Prime Minister Meles Zenawi
27th June 2006 Press Conference, Addis Ababa
Prime Minister Meles Zenawi gave a press conference on 27th June 2006 to local journalists and foreign correspondents. Issues raised included the ruling party’s engagement with the opposition political parties to amend the rules of parliament, other local issues and Ethiopia’s position on Somalia.
“The Security Council reports unequivocally state that Eritrea is arming the terrorist group in Somalia.”
– Prime Minister Meles Zenawi
“Whatever steps we take in the direction of democratisation, we will do so because they are necessary for our country.”
- Prime Minister Meles Zenawi
Questions and answers follow:
Question: Thank you, Mr. Prime Minister. Some sources recently said that the Ethiopian government and its army is interfering in the affairs of Somalia following the recent incident there. What is your opinion on this issue?
I would like to ask you about lots of allegations against the government in connection with the incident in Somalia. The first one is, Ethiopia is violating the arms embargo and supplies arms to rebel warlords in Somalia particularly to Mohammed Drir. The second allegation is that Ethiopia has also sent 300 troops. It is alleged that they are protecting the airport in Bidowa. And the third is that you have actually warned that you will not hesitate to attack the Islamist terrorist group if they attack Bidowa, the seat of the Transitional Government of Somalia. The international community wants to know your response to these allegations. Would you kindly respond to those allegations, please? Thank you.
Answer: Well, first let me say that perhaps, naturally. Ethiopia fully supports the positions taken on the matter by IGAD, the African Union, and practically all of the international community as regards to the peace process in Somalia. There are a number of fundamental points here.
First, the international community fully supports the transitional federal institutions in Somalia – the transitional government, parliament and the transitional charter. Ethiopia fully endorses this position.
Second, the international community is of the opinion that the so-called Union of Islamic Courts should not extend its military operations and that there should be no resumption of conflict in Somalia. We fully endorse that position, too.
And thirdly, the transitional government in Somalia should engage all those who would want to talk to it on the basis of accepting the transitional charter and transitional institutions of governance. So, as far as the future for peace in Somalia is concerned, Ethiopia’s position is identical to that of the international community as a whole. We do not have a specific axe to grind here.
Now, as regards to the implications of the resurgence of terrorist groups within Somalia, on the security and stability of Ethiopia, naturally, like any country, we reserve the right to defend ourselves against all attempts to destabilize our security and stability. We are aware of course that the Union of Islamic Courts is a Union of desperate forces. There are those Somalis who have supported the establishment of such courts because of the desperation that came as a result of the absolute chaos and lawlessness in Mogadishu. So, in a sense for much of the supporters of these courts, the issue is one of order and stability. We understand their desire and we have nothing against that desire.
And then, you have the messenger voice of the government of Eritrea who has been actively involved in the fighting in Mogadishu. Theirs is not a specifically Somali agenda. And finally, you have the jihadists led by Al-Ithad Islami, which I am sure you know, is registered by the United Nations as a terrorist organization. And so, for us, the Islamic Courts Union is not a homogeneous entity. Our beef is with Al-Ithad, the internationally recognized terrorist organization. It so happens that at the moment the new leadership of the Union of the Courts is dominated by this particular group. Indeed, the chairman of the new council that they have established is a certain colonel who also happens to be the head of Al-Ithad. Now, the threat posed to Ethiopia by the dominance of the Islamic Courts by Al-Ithad is obvious. Many of you would remember that Al-Ithad had been involved in terrorist outrages here in our capital. And so, it is absolutely prudent and proper for us to take the right precautionary measures. Having stated this principle, I think it is quite clear to the international community now that we have not violated the arms embargo. The Security Council has reports of violations of the arms embargo in Somalia. And this report unequivocally states that Eritrea has been arming this terrorist groups. It does not say anything about the violations of the arms embargo by Ethiopia. It doesn’t say anything about the violations of the arms embargo by Ethiopia for the simple reason that Ethiopia has not violated the arms embargo. On the other hand, Ethiopia is of the opinion that there should be peace-keeping troops and that the transitional government which is internationally recognized, has the right to defend itself and has the right to protect itself and the international community should afford it the possibilities of defending itself.
