????????
????????2016232
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ThesisforMasterDegree
?????
ComparativeStudyonEconomicCooperationofEthio-Chinaand
Ethio-Germany
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????
????
????
????2018?4?20?
BanchiamlakTadesse
??????????
InternationalRelations
ProfessorLIHONG

ThesisforMasterDegree
ComparativeStudyonEconomicCooperationofEthio-Chinaand
Ethio-Germany
Candidate:BanchiamlakTadesse
Subject:InternationalRelations
Supervisor:ProfessorLIHONG
ShandongUniversity
April20,2018

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Declaration
Ideclarethatthisthesisentitled''ComparativeStudyonEconomicCooperationofEthio-China
andEthio-Germany''istheresultofmyownresearchexceptascitedinthereferences.The
thesishasnotbeenacceptedforanydegreeandisnotconcurrentlysubmittedincandidatureof
anyotherdegree.
Signature:……………………………………………………………………………..
Name:……………………………………………………………………………..
Date:……………………………………………………………………………..

Certification
Thisistocertifythatthethesisentitled"ComparativeStudyonEconomicCooperationof
Ethio-ChinaandEthio-Germany''thatisbeingsubmittedbyBanchiamlakTadesse,inpartial
fulfillmentfortheawardofMastersinInternationalRelationstoShandongUniversitySchoolof
PoliticalScienceandPublicAdministration.
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Name:……………………………………………………………………
Date:……………………………………………………………………

i
Acknowledgement
ThankstoLordforallthecountlessgiftsyouhaveofferedme,andthankstothefamilyfortheir
loveandsupport.
Itisagreatpleasuretoacknowledgeandappreciatemysupervisor,Prof.LIHONG,forher
suggestion,helpfuladviceandencouragementonthisthesis.
Iwouldlikeexpressmydeepestthankandsinceretomyfriends,fortheirefforttoreadmydraft
chaptersandgivingmetheircommentsonit.
IamalsodeeplyindebtedtothePeoplesRepublicofChinaandwhichgivesmethisscholarship
andManythankstomyclassmatesandthestaffofShandongUniversityfortheirhospitable
welcomeandsupportinallmyneeds.
Ihumblyextendmythankstoallconcernedpersonswhohavecooperatedwithmeinthisregard.

Abstract
Ininternationalrelations,itisnotnewthatonegovernmentgivesassistancetotheotherone.The
assistancescouldbevaryinitstypeorinitsmotiveandothers.ParticularlyaftertheWWII,
especiallyaftertheintroductionoftheMarshalPlan,developmentassistanceiscommonandhas
becomeoneofthemainaspectsofinternationalrelations.Althoughtherearevarioustheories
andapproachestodevelopmentassistance,themostacceptableideaisitisgivenforfillingofthe
technicalandfinancialgapoftheother.
Asweknow,mostdevelopingcountriesareinshortageoffinance,knowhowandcapacityso
thattheyareinadifficultytofeedtheirpeopleandtoeradicatepoverty.Forthisreasonthebetter
oneswhicharethedevelopedcountriessupportthembyprovidingdevelopmentassistance.
EthiopiaisoneofthedevelopingcountriesfoundintheEasternPartofAfrica.Withapopulation
morethan100millionandhugenaturalresourcesthecountryisstillfightingagainstpoverty.For
thiseffortalsothecountrygetsalotofassistancefromexternalsources,amongthemChinaand
Germanyarefew.Itisundeniablethatbothcountriescontributealot,butintermsofvolumeand
qualitywhichisthebestsupporteristhequestionthatcanberaise.Itisnotonlytheamountof
themoneythatisflowntoEthiopiabuttheEffectivenessofaidisalsokeyones,thus,itisalso
importanttoasktowhatextenttheassistanceiseffectivelyusedinEthiopiaandhelpfulforthe
country.Thetradeandinvestmentrelationisalsotheotherbasicfactswhichmeasuresthe
economicrelationsofthecountries,therefore,comparingoftherelationofEthiopiawithChina
inonesideandwithGermanyontheotherside,willhelpustocomeuptotheconclusionof
whichoneiscurrentlymoreimportantforEthiopia'seconomicgrowthanddevelopmentandhow.
KeyWords:Developmentassistance,EffectivenessofAid,TechnicalandFinancial
Cooperation,

