military base.

Washington should thus push Ethiopia and Eritrea to make amends; better relations would mean an end to their proxy war in Somalia, which has helped turn that state into a Qaeda haven. Should it choose to use it, the United States has plenty of leverage. Most U.S. spending on Ethiopia goes for health and food aid, which aren’t easy to cut. But the Obama administration could make military aid and weapons sales contingent on Meles’s improving his behavior. The House of Representatives passed a bill in 2007 to do just that, but the measure died in the Senate without White House support.

Much will now depend on the man Obama has nominated for the State Department’s top Africa job, Johnnie Carson. Carson’s record is promising: while ambassador to Kenya from 1999 to 2003, he helped persuade longtime President Daniel Arap Moi to step down, clearing the way for multiparty elections. Should he bring similar pressure to bear on Washington’s new African ally, Birtukan, Ethiopia’s other political prisoners, Africans throughout the Horn and America itself would all benefit.

(With Jason Mclure in Addis Ababa)

By Yilma Bekele

“Why, O my friends, did ye so often puff me up, telling me that I was fortunate? For he that is fallen low did never firmly stand. – Boethius, The Consolation of Philosophy

When the prison guard shouts: Dead man walking! You step aside. The guard is warning people that the inmate walking by is on death row and he has nothing to lose by killing you. You just step out of the way and let the dead man keep his date with destiny.

The President of Sudan General Bashir is a dead man walking. He has a date with the International Criminal Court (ICC). A year ago ICC warned the General that his actions in Darfur were a cause for concern. Human Right watch put him on notice. Amnesty international said Al bashir was abusing his authority.

General Bashir was intoxicated with power. The General with the brain of a foot solder was not in any mood to listen to reason. He told his army full speed ahead. Scorched-earth policy of raping, killing and destroying villages was in effect. Why would he listen to a bunch of ‘liars’ bent in tarnishing his image?

He has friends. He is famous. He is the president of Sudan. He doesn’t have to listen to anybody. He has always said the western colonialists are out to get him. So what if they complain? General bashir is smart. Now that he has oil, he is rich too. They want his oil and those greedy westerners will not lift a finger against him. Especially since his newfound friends the Chinese are not concerned with such trivia as Darfur or human right he is safe. That is right he will play his Chinese hand no one will touch him. Not to mention that he is also surrounded with good honorable friends. No one can ask for better criminal neighbors than Eritrea, Ethiopia, Egypt and Libya.

So ICC in its slow and deliberative process went ahead gathering information, interviewing victims and buttressing the case. There was no hysteria here. ICC knew this process couldn’t be hurried. Accusing someone of genocide, torture, and human rights abuse is a grave matter. Warning shots were fired for those who can hear. Close friends of the tyrant were briefed. The media was kept in the loop. Al Bashir due to his unsurpassed ability to bully the Sudanese people was not to be bothered by some prosecutor in far away Europe.

The African Union and fellow tyrants were recruited to warn the ICC of the dire consequences if an indictment was returned. Delegates were sent to European capitals to explain how democracy works in Africa. The Ethiopian Foreign Minster appealed to Turkey to stop this process. It was said that Africans have their own solution and it cannot be hurried. In the mean time Al Bashir kept busy by denying the scope of his crimes, accusing the court of lack of jurisdiction and insulting the prosecutor as unrepentant colonialist hell bent on interfering in the internal affairs of Sudan.