Be that as it may, as I said and I wish to repeat that, we have not violated the arms embargo and we have not sent troops beyond our border into Somalia. However, we have beefed up our defences all along the border to prevent any threat to our security that might emanate from the resurgent jihadists in Mogadishu, to the extent that they deploy their forces in such a way as to be an immediate, clear and present danger to our security. To that extent, we reserve the right to act. To the extent that they do not pose a clear and present danger to our security, we do not feel there is a need to act. At the moment, they are not a clear and present danger to us. They may become so if they cross a line. They know that line; we know that line. so far, they’ve not crossed it. Therefore, there is no need for us to act. We are simply watching developments in Somalia carefully, patiently and in the hope that there won’t be any need for us to act.
Questions: Thank you very much. Mine is a local one. The first question is the ruling party has been in a series of dialogues with those opposition parties who have joined parliament after accepting the constitutional order of the land. Could you please elaborate on the theme of the dialogue and its significance on the democratization process of the country. The second one, during the current year, the House of Peoples’ Representatives has been deliberating on a number of issues, among them is the economic growth registered over the past three years and the five year development plan. As we are now almost at the end of the fiscal year, how do you evaluate the first year performance of the new parliament? The other question, many agree that a remarkable economic growth has been achieved over the past three years. But some claim that the economic growth has its adverse effect on the public. What is your comment on this. In line with this, currently there is a shortage of construction materials particularly cement which has resulted in delay in construction projects. May I have your reflections on the problems? Thank you very much.
Answer: As regards to dialogue with the opposition parties, we have had a series of meetings with all the parliamentary opposition parties. The initial phase of the discussion was focused on, as it were – laying the ground rules of engagement. The ground rules being respect for the constitution and the laws of the land as a basis of democratic participation. That principle needed to be underlined, needed to be internalized by all the parties and it required extensive discussion and dialogue with the parties. I believe that phase has been completed successfully.
Subsequent to that we have been discussing with the parties on issues related to the parliamentary rules. It is the bones of contention between the ruling party and the opposition parties. It is also to be remembered that the government had promised to carry out studies of best practices in this regard on the basis of practices of well established parliamentary practices, particularly federal democracies. A number of countries were selected for the purpose. The Federal Government of Canada, Germany and India and an old and established parliamentary democracy, the UK. Consultants were hired to carry out studies on the rules of this parliament and they submitted their reports. The reports submitted by the consultants were distributed to the parliamentary parties – both the ruling and the opposition parties. And on the basis of these studies, we engaged the opposition parties in dialogue on amending the parliamentary rules to make it possible for our practice to be on a par with the best in the world. This dialogue has continued, I believe there is now agreement on the overwhelming majority of issues. A number of the opposition parties have registered reservations on a few points. But on the whole, there is consensus on how to move forward with regard to parliamentary rules.
I believe the next phase will have to focus on the remaining contentious issues – that of the press law and of the election board. As the parliament is now winding down business for the summer recess, it is my expectation that the dialogue will continue during the recess period. And, the parliament will then have the opportunity to revisit the press law and the National Election Board programmes in the new budget year, perhaps October or so.
The dialogue so far has been, in my view, quite productive. As I said, there is now agreement, at least, in principle on the rules of the game. We have engaged each other in dialogue and succeeded and we have set the precedent for continued dialogue and engagement amongst the parliamentary parties.
The performance of the parliament over the past year, I think, has been very laudable. As I am sure all of you remember, it didn’t start on the right foot. A significant number of opposition parliamentarians had decided to boycott the parliament and, subsequent to that, we had this attempted orange revolution in Ethiopia. And so the omens were not that good. Nevertheless, the parliament has succeeded in overcoming these initial difficulties and has passed laws and discussed issues of fundamental significance to the country including the five-year development plan. The discourse within parliament and outside parliament among the parliamentary parties has been quite sober and mature. And on the whole, I believe the parliament has done quite well over the past year.