Acronyms
ACPAfrica,CaribbeanandPacificGroup
ADLIAgriculturalDevelopmentLedIndustrialization
AUAfricaUnion
BGRGeosciencesandNaturalResources
BMZMinistryforEconomicCooperationandDevelopment
CBGCapacityBuildinginGovernance
CDFCommunityDevelopmentFund
CIMCentrumfürinternationalMigrationundEntwicklung
DAADGermanyAcademicExchangeGroup
DEDGermanDevelopmentService
ECAEconomicCommissionforAfrica
ECBPEngineeringCapacityBuildingProgram
EPLFEritreanPeople'sLiberationFront
EPRDFEthiopia'sPeople'sRevolutionaryDemocraticFront
FLNNationalLiberationFront
FOCACForumonChinaAfricaCooperation
GmbHEntwicklunggemeinnützige(CapacityBuildingInternational,Germany).
GNPGrossNationalProduct
GOEGovernmentofEthiopia
Gtz(GIZ)GermanTechnicalCooperation
GTPGrowthandTransformationPlan
InWEntInternationaleWeiter-bildung(GermanyTrainingcooperation)
KfwGermanFinancialCooperation
GEQIPGeneralEducationQualityImprovementProgramme
MDGsMillenniumDevelopmentGoals
MEFFMacroEconomicExpenditureFramework
MoFECMinistryofFinanceandEconomicCooperation

MoARDMinistryofAgricultureandRuraldevelopment
MoCBMinistryofCapacityBuilding
NEPADNewPartnershipforAfricaDevelopment
NGONonGovernmentalOrganization
ODAOfficialDevelopmentAssistance
OECDOrganizationofEconomicCooperationandDevelopment
PASDEPPlanforAcceleratedandSustainedDevelopmenttoendPoverty
PBSProtectingBasicServices
PRCPeoplesRepublicofChina
PRSPPovertyReductionStrategyProgramme
PTBPhysikalisch-TechnischeBundesanstalt
RECRegionalEconomicCommunities
SDPRPSustainableDevelopmentandPovertyReduction
SIDASwedenInternationalDevelopmentAgency
SLMSustainableLandManagement
SNESpecialNeedsEducation
SUNSustainableUtilizationofNaturalResources
TCTechnicalCooperation
TDPTeachersDevelopmentProgramme
TVETTechnicalandVocationalEducationandTraining
UCBPUrbanCapacityBuildingProgramme
UGDPUrbanGovernanceandDevelopmentProgram
UNAIDSUnitedNationAIDs
UNDPUnitedNationsDevelopmentProgram
UNICEFUnitedNationsInternationalChildren’sFund
USAIDUnitedStatesAgencyforInternationalDevelopment
WASHWater,SewerageandHygiene
WHOWorldHealthOrganization
WSMWoredaSystemManagement
WTOWorldTradeOrganization

v
Tableofcontents
Acknowledgement…………………………………………………………………………………………i
Abstract……………………………………………………………………………………………………….ii
Acronyms……………………………………………………………………………………………………iii
I.Introduction……………………………………………………………………………………………..1
1.1.Background……………………………………………………………………………………………………………1
1.2StatementoftheProblem………………………………………………………………………………………….3
1.3ObjectivesoftheStudy…………………………………………………………………………………………….4
1.4.SignificanceoftheStudy…………………………………………………………………………………………5
1.5ScopeandLimitations………………………………………………………………………………………………6
1.6LiteratureReview…………………………………………………………………………………………………….7
1.7.ResearchMethodology………………………………………………………………………………………….11
1.8StructureoftheResearch………………………………………………………………………………………..12
ChapterTwo………………………………………………………………………………………………13
TheoreticalFramework………………………………………………………………………………13
2.1OverviewofInternationalRelationsTheories……………………………………………………………13
2.2OriginandDevelopmentofGapTheory…………………………………………………………………..17
ChapterThree……………………………………………………………………………………………22
Ethio-ChinaEconomicCooperation……………………………………………………………22
3.1BackgroundoftheRelation…………………………………………………………………………………….22
3.2China'sEconomicRelationtoEthiopia…………………………………………………………………….24
3.2.1BackgroundoftheChina-AfricaRelation………………………………………………………………24
3.2.2.TheBandungConference–AfricanandAsianNationsMeet;…………………………………24
3.2.3ChineseAidtoAfrica–aBriefHistoricalOutline…………………………………………………..25
3.2.4.TheFOCACMeetings………………………………………………………………………………………..27
3.2.5TheBeijingConsensus…………………………………………………………………………………………30