Thus, on march 4th. 2009 ICC issued an arrest warrant for Al Bashir. The charges against the tyrant include:
1. five counts of crimes against humanity: murder; extermination, forcible transfer, torture, and rape;
2. two counts of war crimes: intentionally directing attacks against a civilian population as such or against individual civilians not taking direct part in hostilities, and pillaging.
So where do things stand today? Al Bashir is squirming like a cornered rat. He has showed his defiance by visiting fellow tyrants in the neighborhood. He has expelled NGO’s and aid workers from Sudan. The indictment still stands. The ICC has threatened to add new charges regarding his expulsion of aid workers. Al Bashir is vainly trying to show the support he has in Sudan by ordering, bribing, threatening the people to come out and march in his support. Too little too late.
In an interview with the BBC this is what fellow tyrant Meles Zenawi has to say:
Question: Why are African Union leaders turning a blind eye to the suffering going on in Darfur?
Zenawi: Well clearly there is in justice in Darfur and the AU recognizes that. But there are different methods of addressing injustice. There is the type that we saw in South Africa and everybody aggress that the apartheid system in South Africa committed crimes against humanity. Nobody I know of had opposed the African method of restorative justice and I do not see any reason why similar approach cannot be followed in Darfur. The thing is the crisis in Darfur is primarily a political crisis it is not a humanitarian crisis.
Question: You talk about the reconciliation process of what happened in South Africa but Darfur is a war crime and the war crimes trial suggested by the Sudanese government is a bit late in the day isn’t it?
Zenawi: Well the African Union is suggesting the indictment be differed for a year so that an already complicated peace process does not get more complicated….
You see what I mean. This is a perfect example of mixing apples and oranges to cloud the issue. The reconciliation process in South Africa took place after the Apartheid regime gave up power and authority. The De Klerk regime saw the writing on the wall and moved aside. The reconciliation process was put in place by the newly democratically elected government. Thus, to suggest such a process in Sudan while Al Bashir is in power with his army and security intact is bizarre and self-serving. Even in the South African process there were those that mentioned the weakness by pointing out that justice should have been a prerequisite for reconciliation rather than the alternative to it. Ato Melese’s so called ‘African method of restorative justice’ is another version of ‘revolutionary democracy’. It sounds cute but it is hollow inside.
Another proposal floated by the AU is to ‘differ’ the indictment for one year. I guess this is what you call not ‘unclear on the concept’. You just do not indict and un-indict at will. The indictment took place because there were irrefutable facts that showed a pattern of criminal behavior by the individual. You cannot put the genie back in the bottle. People have died, some have been maimed for life, villages have been burned and lives have been disrupted. You cannot undo the damage. What the Africans are saying is the tyrant has killed half a million so let us not upset him further so he does not kill more. It does not work like that.
This sort of suggestion arises due to the practice of using the courts for political ends in most of Africa. If memory serves us right that is the game the Ethiopian regime plays. Kinijit leaders were indicted for attempted genocide, attempt to forcefully overthrow of the regime and other charges. There was no proof, no witnesses and no case but it did not stop the regime to carry out the judicial theatre for two years while the opposition leaders were kept in jail. The two years gave the regime time to disrupt the party, exile it opponents and murder elected leaders. Ato Meles is asking a ‘deferral’ for a year so Al Bashir can do some more house cleaning.
Genocide Watch is calling on UN High Commissioner for Human Rights to investigate Meles Zenawi regarding atrocities committed in Gambella, Awassa and Ogaden. The massacre that took place after the 2005 election is still waiting for resolution. As was the case with Al Bashir the ball has started rolling.
The recent confiscation of coffee in collusion with the so-called ECX is further crime against our people. I see dark clouds hovering over the TPLF Empire. The danger of indictment, the inflation, the economic meltdown, lack of foreign currency reserves and general lawlessness in the country is a clear indication of a crumbling system on its last legs. The criminals are watching each other closely. There are those prone to panic and abandon ship. There are those who are unwilling to take the rap for crimes of the politburo. There are those ‘teletafe’ organizations nervous that they will be the first ones to be thrown to the hyenas at the first indication of trouble. That is the problem with criminal enterprises. It is each to his own. We are familiar with the actions of TPLF. No one is indispensable. As sure as the sun will rise up from the East tomorrow morning, Ato Meles will join Al Bashir in The Hague soon. I believe he is a dead man walking.

ADDIS ABABA, ETHIOPIA (The Daily Monitor) — The recently made growth forecast for the year’s economic growth of the country by the International Money Fund (IMF) was more realistic than the forecast made by the Ethiopian government, the World Bank said on Tuesday.

“The World Bank team here believes that the IMF’s is more realistic than the government’s forecast for the reason that investment in the country seems to be slowing” the Bank’s Country Director for Ethiopia Kenichi Ohashi told journalists at a round table discussion attended by visiting World Bank Director for International Affairs, Grace Ssempala.

He said it would be difficult for the country to sustain the economy growth it has been recording through the years because of the challenges in government spending. The Ethiopian government claims that over the past five years the country has registered an average economic growth of 11.8 percent. Just last week, it said it will be 11.2 percent this fiscal year, despite the challenges in inflation and crunches in balance of payment.

Nevertheless, forecasts by the IMF for the year indicated that the growth may decline by almost a half, to 6.5 percent as the world slowdown is likely to hit the country’s coffee export, tourism and transportation.

Ethiopia’s dictator Meles Zenawi recently said that the world economic downturn was not to be considered significant compared to the economic achievements the country is registering, “in the face of global financial crisis.” “It is projected that the global crisis will continue to prevail for the next two or three years, on our side there is a hope that our economy will continue to grow at the same pace,” he said.

But the IMF has said that the country is one of the vulnerable countries to the unfolding crisis.