With regard to inflationary pressures and shortages of cement in our economy at a time when we have achieved a lot of progress in terms of economic development, there are bound to be some inflationary pressures related to both global and local developments. Globally, as many of you would know, commodity prices have increased particularly that of oil and that will have its impact in terms of prices in our country. The growth of our economy has increased demand for lots of goods including cement. The production capacity we have is inadequate to meet this rather dramatic increase in demand for cement. This is as a result of the construction boom that is consequent to the economic growth we have achieved.
A year or so ago, the cement factories in our country were unable to fully utilize their production capacity because of lack of demand. At the moment, all the cement factories in the country are working flat out. And yet there is a huge discrepancy between demand and supply. That is the main reason for the shortage of cement in the country and increasing prices of cement. Where there have been shortages, we have tried to address them through importation of the necessary goods. We will do the same as regards to cement.
But these temporary problems, in my view, are harbingers of further growth rather than of crises. To just take the example of cement, the fact that there is a huge demand for cement now has precipitated unprecedented investment in the cement industry. A number of big cement factories are in the pipeline, mostly through investment by the private sector. That is the result of the fact that growth has generated demand and demand also, sooner or later, be followed by supply – supply through growth of the economy.
So, in my view, the problems we face now in terms of price pressures are harbingers of growth – they are results of growth and harbingers of further growth.
Question: Thank you Mr. Prime Minister. My name is Mikiyas Mekonnen. I am from Capital Newspaper. Ethiopia is moving towards extracting oil in Ogaden. How will this tension with Somalia affect the process? Related to that, the Ethiopian flag is being burnt in public in Somalia. How did the government react to that? There have been clashes on the Ethio-Kenyan borders for a brief while. There are also troubles in the Gambella State with alleged ethnic clashes where people have been killed. Ethiopia has also persistent problems with Eritrea and with Somalia as well with regards to the current situation there. Last but not least, there have been bomb explosion in the metropolis and other cities. Can you please tell us how safe we are in terms of our security? The US Central Command, General John Abuzaid visited Ethiopia last week. Did his visit have anything to do with the current situation in Somalia? Thank you.
Answer: I think I have said all I need to say about developments in Somalia. If indeed Ethiopian flags have been burnt by some in Mogadishu, that shouldn’t come as a big surprise. After all, as I said earlier on, the courts are being led by the leader of Al-Ithad Al-Islami. And this is a group that had no qualms about planting bombs in hotels in Addis. And therefore, I wouldn’t be surprised if they were to engage in flag burning to the extent that they limit their outrages to flag burning that is tolerable. All we are concerned about is whether they go beyond that and cross the red line. So far I believe they have not crossed the red line. I believe they are unlikely to cross the red line any time soon. And therefore, to that extent they do not pose a clear and immediate danger to us.
With regard to cross-border tension in Kenya, anybody who knows anything about that area knows that this is unfortunately, an old practice of cattle rustling, conflicts related to pasture and water exacerbated by drought which was particularly prominent this year. While clearly some would try to fish in these troubled waters, the underlined issues are age old; and therefore, not of immediate and serious concern. Obviously, because this results in loss of lives, all of us are deeply distressed and we need to do all we can to prevent it and stop it. But it is not something unheard of.
Generally speaking, there are instances of lawlessness and violence that you have enumerated in Ethiopia. However, I do not believe the average Ethiopian is less secure in Addis than the average Kenyan is in Nairobi or the average South African is in Johannesburg or the average American is in New York. Indeed, they are probably more secure here. This is not to say that these threats to security should not be taken seriously and addressed. This is to say that they should not, on the other hand, be unnecessarily exaggerated.