3.3Ethio-China'sEconomicCooperation………………………………………………………………………31
3.3.1.MajorFactorsoftheEthio-ChinaeconomicCooperation………………………………………..31
3.3.2.TradeandInvestmentRelations……………………………………………………………………………34
3.3.3BuildingInfrastructure…………………………………………………………………………………………35
ChapterFour……………………………………………………………………………………………..38
Ethio-EuropeEconomicCooperation…………………………………………………………38
4.1.Europe-AfricaRelation………………………………………………………………………………………….38
4.1.1.BackgroundoftheEurope-AfricaRelation……………………………………………………………38
4.1.2.EuropeancountriespoliciestowardsAfrica…………………………………………………………..39
4.1.3.China'sroletoAfricaanditsimpactonAfrica-EuropeRelations……………………………..43
4.2EthiopiaandEuropeCooperation…………………………………………………………………………….45
4.2.1.OverviewoftheRelation…………………………………………………………………………………….45
4.2.2.EuropeanEconomicRelationtoEthiopia………………………………………………………………46
4.2.3.Ethio-GermanyEconomicCooperation…………………………………………………………………52
4.2.3.1.Germany'spolicytowardsAfrica……………………………………………………………………….52
4.2.3.2.BackgroundoftheEthio-GermanyEconomicCooperation………………………………….54
ChapterFive………………………………………………………………………………………………66
ComparativeanalysisofChinaandGermanyassistancetoEthiopia…………..66
5.1.Developmentpolicies…………………………………………………………………………………………….66
5.1.1.China'sdevelopmentpolicy…………………………………………………………………………………66
5.1.2.Germany'sDevelopmentPolicy……………………………………………………………………………69
5.2.DevelopmentStrategiesoftheEthiopianGovernment………………………………………………73
5.3.AidEffectivenessandtheEthio-ChinaandEthio-Europeeconomicrelations……………..76
5.3.1ProceduresofthedevelopmentcooperationofGermany………………………………………….79
5.3.2China'sProcedure………………………………………………………………………………………………..81
5.4.TypesandModalitiesofAid…………………………………………………………………………………..82
5.4.1Typesofaid………………………………………………………………………………………………………..82
5.4.2.Modalitiesofaid………………………………………………………………………………………………..84
CONCLUSION…………………………………………………………………………………………………………..85
References………………………………………………………………………………………………………………….89

1
I.Introduction
1.1.Background
EthiopiaislocatedintheEasternPartofAfrica.IthasaborderwithEritreaintheNorth,with
SudanRepublicandSouthSudanintheWest,withKenyaintheSouthandSomaliaintheS.
EastandDjiboutiintheEast.Itisoneoftheoldestcountrieswhichhavemorethan100million
populations.Withregardtointernationalrelations,Ethiopiaistheoneofthefoundingmembers
oftheUNandtheAUandvariousinternationalorganizations.TheHeadQuartersofAU,ECA
anddifferentofficesofinternationalmissionsareinthecapitalAddisAbaba.
Initsdiplomaticrelations,EthiopiahaspoliticalrelationwithdifferentEuropean,Asia,Northern
andLatinAmerica,andAfricancountries.ThegreatpowersofEuropearethefirstcountriesto
establishtheirofficesinAddisacenturyago.Forexample,Italy,Britain,Germany,France,USA,
Belgium,arethosewhohavemorethan100yearsofdiplomaticrelationwithEthiopia.In
Economicrelationespeciallywithregardtodevelopmentassistance,Ethiopiaisthemain
receiverofbilateralandmultilateralassistances.InBilateralrelation,Ethiopiahasgotaidand
loanfromalmost30developmentpartners,amongthemtheEuropeancountsalargenumber.In
agewise,Europeancountriesaretheoldestonesthathavebegundevelopmentcooperationto
Ethiopiainthe1950s.
AmongtheEuropeancountriesGermanyistheleadingone.SinceGermanyisamemberofEU,
itscontributionthroughtheEuropeanUnionandothermultilateralinstitutionsissharingalarge
amount.Apartfromthis,throughthebilateralchannelGermanycontributedmuchtothe
developmentofEthiopia.GermanyhasbeenprovidingEthiopiawithsometechnicalassistance
asfaras1956;however,developmentcooperationbetweenthetwocountrieseffectivelybegan
in1964.
ThisdevelopmentcooperationhasbeenguidedandcoordinatedbyGovernment-to-Government
consultationandnegotiationmeetings.TheGermanGovernmentthroughitsMinistryfor
EconomicCo-operationandDevelopment(BMZ)establishedtwoorganizations,namelyKFW
andGTZ(currentlychangedtoGIZ)fortheimplementationofthebilateralprogrammes.Each

