Ethiopia looks east to slip reins of western orthodoxy

By William Wallis in London

Published: February 6 2007

As leader of the most powerful and populous country in the Horn of Africa, Meles Zenawi has found it relatively easy to forge strong alliances with the west.

But Ethiopia's prime minister, whose Marxist guerrilla movement in the 1980s saw Enver Hoxha's Albania as a model, draws inspiration now - as well as a growing proportion of funding - from the east.

In an interview with the FT in Addis Ababa, Mr Meles argued that the "neo-liberal" market reforms that have been the hallmark of western and World Bank intervention in Africa for more than two decades have failed to "generate the kind of growth they sought".

They were correct in identifying the predatory nature of African states as the "central problem". They were also right in addressing huge macroeconomic imbalances, he said. But they had been "unable to transform the rent-seeking nature of the state", merely weakening the state and reducing its influence instead.

"I believe in a strong developmental state. Developmental states do not intervene in the market in a wanton fashion. They intervene in the market to address pervasive market failures," Mr Meles said, responding to questions on the book he has recently written on the subject. "It is a combination of market instruments and non-market instruments to optimise the outcome. That has been the model of, let's say, Korea and Taiwan."

In practice Ethiopia has had to swallow a certain amount of World Bank orthodoxy. Mr Meles has liberalised agricultural markets, for example, but he has been reluctant to privatise the national airline or telecommunications industry.

Mobile telephony "is a licence to print money in Africa", he said. "The issue is how do you use that money. Do you use it to build less profitable but in [the] long term more important infrastructure?

"We are investing in the future in spite of the fact we are begging for food aid at the same time," he said.

In the 17 years since the Tigrayan People's Liberation Front (TPLF) swept south from the highlands of northern Ethiopia to end dictator Mengistu Haile Mariam's reign of terror, Mr Meles has weathered numerous crises.

When relations soured with his erstwhile allies across the border in newly independent Eritrea, Ethiopia fought a bitter and bloody two-year war. Unwilling to convert fighting over their shared border into a broader war to reconquer parts of Eritrea giving access to the sea, Mr Meles lost many domestic allies, prompting an internal crisis in government in 2001.

Just four years later his government's record on democratic reform came under attack when dozens of protesters claiming elections in the government's favour had been rigged were shot dead on the streets of Addis Ababa.

In the west, some of the lustre has worn off a leader seen in the mid-1990s as one of Africa's great hopes.

However, fresh from his army's swift victory over a coalition of Islamists in Somalia, whose expanding rule and jihadist rhetoric Ethiopia deemed a regional threat, Mr Meles has recovered some of his standing. The US, which provides about $600m (€464m, £306m) in aid annually and considers Ethiopia one of four top strategic partners on the continent, has endorsed Ethiopia's action, shared intelligence and, according to Mr Meles, provided "vital diplomatic support".

The UK and other western donors, having initially suspended direct budgetary support to the government because of concern over its human rights record, are again increasing development aid.

Meanwhile, Mr Meles is drawing on China's appetite for lending to the continent, attracting, he says, $500m in concessional loans, $1.5bn in investment towards telecommunications infrastructure and a further $1.5bn in short-term trade credits.

But he strongly rejects concerns in the west that China's willingness to lend without asking questions is undermining western aid conditionality.

"I think it would be wrong for people in the west to assume that they can buy good governance in Africa. Good governance can only come from inside; it cannot be imposed from outside. That was always an illusion," he argued.

"What the Chinese have done is explode that illusion. It does not in any way endanger the reforms of good governance and democracy in Africa because only those that were home-grown ever had a chance ofsuccess."

Financial Times