Question: Could you give us any details on how many troops are deployed out to cross-border between Ethiopia and Somalia. And the second question is also this issue. It has been more than a year now that the international community, the African Union in particular has been talking about sending a mission to support peace in Somalia. The mission has not still been sent. If nothing happens in the next weeks, will Ethiopia decide to support the transitional government on its own initiative? And my last question is concerning Eritrea. There have been reports today saying that about a hundred rebels coming from Eritrea have been killed. Could we know who these people are exactly and what their agenda is and why they had to be killed?
Answer: With regards to figures of troops deployment along the border, I am sure you will understand that I would not be eager to divulge these figures. All I can tell you is we believe we have enough to deter would-be threats to our country from engaging in adventurism and, if need be, to redress any such risks of adventurism, I believe that, so far, it has been quite successful. Quite successful in the sense of deterring any emerging threats to our country. We hope and expect that this will continue to be the case.
With regards to support for the transitional government we, along with the rest of the international community, back the transitional government in Somalia and the transitional institutions. We believe that there should be a peace-keeping operation in Somalia to provide support for the transitional government. We expect the African Union to take steps in that direction. The fact that the mission has not yet been deployed does not mean it will not be deployed. And even if that were to be the case, at the moment, there is no need for Ethiopia to pre-empt actions by IGAD or the African Union. As usual, we will follow the lead of the African Union and IGAD; and we will not attempt to pre-empt their activities.
With regards to reports of rebels killed, as far as I know it happened over a month ago. This was an attempt by the government in Eritrea to infiltrate the so-called Patriotic Front through the north-west of our country. The defence forces were aware of their activities and plans and attempts were made to apprehend them. But as you know, these are armed detachments who are unlikely to obey orders to surrender their weapons and hand themselves in. And so attempts to apprehend them were not successful at which point the defence forces had to take all the necessary measures to eliminated the threat.
Question: If Sheik Hassen Dahir Aweys is going to make a deal with the transitional government, will Ethiopia support it because this man is a wanted man, not only by Ethiopia but also by the international community. What will be the position of Ethiopia? The other one is, as far as I know and you know for yourself, Eritrea is not only sending armaments to Somalia but she has also sent army personnel to train some of the warlord militias. Even sometimes, I remember your forces have caught security personnel from Eritrea in Jigiga, Godie and Kelaffo. Even some were seen on the roads of Mogadishu supporting the warlords. At the same time, Eritrea is just engaging in a big propaganda ploy. For example, two days ago, Eritrea was accusing the Ethiopian government of having conflicts with Sudan and Kenya and with all these things, just implying that the Ethiopian government is war mongering. What is your position on this? Why is Ethiopia not saying anything while it is hosting thousands of refugees from Eritrea, while she is talking even when they get one or two soldiers, they are just propaganding now and then? Why does the Ethiopian government not want to do the same?
Answer: With regards to Aweys, in the Al-Ithad group, there are two separate issues here. What the Somalis might wish to do amongst themselves and what the response of the international community, including Ethiopia, should be to the presence of an internationally known terrorist personality in a government, these are two separate issues. Obviously, it is up to Somalis to decide whom to include and exclude in their government. And we respect that right. I would be very surprised if Aweys and company were to recognize the transitional government and the transitional charter. The transitional charter says nothing about Taliban-type governance. It says everything about some sort of democratic governance in Somalia. That, I suspect, would be directly contrary to Aweys and company’s views about governance. And so, it will come as a big surprise to me if these groups were to recognize the transitional government and engage it in dialogue seriously. It doesn’t go along well with their ideology. Nevertheless, that is for Somalis to sort out.
Now, when it comes to what the response of the international community should be to the presence of a very well known terrorist in a government, that again is a separate issue and obviously we would find it very difficult to interact with such a government. A very well-known internationally recognized terrorist in a position of influence of any government would be a source of concern to any country and to the international community as a whole.