2
oftheorganizationhasitsowndutiesandresponsibilitiesandfollowsdifferentimplementation
procedures.
FinancialCooperation,whichiscarriedoutbyKFW,isaimedatfinancinginvestmentin
agriculture,industry,thedevelopmentofeconomicandsocialinfrastructureandenvironmental
andnaturalresourceprotection.ThetechnicalCooperation,whichisconductedbytheGerman
AgencyforInternationalCooperation(GTZ)isaimedatstrengtheningandenhancingthe
capacityandperformanceofhumanpoweraswellastheinstitutionsofarecipientcountryonthe
basisofjointcooperationprojects.Itinvolvestheassignmentoftechnicalpersonnel,trainingand
thesupplyoftechnicalequipment.Thedevelopmentcooperationofthetwocountriesasitwas
indicatedabovehavebeenguidedandcoordinatedbyGovernment-to-Governmentconsultation
andnegotiationmeetings.
RecentlytheAsiancountries,particularlyChina,Japan,S.KoreaandIndiaarecomingto
EthiopiaandtheyarecontributingalottotheCountry'sdevelopmentprojects.Especiallythe
Chineseinvestmentanddevelopmentassistanceisrapidlygrownandinmainareasitshowsits
partnershiptotheEthiopianpeopleandthegovernment.
ChinaandAfricastartedtheircontactaroundthefirstMillenniumA.D.thoughtheyare
separatedbyvastdistance(Filesi,1972:10).HoweverasAddisstated"theirrelationswerenot
officialasinthesecondhalfofthe20thcentury"(AddisDilenesa,2005:241)
TheEthio-Chinarelationhasgrownthroughtime.Currently,wecansaythatitsrelationisina
remarkablestage.ChinaisnowthemainpartnerforEthiopia’sdevelopmentendeavorsandbest
friendininternationalpoliticalforums.Atpresent,Ethiopiahasexemplaryrelationshipwith
China.ChinaisalsooneofthemainactorswhichaggressivelysupportEthiopia'ssocial
economicdevelopment.SofarbusinesswithChinahasbeenencouraging.Andthegovernment
believesthatChinasharesitsdevelopmentexperienceswithEthiopia.It'salsoprovidestechnical
supporttoenhanceEthiopia'sdevelopment.
Inadditiontothetradeandinvestmentrelationofthetwocountries,China’saidtothe
developmentprogrammes/projectsisbecominghigh.Accordingtotherecordeddataofthe

3
EthiopianGovernment,Chinaisnowthemaindonorthatcontributesahighvolumeofaid/loan
toEthiopia,comparedwiththeEuropeanandUSAfigures.(Source:MoFEC;2016)
ThepurposeofthisthesisisthereforetoshowtheeconomicrelationsofthetwowithEthiopia,
whicharetheEuropeancountriesononesideandChinaontheothersideandmakea
comparativeanalysisoftheirstrengthsandweaknesses.
Thethesismainlyfocusedoneconomicrelationsinceitisthemainforceofthecountry's
development.Therefore,theresearchisgearedtodevelopmentassistance,tradeandinvestment
cooperationthanthepoliticalones.SincetheEuropeancountriesintheirpoliciesandprocedures
havefollowedmoreorlesssimilarapproaches,asacasestudythepaperwilldealwiththe
Germanyassistance.Germanyischosenbecause,itisoneofthemajordonorsfromEuropean
countriesandithasmainlyinvolvedwithtechnicalassistanceorcapacitybuildingthantheassets
buildingorphysicalactivities.
Regardingtheaidmodalitiesespeciallywithreferencetoitseffectivenesstherearetwomain
arguments.Onegroupsaidtechnicalcooperationortransferringofknowledgeismoreeffective
forthereceiversthanbuildingroads,bridges,damsorothersandifthedevelopedcountries
(donorcountriesandorganizations)buildthecapacityofthelessdevelopedcountriesthelatter
bythemselvesplayedamajorroleforconstructingphysicalworksaswellasforestablishingofa
bettersystem.Ontheotherhandtheothergrouparguesthatthedevelopingcountrieslacksbasic
physicalandsocialinfrastructuresothatthemainassistanceshouldbeonbuildingofthe
infrastructures.Inthisregard,GermanywillbegoodexamplefortheformerargumentandChina
forthelatterone.Todocomparativeanalysisbetweenthesetwocountriesthuswillhelpusto
prooftheseargumentstoo.
1.2StatementoftheProblem
Asmanyofthescholarsagreeditisdifficulttomeasureanimmediateresultofaparticular
country'scontributionforagivencountryanditisamerefactthatbothGermany(Europein
general)andChinahaveprinttheirfeetontheeconomicdevelopmentofEthiopia.Itisalso
commonlyagreedthatEthiopiaisabeneficiaryfromthecountriesassistance,however,thereare

