By Monty Munford
India has lost out to China in the race to build several Ethiopian railways, including the strategically important line to Djibouti that allows land-locked Ethiopia access to the sea. The struggle between the two countries for influence in Africa is really hotting up.
For India, this looked like a done deal. In January this year the Ethiopian Prime Minister, Meles Zanawi, tackled the project with the Indian Minister of State for External Affairs, Shashi Tharoor, at the African Union summit in Addis Ababa. He asked for specific Indian funding for the various projects.
But the charismatic Tharoor is gone – he resigned after the IPL scandal – and India has dithered on funding the construction of railway lines to stretch 5,000 kilometres from Addis Ababa into various regions of Ethiopia. Consequently, China has stepped in and granted the country a multi-million pound loan… And, let’s be clear, the resulting goodwill likely to be shown to China will be vast.
At present (and I went there yesterday) the beautiful century-old railway station in Addis Ababa is covered in weeds after lying inactive for several years, and is also under threat because of a local street project.
So to reach Djibouti from Addis, passengers have to travel more than 470 kilometres on extremely difficult roads to Dire Daoua to pick up the train. Not exactly ideal for international trade. If China can complete this line efficiently, expect other Indian companies to lose out to their Chinese counterparts as the Ethiopian government makes India pay for its complacency. According to Hailemariam Desalegn, the chairman of the Ethiopian Railway Corporation (ERC), the Indian Government too long to respond to the request for funds. So work on the lines will begin in the last quarter of this year.
This is a major setback for the burgeoning trade relations between the two countries and allows China to curry favour with yet another African country as its ongoing strategy of an African land-grab continues.
India has a thriving trade with Ethiopia worth nearly $500 million. The total Indian investment in the country is about $4 billion, of which $1 billion worth of projects has already been implemented.
Indian businessmen can fly directly to Addis Ababa from Mumbai in less than six hours and Ethiopia has nearly 500 Indian companies based in the country. Companies such as the Tata Group and McLeod Russel India, the biggest tea company in the world, are leasing land, the latter citing costs as the major reason for choosing Ethiopia.
Much of India’s flower production is also centred in the country and Sai Ramakrishna Karturi, a Bangalore businessman, has now become the largest rose grower in the world after huge investment in Ethiopia’s rose gardens. Whether relations between the two countries will blossom or wither like the weeds at Addis railway station depends largely on India’s reaction to this colossal diplomatic and economic blunder.