In general, however, I think this is largely a hypothetical issue. Hypothetical in the sense, that as I said, these are terrorists. The Aweys groups are terrorists - internationally known terrorists. Their mode is the Taliban. It is not the charter of the transitional government. And so, I would be very surprised if they were to wish to be part of the transitional government. However, we have to be careful and make sure that we do not paint all those who are associated with the Islamic courts with the brush of the Ithad. There are people in Mogadishu for example, associated with a certain clan in Mogadishu who are in this process largely because of their desire for stability rather than their desire for a Taliban type of governance. So, we have to recognize that the Islamic Courts in general are a mixed bag. It so happens that they are now being led by the most extreme elements of that mixed bag.
With regards to the destabilization attempts - destabilization of Somalia, Ethiopia, Sudan and so on - I think it doesn’t help if we, all of us here, were to engage in allegations and counter allegations. I think we should defer to reports of independent bodies. What countries are doing in Somalia is being monitored by a United Nations-mandated body. The United Nations-mandated body has recently submitted its report to the Security Council of the United Nations. And that report is quite clear – quite explicit. It doesn’t say anything about Ethiopia violating the arms embargo or arming this or arming that. But it has detailed reports of what Eritrea is doing to arm the forces of instability in Somalia, to train them and to provide all sources of assistance. That is a matter of record; it is not a matter of allegation on the part of the Ethiopian government. It is a matter of record in the United Nations Security Council. Because we believe that the record speaks for itself, we have refrained from tit-for-tat exchanges of allegations and propaganda with the government of Eritrea.
Secondly, we feel the overall strategy of the government of Eritrea is destabilizing the region, whether it is in Sudan, as you know, again it is a matter of public record that the Eritrean government has been supporting the rebels in Darfur, which is associated with Sheik Turabi of the Islamist groups in Sudan. That is a matter of public record. This group has its headquarters in Asmara. It is very well known again that they are trying to destabilize Ethiopia. It is also very well known that they are trying to destabilize Somalia.
Now, for me this is a strategy of desperation and chaos. I believe it will collapse under its own weight. And, therefore, I think, we should not give it an honour it does not deserve, by responding in kind. If a desperate and frustrated group wants to sink, wants to take everyone around it down to oblivion, that is its business. All we can say is have a speedy journey. But we are not part of the trip.
Question: Thank you. Coming to the Ethio-Eritrea border issue, where are we now regarding the border demarcation? Eritrea is accusing Ethiopia of abusing the matter and is also declaring its unwillingness for dialogue. What is your comment on this issue? And the other one, some say that the relations between Sudan and Eritrea are taking a new shape. And these same parties also express their concern that this will aggravate the Ethio-Eritrea situation. How do you describe this situation and how do you see the current status of the Ethio-Sudan bilateral relations? And finally, as we are now in the rainy season, could you tell us how the agriculture and rural development activities are going on at present and what significance the season has for registering economic growth for the fourth round and what things should be done in this regard?
Answer: With regards to the demarcation and the Ethio-Eritrea conflict as a whole, we had hoped, perhaps against hope, that the initiative taken by the witnesses to the Algiers Agreement - the United Nations and the United States - to jump-start this process through engagement with the boundary commission would perhaps bear some fruit. As it happens the position taken by the Eritrean government throughout the process of the series of meetings in London has been one of obstinacy and extremism. They have said that they are not interested in dialogue, they are not interested in engagement and of late, they have even declared that they will not participate in the meeting. That is why the third meeting which was scheduled for June could not be held. And so, it appears that Eritrea has buried this particular initiative. Naturally, we would have hoped that Eritrea would engage us in dialogue in our neighborhood. And the failure on the part of Eritrea to do so is a source of dismay and concern for us. We shall continue to persevere in our search for peace, lasting peace, on the basis of the Five-point Peace Plan that we have put in place. The fact that the current initiative appears to be the dead does not mean there cannot be future initiatives. We hope when the time is ripe, there will be such initiatives which will lead to peace.