4
alsostillraisedalotofquestionsontherationalityofdevelopmentaidandinitseffectiveness
fromboththereceiveranddonorsides.
AsitismentionedintheabovepagesthisthesistriedtoexaminetheEthiopiaandChina
economicrelationaswellasEthiopiaandEuropeancountrieseconomicrelationstaking
Germany'scooperationascasestudy.Itmainlyfocusedonthestrongandweakpointsofthe
cooperationandcomparativelyanalyzedtheireffectiveness.Thoughitisobviousthatthe
relationshipofEthiopiawithChinaorwithGermanyhavetheirownadvantages,itmainly
analyzedwhichismoreusefulandadvantageoustothecountry(Ethiopia)andwhy?Sothe
researchquestionofthepaperis:WhatisthebenefitthatEthiopiagetsfromitsrelationwith
ChinaandwithGermany?How?ItalsoaskssinceGermanyistheoldestpartnersofEthiopia,
wastheeconomicrelationfruitfulwithcomparingofChina'sdevelopmentassistancewhichhas
only20yearsage(sincethemainFrameworkagreementwassignedon1997)?Ingeneralit
analysesthestrongpointsandweaknessesoftherelations.
Inadditiontothat,thereareargumentsontheaideffectivenessofthecountries.After50yearsof
deliveringeconomicassistance,nowadaystheworldstartedtoevaluateitseffectiveness,asa
resultoftheirassessment,thedonorsandreceiverscameupwithmajorprinciplesandguides.
TheParisDeclaration,TheAccra(Ghana)andBusan(S.Korea)PlanofActionsaretheresultof
thiscommonunderstanding,sothepaperaskedtowhatextenttheaidflowntoEthiopiaismore
effectiveandwhichoneismosteffectivetothecountryascomparingofChinaandGerman
developmentcooperation.
1.3ObjectivesoftheStudy
Onecouldn’tbeneglectthat,aidhasitsownaimfromthepointofviewsofthedonorsandthe
recipientcountries.Thedonorortherichcountriesbelievethatbysharingtheirwealthtothe
poorones,theycanhelpthelatter’stosolvetheireconomicbackwardness,consequentlythe
mostconduciveandpeacefulworldwillbecreated.Ontheotherhand,thedevelopingcountries
seeaidasoneofsupportinginstrumentsfortheirendeavortobeaprosperousanddevelop
countrieswhichstandontheirfootasequallevelasothers.

