Background: The construction of the Grand Ethiopian Renaissance Dam on the Blue Nile will likely heighten tensions in East Africa and could also lead to an increase in instability in Southwest Asia. When Egypt became preoccupied with the Arab Spring at the beginning of 2011 the East African States of the Nile River Basin took the opportunity to vocalize their claims to the water resources of the Nile. The 1959 Nile Water Agreement, a colonial era treaty, awards the vast majority of the Nile's waters to Egypt. The co-riparian countries of the Nile have always been against this treaty as the agreement was signed by foreign powers and does not protect the interests of the states in question. Despite this resentment, Egypt's relative economic and military strength and the internal stability issues in some countries made it difficult for East African countries to challenge this treaty. The current situation in Egypt has changed this.
The Nile is divided into the Blue Nile and the White Nile. Ethiopia, North Sudan, South Sudan, Egypt and Eritrea (to a minor degree) all share the water of the Blue Nile with Ethiopia's highlands providing approximately 85% of the river's water supply. In 2010 Ethiopia, Kenya, Uganda, Rwanda and Tanzania increased their efforts to divide the water resources of the River Basin more equitably and revoke Egypt's right to approve any projects on the river, such as the construction of dams, that might impact the flow of the river. Not surprisingly both Cairo opposed these measures. Given that the population in the Nile River Basin is expanding dramatically (it is expected to double by 2050) water use is on the rise, thus any cut in access to the river's resources is perceived as an existential threat. In the realm of hydropolitics violent conflicts tend to occur internally. The Nile River Basin is one the region that could see violence on an international level. Given the geography the region this could impact ships coming through the Suez Canal and stability in Southwest Asia.
For the moment lets look at the challenges that Ethiopia faces in constructing the dam, the options that Egypt has to counter Addis Ababa's actions and the concerns of North and South Sudan.
Ethiopia's Challenges: Building a large dam is neither a cheap or fast proposition. The Grand Ethiopian Renaissance Dam is supposed to be complete by 2017. That said the question of how the estimated price tag for the project of 5 Billion USD is going to be met needs to be answered. Given that the World Bank calculated Ethiopia's 2011 GDP as $31.71 billion we are looking at a project that is roughly one sixth of the countries economic output. Ethiopia started building the dam before they had secured all the necessary funding as Addis Ababa knows that it likely only as a limited time before Egypt can counter the dam's construction. It is likely that one of Cairo's key objectives will be to ensure that Addis Ababa never raises the additional funding. In theory Ethiopia could offset the cost of the project through selling hydropower but it must be noted that a theoretical deal is not a done deal. Questions remain as to how much revenue Ethiopia would be able to gain from the sale. There are also concerns as to how long it will take the reservoir of the dam to fill. There is speculation that it could take several years which would likely reduce downstream flows. In short, the faster Ethiopia wants to raise the reservoir the more down stream flows are going to be cut. That said, this dam is in the highlands which means that less water in lost to evaporation as compared to the water in Lake Nasser so it is possible that damming in Ethiopia and deconstructing the Aswan High Dam (which is contributing to soil salinization in Egypt's fertile Nile Delta) could result in more water and increased food production in the region. Despite this scenario it is unlikely that either Cairo or Khartoum would consent to policy makers in upstream countries controlling their access to the flow of the Nile.
Egypt's Concerns: Approximately 99% of Egypt's 82.54 million people lives in the Nile River Valley in an area about the size of Maryland. This population is utterly dependent upon the Nile's waters. Despite the current instability in Egypt Cairo has several strategies that it can employ:
1. Egypt could use Pakistan as a model and turn a blind eye towards parties in the region whose interests go against those of the United States and other Western powers. Such an act would likely emboldened these groups. Given Egypt's strategic location it could be used as a staging ground to cause disruptions in North Africa and Southwest Asia. Such actions could also put further strains on Egyptian - Israeli relations which would be a further issue that the United States would have to manage. This would distract Washington from other pressing issues in other parts of the world. Though this strategy would strain relations between the United States and Egypt it is unlikely that the Washington would abandoned Cairo outright. Pakistan serves as a precedent here. For these reasons the Egyptians can essentially say, "Side with us in this dispute and we will not make your life more complicated." Such a strategy could be used to ensure that Ethiopia never receives the funds necessary to complete the dam.
2. Egypt could fund rebels and opposition groups in upriver states. A precedent exists here as Egypt supported both the Eritrean People's Liberation Front and Tigrayan People's Liberation Front during the 70's and 80's. Political tensions in Kenya, Uganda and Rwanda are also not exactly closely guarded secrets. Cairo might seek to exploit these divisions if its access to water is threatened. Egypt could also offer financial assistance to some of these countries in an effort to buy their support. The success of such a policy is questionable however given how firmly the upriver states have been pressing their claim to the Nile's water. Thus, it is unlikely that any of these countries would legally limit their access to the Nile's waters for any length of time let alone in perpetuity.
3. Egypt could disrupt shipping in the Suez Canal. This is the least likely scenario as it would have a major impact on the Egyptian economy. The decline in revenues from tourism would also make this approach even more economically damaging. That said access to water is literally a life or death issue. When confronted with such choices states make decisions that would, in other circumstances, be madness. Though this is the least likely scenario it is worth keeping in mind if Egypt gets desperate.
North Sudan's Concerns: Though relations between North and South Sudan have improved of late they are still strained. Khartoum will not want another challenging issue to contend with but, as in Egypt, access to water is an issue that is too big to put on the back burner. Given North Sudan's geographic location and the fact that it has a legal claim to the water resources of the Nile under the 1959 Nile Waters Agreement it tends to side with Egypt on these issues. Thus, it is likely that Khartoum will continue this trend and support Cairo's position.
South Sudan's Concerns: As the world's newest country South Sudan has a variety of concerns. Though water is one of them the country does enjoy enough rainfall to make its agricultural sector not totally dependent on irrigation. That said water is not a resource that one signs away lightly. After all South Sudan needs water for sanitation, irrigation could aid food security and the ability to impact the flow of the Nile into North Sudan and Egypt gives Juba some leverage. For these reasons is unlikely that South Sudan would sign any agreement which would limit their access to the Nile even if such a deal provided them with much needed capital.
Conclusion: Tensions in the Nile River Basin are not going to disappear anytime soon. For the reasons outlined above the region should be monitored as it could result in a humanitarian crisis either in the form of war, chronic food insecurity, inadequate sanitation or a combination of all of the above. Given the proximity of the Horn of Africa to Southwest Asia it is not impossible that instability in Africa could be exported and in turn could impact the regional interests of the United States and put pressure on Washington to intervene in conflicts that would be costly and probably not end in a conclusive manner. Given internal issues in Egypt it is unlikely that these problems will result in a conflict within the next six to twelve months but it is possible that the situation will escalate within the coming five years. An increase in stability in Egypt will have a direct effect on how forcefully Cairo challenges the actions of Ethiopia and the other upriver Nile States.