With regards to so-called new opening in Eritrea and Sudan relations, first of all, if Eritrea wants to have good relations with its neighbors in earnest, we will be the first to welcome such an approach. However, we are not yet convinced that Eritrea is seeking peace with all its neighbors seriously. As I said earlier on, all the activities of the Eritrean government point to a strategy of desperation and chaos rather than a strategy of engagement and accommodation. And so, I would be surprised if the current clamor around the recent exchanges of visits leads to anything substantive by way of improvement in relations between Eritrea and Sudan or Eritrea and its other neighbors. I would be surprised if this were to be the case simply because I see no indications of the Eritrean government changing its strategy of desperation and chaos. But I would be the first to applaud the Eritrean government if it were to change its strategy and make a move towards engagement and accommodation. With regards to Ethio-Sudan relations, they are as good as they have ever been and I expect them to continue as such.
We are better prepared than ever to make good use of the good rains that we have now and that are in prospect. We have imported more fertilizer than ever; the distribution of fertilizer to the farmers has been very brisk, much more effective than in the past. There is huge demand for improved seeds on the part of the farmers. The extension service we have is better prepared to provide technical assistance to the farmers and so barring any unforeseen circumstances, I expect a bumper crop next year too. And that should augur well for our overall economic growth.
Question: Thank you Mr. Prime Minister. Speaking of the regional issues, where does Somaliland fit in this? Because the Ethiopian government in its pursuit to have an alternative port of Berbera as an outlet to the sea, and having this regional problem with Somalia, I would be interested to know where Somaliland fits in? The second is, are you not worried by the growing current account deficit in trade? Because the IMF is, and I believe their concern is that the state is spending so much money on telecoms and electricity infrastructure and the Ethiopian petroleum Enterprise to cover the oil bill. And their concern is that it will create unsustainable sort of budget deficit and also affects the current account. And the Ministry of Finance and Economic Development last week reported that Ethiopia’s foreign currency reserve has gone down by nineteen per cent compared to last year. I would like you to comment on these.
The world Bank has released what is called Protection of Basic Services a couple of weeks ago. As we all know, it is a two-year interim programme. They seem to say that they will be happy to continue direct budget support after two years provided that the quality of governances is improved. And what they mean by the quality of governance is an inclusiveness of engagement and accommodation by your government, which has to do with reconciliation with political forces outside the fence, as you are appearing to do with political forces inside the fence. My apology to continue with my question, I am also interested to know that the interest rate has not been adjusted for the last three or four years despite the fact that inflation is going up with an average eleven per cent now. The idea or the thinking when the interest rate was reduced a couple of years ago was that the inflation rate could be kept at an average of three per cent. Do you think that there will be any time soon that the interest rate will go down and therefore justifies the kind of interest rate that is there? The other issue is about the WTO accretion process. The Ministry of Trade and Industry has prepared a memorandum on the foreign trade regime and it was submitted to the Council of Ministers quite a while ago. And Ethiopia has agreed to submit this in September, 2005. Nothing has happened so far. When will this memorandum of foreign trade regime be approved by the council and the accretion process resume with the WTO?
Answer: I hope it is particularly among the Ethiopian journalists you are asking more than one or two questions at a time. I hope you would give your other colleagues the opportunity to ask their questions. But I think the questions that you have asked are quite relevant and interesting. And I will respond to all of those questions.
With regards to Somaliland, the view of Ethiopia has not changed. The ultimate status of Somaliland, in our view, will depend on the will of the Somali people; not on the will of the Ethiopian government. Until such time as its final status is resolved in some fashion Somaliland continues to be a beacon of stability in the troubled region. That is a very welcome development for Ethiopia and I believe for the international community. We will do whatever we can to promote stability throughout Somalia, including Somaliland. We will engage all entities and forces in Somalia that promote stability and peace in the region.
And therefore, we will continue to engage the Somaliland authorities in terms of trade, security and other issues of mature interest. So nothing much has changed in this regard as a result of the turmoil in Mogadishu. And we hope it will continue to be the case and we expect that to continue to be the case.