5
Aidisknownforthelast60yearsparticularlysincetheendofWWII,withsomeslightshiftof
concepts;however,asitisseenatthecurrentrealityofourglobe,thereisnosignificantchange
intheeconomicdevelopmentofthecountries.Therichonesarestillboostingtheirincomeand
becomericherwhilethebackwardstatesarestillremainingastheirbackwardnessandevensome
ofthemarebecomingpoorer.
Inshort,theeconomicassistanceofmostnationswillnotfulfillitsgoalandasweobserved
todaytheworldpeaceisstillinanutshell.Ethiopiaasoneofthedevelopingcountrycouldn’tbe
freefromthisentirephenomenon.Currentlythereareabove30bilateralandmultilateraldonors
(MoFEC,2016)whicharesupportingtheEthiopiandevelopmentendeavors.Sothatitishelpful
toseeinwhatextenttheserelationshaveassisteditsefforttoeradicatepovertyand
backwardnesswithareferenceoftheEthiopiaandGermanyandEthiopianandChina
cooperation.
TocoverthewholeassistanceofEuropeforthispaperisdifficultsothatitselectedGermanyas
casestudybecauseGermanyisoneofthemaindonoraswellasitistheoldestonefrom
Europeancountries.Moreover,theuniquenatureofGermany’saidtoEthiopiaistofillthe
knowledgeandcapacitygapofthelatterandtotransferknowledgethroughtechnical
cooperation.Togivefullnatureofdevelopmentcooperationitisveryimportanttocomparewith
othercountrysothatthepaperattemptedtomakeacomparativeanalysisforthetwo;Chinaand
Germany'sdevelopmentcooperationwithEthiopia.
TheobjectiveofthisstudyisthustoexaminethedevelopmentcooperationofEthiopiawiththe
abovementionedcountries,sincetheirmodalityofassistanceisdifferent,italsoassessthe
effectivenessofthetwowithrespectoftheirageasGermanyistheoldestpartnerwhileChinais
theyoungerone.
1.4.SignificanceoftheStudy
ItisbelievedthatthepaperhasitsownsignificancetotheongoingEthiopia'sdevelopment
cooperationwithEuropeancountriesandChina.Ononehanditattemptstoshowandanalyzethe
strengthsandweaknessesofthecooperation.Especiallyinourcaseitisimperativetodiscuss
howfarEthiopiaisusingtheforeignaid,particularlytowhatextenttheforeignresources

6
enteringtoEthiopiaisusefulforoveralldevelopment.SincethethesisfocusesonGermany’said
(mostlytechnicalones)andChina(whichisinvestmentones)itpinpointedthemajor
shortcomingsofthesemodalitiesandasfarasitsconcern,thepaperforwardeditsown
recommendationssoastosolvesomeoftheissues.
Asitismentionedinabovepagesnoonearguethataidisnotimportantnorcouldpossiblyputa
specialmeasurementtoshowoneformofaidisimportantthantheother.Ethiopiaalikemany
developingcountriesneedalltypeofassistancebutwhichoneismoreimportantforthe
country'soveralldevelopmentshouldbeassessed.Thereforethisthesisissignificantintheway
ofshowingtheEthiopia'sdevelopmentcooperationinlightofthetwodonors.
Aideffectivenessisalsotoday'smainagendaoftheworldsothatbasedontheprinciplesofwhat
theworldagreedontheaideffectivenessthethesisgivesitsowncontributionwhichonefulfills
themainprinciples.Itisalsoimportantinexaminingofthedonorscommitmentatvarious
forumstowhatextenthaveachievedandkeeptheirpromise.
Thestudyalsoexaminedthecurrenttheoriesandideasofforeignaid,amongthemithasgiven
moreemphasisforgaptheoryinwhichitarguesthatdevelopmentcooperationisoneoftheway
tocreateapeacefulworldbyeradicatingofpovertyandinequalityamongnations.Itis
significantinitsapproachofansweringsomeofthecommonargumentsofaidinour
globalizationera.Thisbyitselfwillbroadenthediscussionwhichistakingplacecurrentlywith
regardtoaidandothersubjects.Finally,thestudyindicatedideasforthesmoothimplementation
orundertakingoftheEthio-GermanyandEthio-China'sdevelopmentcooperationinfutureand
forthemaximumutilizationofEthiopiafromitsdevelopmentpartners.
1.5ScopeandLimitations
Asitismentionedabove,thisresearchonlyfocusesonthevariousprojectsandprogrammes
whicharetakingplacethroughoutthecountry.TheGermanyprojectschanneledthrough
Germanytechnicalcooperation(gtz)andGermanyfinancialcooperation(kfw).Nowadaysthere
arethreemainprojectssupportedbyGermany'scooperation.Theseinterventionsarewidein
naturewhichscatteredacrossthecountry.Thoughallofthesethreeprogrammeshave
similaritiesinpoliciesandprocedureshoweverthereareaofintervention,specificobjectivesand

