From War to Welfare
As international support continues to return to Ethiopia, Addis has secured substantial financial backing from institutions like the IMF and World Bank, as well as renewed sovereign loans from individual governments. Yet this influx of funds has done little to alleviate the hardships faced by ordinary Ethiopians. Soaring inflation, particularly in the cost of food and fuel, has made basic necessities unaffordable, while millions remain dependent on humanitarian aid to survive. Far from easing the burden on Ethiopian citizens, potential financial lifelines highlight a troubling disconnect between international support and the realities on the ground, where both rural and urban communities continue to grapple with rising poverty and economic instability.
Ethiopia, with a population estimated at over 130 million in 2024, once celebrated rapid economic growth that halved extreme poverty and improved health and education. But these achievements are now unravelling under the strain of inflation exceeding 35%, global supply chain disruptions, extreme weather events, and protracted armed conflict in parts of Tigray, Amhara and Oromia. These crises have destabilised agriculture, displaced millions and deepened food insecurity, with over 20 million people now requiring urgent assistance.
The government’s allocation of resources is now under scrutiny, particularly its focus on military expenditure. Ongoing unrest, particularly the Fano insurgency in Amhara, has prompted escalating military spending, reportedly exceeding USD 1 billion during the Tigray war alone. This focus on military solutions strains Ethiopia’s budget, diverting resources from critical sectors like healthcare, education and infrastructure. Consequently, poverty rates have surged to 68.7%, with Ethiopia now ranking 175th on the Human Development Index and 145th in progress toward the UN Sustainable Development Goals.
Ethiopia has recently implemented significant economic reforms to secure bailouts from the IMF and World Bank. These have included a market-based exchange rate, removing most restrictions on current accounts, and modernising monetary policies. Among the most notable changes is the floating of the birr, which has served to align it with black market rates, and a 14 November revision to the National Bank of Ethiopia (NBE) that allows exporters to retain 50% of their foreign currency earnings. While these reforms are intended to address inflation, foreign currency shortages and mounting debt, they have in fact exacerbated price instability and eroded purchasing power, further burdening the average Ethiopian.
These reforms also signal a shift from the developmental state model championed by former PM Meles Zenawi, which prioritised state intervention and infrastructure-driven growth. By contrast, Abiy Ahmed’s administration has embraced a free-market approach, selling off public industries and welcoming privatisation. While Meles’ policies sought to lay a foundation for democracy and middle-class growth, Abiy’s strategy appears driven by the immediate need for foreign investment, often at the expense of social safety nets.
Despite significant international support, there is growing concern that much of the financial assistance intended to aid Ethiopia’s most vulnerable populations is instead being diverted to sustain ongoing armed conflicts in Amhara and Oromia.Rather than stabilising the economy or rebuilding infrastructure in conflict-affected regions, resources appear to be disproportionately absorbed by military operations. This diversion not only prolongs political instability but also undermines urgent recovery efforts, leaving displaced communities and struggling populations without the support they desperately need amid a worsening humanitarian crisis.
The destruction still prominent across Tigray, and now in Amhara and Oromia, starkly contrasts with high-profile government projects, such as the renovation of Meskel Square in Addis Ababa. These development projects, while visually striking, highlight a troubling prioritisation of image over substance. Outside the capital, infrastructure remains in shambles, aid is insufficient, and millions of displaced Ethiopians are struggling to rebuild or sustain their lives. Agricultural disruptions caused by armed conflict and extreme climate events exacerbate inflation, while supply chains remain broken and rural economies grind to a halt.
Ethiopia’s strategic importance continues to attract foreign investment, particularly from the UAE and China, who view the country as a gateway to the Horn. Western nations, wary of ceding influence, remain engaged but often tie financial support to governance reforms. This geopolitical competition underscores Ethiopia’s ongoing global significance, but does little to address its domestic crises.
The current trajectory of the Ethiopian government is unsustainable, with military spending and vanity projects overshadowing the urgent need for meaningful humanitarian aid, development assistance and reform. Ethiopia faces mounting inflation, deepening poverty and persistent instability, yet resources are being diverted from rebuilding and addressing citizens’ most basic needs. Without a decisive strategy to stabilise the economy, rebuild infrastructure and prioritise public welfare, Ethiopia risks further entrenching its dependence on foreign aid and further exacerbating the struggles of its people.
International support and economic reform offer opportunities to effectively address these challenges, but their impact is currently undermined by misplaced priorities. Military operations and superficial development cannot replace the comprehensive recovery efforts and governance reform essential for Ethiopia’s brighter future. To escape cycles of poverty, armed conflict, political unrest and economic instability, the Federal Government of Ethiopia must shift its focus from war to welfare, channelling resources towards rebuilding lives, fostering growth and restoring trust.