Now with regard to the current account balance of Ethiopia and its relation to public investment in telecommunications and electricity, in power generation and distributions, I am aware that our friends in the IMF are uncomfortable with this issue. We have been uncomfortable for some time now. I suspect this is partly related to their concern with our balance of payment and I suspect it is also related to their concern with public investments in infrastructure particularly in telecommunications and power. It appears their preference is for private sector activity in telecommunications and power. And it appears the balance of payment situation jives quite well with their agenda related to telecommunications and power.
Our view however is also consistent, while the foreign exchange reserves of country have come down they are still very comfortable. And so, we do not face a balance of payment crisis. More importantly perhaps, while our exports have increased and the reports of the last eleven months show that our exports have increased by about 20 percent, our imports have also increased. But the increase in imports comes largely from the importation of machinery, raw materials and semi-finished goods rather than consumption goods. Consumption goods do not constitute more than 30 per cent of our total import bill. And so, the dramatic increase in our imports is in areas related to investment. Ultimately, growth and investment are the final sources of macroeconomic stability. Macroeconomic stability in our view is not an end itself — it is a means to an end – that of sustainable growth. So the slight reduction in our balance of payment situation is a result of our booming economy; and, it is a source not of macro-economic instability but sustained stability in our macro-economy. But this is an old argument between ourselves and the IMF. I don’t think we are going to resolve it this year. We did not resolve it for the past ten years. So, it will be unlikely for us to resolve this issue any time soon. I suspect we will have to respect each other views and move on.
World Bank support to the Public Protection of Basic Services programme - we were very happy that the World Bank has made its decision in this regard and that it has also cancelled Ethiopia’s debt, that it has also backed a number of projects — roads, rural development, financial sector support and so on. We were very happy with all of that. As to whether we will shift to budget support, it all depends on the response of the bank and the international community. We have made our views very clear. Whatever steps we take in the direction of democratization, we will do so because they are necessary for our country. We will not do so as a result of pressure related to budget support or otherwise. So, we will move further in the direction of consolidating democracy in our country with or without budget support. We will not move an inch beyond what we consider is necessary and good for us just to attract budget support.
With regards to the interest rate in Ethiopia, as I am sure you will know, the National Bank determines the minimum deposit rate and that is all. It does not determine the lending rate. The banks determine their lending rate. It does not determine the maximum deposit rate. The banks determine their deposit rate. And therefore, interest rates are, in the final analysis, determined by the banks rather than government. The government simply determines the minimum deposit rate that banks are obliged to pay. They cannot pay below three per cent. If they want to, they can pay ten per cent for deposit rate. If they want to, they can charge 30 per cent as far as lending rates are concerned. If they are not doing so, it is because of the competition among the banks. And so, the time has passed for the National Bank to determine deposit rates and leading rates and so on. That is beyond us now. That is behind us now. That was the case maybe seven years ago. But as a result of the liberalization of the financial sector, that is no longer the case. We only determine the minimum deposit rate. Everything else is determined by market forces.
So if markets affect the interest rate one way or the other, that is fine with us. If they don’t, that is also fine with us. Maybe the banks feel the blip in inflation is just a blip, and that it will come down, may be they feel that is the case, if that is their feeling, it is not far from our assessment.
With regards to accession to the WTO, the memorandum will be considered when the necessary consultations amongst experts who have to review the memorandum before the ministers have a look at it, have completed their task. I hope that they will do so over the summer. But as soon as they complete that process, it will be submitted to the cabinet and the cabinet will have a look it.
Question: If you allow me, I would like to take you back to Somalia again. The Al-Ithad was a weakened group following retaliatory moves taken by Ethiopia. And you said repeatedly that what transpired in Mogadishu is the people’s desire for stability. Would you say that Al-Ithad ability to be in a leadership now is a sudden turn of event where it capitalized on the desire of the people or is it a gradual process? If so, was the government of Ethiopia aware of Al-Ithad’s activities within Somalia?
Answer: Well at a time when Al-Ithad posed clear and present danger to our security we had to act. It was based in a small town called Luke somewhere in between our border town and Bidowa. We had to root it out from its base operation there. And that indeed weakened its capacity to threaten us and it moved to Mogadishu and lower Shebele. Militarily, it was, as it were, parasitizing on Islamic court militias of various clans in Mogadishu and the lower Shebele valley. But it never went out of business.
Now, as I said earlier on the processes in Mogadishu, the forces around the Islamic Courts are a mixed bag, there are those who are seeking order, some kind of order in chaotic and lawless Mogadishu. This are linked to various clans in and around Mogadishu, while many of these are Muslims and naturally would have nothing against Sharia law. They are not necessarily jihadists. And then you had, as I said, the messenger voice of the government of Eritrea. A significant number of them are not Muslims at all. And lastly, you have the jihadists led by Al-Ithad. It is this amalgam, which succeeded in butting-out the war-lords who had created the lawlessness in the first instance. Now, Al-Ithad is the best organized of all these groups and therefore it appears to have had the inside track as far as taking over the leadership of this amalgam is concerned. That does not mean there is absolute homogeneity as to the way forward amongst those forces. And so, our reactions will be based on a correct understanding of each of the components of this amalgam. We will not mix up apples and oranges. We know there are apples and oranges in there. Our response will not be based on mixing up this. Our response to Al-Ithad and its leader is uncompromising. We will not tolerate them anywhere within the range where they could pose a direct and visible threat to our security and they know that, and they have refrained from crossing that line. We expect them to continue to refrain from crossing that line. Now, as far as the other forces particularly those who are seeking some sort of order in Mogadishu are concerned, we have no problem with these clans. And, we hope and expect that they will engage the transitional government in dialogue and sooner or later distance themselves from the jihadists and from the Taliban.
Question: Some companies are negotiating with the Ministry of Trade and Industry to import cement without, or exempted of, VAT and duty. Will that be allowed? And if it does, will that opportunity be given to all companies interested in doing that? Thank you.
Answer: We will find ways and means of addressing the shortage of cement in the country until the investments in the pipeline are in a position to address our requirements. And we will seek ways and means of importing cement in a manner that does not put unnecessary strain on our balance of payment situation. Whatever we can do to stabilize the prices of cement and provide adequate supply, while at the same time reducing the burden on our balance of payment, we will do. Whoever is in a position to fulfill our objectives will be given equal opportunity. But the objectives are precisely defined, and those are, first, the importation of adequate cement to stabilize prices and second, minimum pressure on our balance of payment. Those who fulfill these two requirements would be very welcome.
Question: I just would like to take you back to the Ethio-Eritrea border conflict. As you know, the situation now between Ethiopia and Eritrea is no peace, no war. This no peace, no war situation is having its own psychological impact on the people, especially those who are on the border. What will be your message to these people?
Answer: Well, that is not of our making. Our preference, our desire is that this border should be a normal border that there should be peace, tranquility, normalization, brotherhood, after all the people of Ethiopia and Eritrea are brotherly people to each other. So, that is our desire, that is our wish. We want that to happen yesterday. We do not want an hour to pass, in which people will have to live in an environment of tension. And so, our desire I think, is consistent with the desire of the people across the border, on this side and the other side of the border. The problem is that, for some reason, the Eritrean government has taken it upon itself to [bring] such chaos and instability in the region, not just around the border. Until and unless the Eritrean government sees it fit to change its strategy of, as I said, desperation and chaos, until such time we will all have to live with the consequences of such an unhelpful policy. What we on the Ethiopian side can do is to limit the damage of such a policy on us. And I believe we have done so effectively. The damage of such policy on Ethiopia is minimal compared to the damage that it has brought about to the Eritrean people themselves. They are the first victims and the primary victims of this policy and strategy. We were not happy that this is the case. But as government, all we can do is to protect our own, and I think we have effectively protected our own.
We cannot completely negate the negative consequences but we can limit its impact and as I said, we have done so. And I am confident that we will continue to do so.
Thank you very much