By The Ethiopian Cable Team
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Two days of heavy clashes (3–4 June) in the Somali capital, Mogadishu, between federal troops and opposition-aligned forces have underscored both the fragility of the city’s security environment and the volatility of electoral politics. Although relative calm has since returned to the two hardest-hit districts - Hawl Wadaag and Abdiaziz - and mediation efforts have intensified, tensions remain high, fuelling fears of renewed armed skirmishes. Credible reports of mass clan militia mobilisation on the edges of Mogadishu speak to a conflict that is widening. The militarisation of politics and elite fragmentation over the electoral process have shattered a core assumption: that Somali leaders will ultimately step back from the brink to negotiate a way forward. Consequently, the country is entering a perilous phase in which domestic factions alone cannot resolve the impasse, making neutral, external mediation a necessity.
Puntland President Sa'id Abdullah Deni is unofficially in the race for the federal presidency of Somalia. By most accounts, the regional leader is running again and this explains his re-engagement with Mogadishu after a three-year hiatus. Driven by shifting electoral dynamics, Deni’s decision to re-engage with the centre forces him to confront a radically altered political landscape in Mogadishu. Under President Hassan Sheikh Mohamud (HSM), the federal government has rewritten the rules of Somali politics, altering the institutional framework and consolidating executive authority.
A flurry of media reports in recent months suggest the US and Eritrea could be inching towards a potential deal to reset decades of frosty relations and a partial lifting of American sanctions imposed in 2021. The news of discreet talks between the two sides, mediated by Egypt, was initially reported by the influential Washington Post newspaper in April 2026 and have since been partially confirmed by official sources.
On 10 May, the Federal Government of Somalia (FGS) unilaterally conducted its contentious 'one-person-one-vote' (OPOV) electoral model in South West State (SWS), directly overriding opposition demands for a negotiated, consensus-based framework. Crucially, the very laws underpinning these OPOV elections are themselves deeply contested: the electoral framework was created following a rushed revision of Somalia’s constitution that many federal member states and opposition groups rejected. The vote, exclusively managed by the National Independent Electoral and Boundaries Commission (NIEBC), saw localised polling in 13 districts and across 126 poll centres and 276 stations. While 376,212 citizens were registered, actual turnout reached 132,430 voters - a participation rate of approximately 35.2% - with 128,276 valid ballots cast and 4,154 deemed spoilt/invalid. The electoral outcome, unsurprisingly, solidified a decisive mandate for Hassan Sheikh Mohamud’s Justice and Solidarity Party (JSP); the governing party secured an absolute majority of 51 out of 95 contested legislative seats, comfortably outpacing its closest rival, Sharif Hassan Sheikh Aden’s Ururka Horumarka, which claimed 14 seats.
The Federal Government of Somalia (FGS) has effectively entered a 'grey transition' - a deeply fraught and hotly-contested interregnum that could upend decades of state-building and foment greater instability. By utilising the March 2026 constitutional amendments to extend his presidential mandate until May 2027, Hassan Sheikh Mohamud (HSM) has effectively plunged the fragile Horn of Africa state into a profound period of severe internal strain and legitimacy crisis. This legalistic manoeuvre has roiled domestic politics and put Western partners of Somalia in a difficult spot. If Somalia's Western allies concede to HSM's fait accompli without extracting concessions from him on a negotiated settlement, they are likely to embolden Hassan Sheikh.
Somalia is entering one of the most dangerous political periods in its recent history. An unprecedented convergence of unresolved constitutional disputes, contested electoral arrangements, rising tensions between federal and regional actors, and the growing politicisation of state security institutions has pushed the country towards a potentially destabilising impasse.
'Give Peace a Chance' was the title of a 1969 single written by John Lennon, recorded during his famous honeymoon 'bed-in' with Yoko Ono. Capturing the counterculture sentiments of the time, it was adopted as an anthem of the anti-Vietnam War movement in the following decade. Thirty years later, a provocative inversion of the title-- 'Give War a Chance'-- was adopted in a well-known Foreign Affairs article by Edward Luttwak in 1999, in which he argued that humanitarian interventions or premature negotiations can freeze conflict, resulting in endless, recurring war. Luttwak contended that war has an internal logic, and if allowed to 'run its course', can bring about a more durable peace.
A foreign-backed president, a besieged capital city, and a jihadist movement affiliated with Al-Qaeda-- this time not Somalia, but Mali. Late last week, Jama'at Nusrat al-Islam wal-Muslimin (JNIM), the transnational Salafist-jihadist group in Mali, stormed across much of the country's north, as well as entering Bakamo and assassinating the defence minister. The coordinated offensive-- in conjunction with the Tuareg separatist movement, the Azawad Liberation Front (ALF)-- has left the military junta reeling, and forced the withdrawal of their Russian allies from a number of strategic towns.
Last week, a bombshell Wall Street Journal article revealed that Washington was exploring a reset in relations with Eritrea, with US envoy for Africa Massad Boulos having met privately with senior regime officials in Egypt. Any normalisation of ties now appears to be on ice, with the reaction to Boulos's meetings — facilitated by Egypt — having been met with short shrift. But the episode speaks to broader issues about American foreign policy in the Horn and the accelerating reconfiguration of the Red Sea political order, which will not go away simply because this particular overture may have stalled.