7
thebeneficiariesarevary.Thisis,therefore;theresearchfocusedonmajorissuesratherthan
goingdeepineachspecificissues.
ForChinesecooperationalsotherearealotofinfrastructuresandtechnicalcooperation
supportedprojects,someoftheinfrastructureprojectsaresupportedthroughloans.Theprojects
similartoGermanys'projectsvaryintheirobjective,proceduresandtheirtargetedbeneficiaries
sothatthethesisforcedtolimiteditselfonlythegeneralissuesinsteadoffocusingthedetailand
specificones.
Formakingcomparisonbetweenthetwocooperation,italsoselectedthepolicyissues,therefore,
especiallyforthepurposeofstudyingaideffectivenessitfocusedontheareaoftheforeign
policiesofGermanyandChinatowardsdevelopingcountriesandthemodalitiestheyareusingto
channeltheirassistanceaswellastheimplementationproceduresofthecountries.Italsolimitto
studyonlyonthepointoftheEthiopia'sfiveyearplanwhichiscalledtheGrowthand
TransformationPlan(GTPII).ThePlanlistedtheprioritiesforthecountryandrequeststhe
donorstosupportthesepriorities,sohowfartheassistancesupportsfortheachievementof
Ethiopiainterestwillbeoneoftheissuesdiscussedinthispaper.
Theresearchbyitsnaturefacedsomelimitationsduetodifferentreasons.Thefirstandforemost
limitationissincetheresearchhasfocusedonthebilateralrelationsoftwogovernments,there
wereproblemsduetosomeofthedocumentsareconfidential.Asaresultitwasdifficulttoget
allnecessaryinformation.
SincethethesishasbeenconductedfarfromEthiopiaithasoccurredsomeproblemstodo
concreteresearchesandthesecondresourcesthataregovernmentdocumentsandpublications
maynotgivefullpictureoftheassistance.Asitismentionedabovethepaperisfocusingon
generalissuessothatitbyitselfwouldnotleadtogiveareasonableconclusionwithoutseeing
eachofthemseparately.
1.6LiteratureReview
Regardingeconomicrelationsingeneralandtheirdevelopmentaidinparticulartherearestill
variousargumentswhichdidn’tsolvecurrently.Themainargumentswouldbemostlyarisein

8
thematteroftheeffectivenessofaid.Somearguethataidhasgivenforthelast60-70years,
sincetheWWIIfromthedevelopedonestothedevelopingcountries,butthereisnosomuch
progressinthedevelopingcountries,eventhecurrentfactshowsthattherichcountriesare
becomingricherwhilethepoorarestillbeingpoorersoaidisnoteffectiveinallcircumstances.
Theothershoweverdon'tacceptthisargumentandforthemaidisoneofthetoolsforpullingout
thebackwardworldtobeaprosperousandforstabilizingoftheworldpeace.
Amongthetheoreticiansthereisalsonobasicagreementontheadvantageofaidmodalities,for
themtechnicalaidismoreimportantthaninvestmentaidwhileforothersitistheinvestmentaid
ismoreimportantthattechnicalaid.Someargueaidwhichflowninformofgrantismore
fruitfulthatthatofgettingintheformofloan.Thisisthusthethesiswillattempttoshowa
reviewofdifferentauthorswhocontributedtothewritingsoftheeffectiveaidmodalitiesthese
argumentsandsuggestitspossiblecommentsonthearguments
Asuccessfulaidprogrammerequiresmatchingoneormoreelementsofa
desirabledevelopmentstrategywithanappropriateaidstrategy,supported
bywelldesignedmodalitiesandeffectiveimplementation.Robinsonand
Tarp2000:13
The1990ssawtheemergenceofnewaidapproaches—especiallygeneralbudgetsupport(GBS),
sectorbudgetsupport(SBS)andpoolingfundarrangementsundertheSector-WideApproach
(Swap)alongwiththeintroductionofthePovertyReductionStrategyPaper(PRSP)andthe
relatedinstitutionalframeworks(suchasthePerformanceAssessmentFramework(PAF)andthe
Medium-TermExpenditureFramework(MTEF)).Theiremergenceisareactiontoovercomethe
weaknessesoftheexistingaidmodalities,typically'stand-alone'projectsandstructural
adjustmentoperations,especiallyinthesub-SaharanAfricancontext.However,theexperiences
withnewapproachesarestillrecent,andthereisacontinuingdebateontherelativemeritsof

9
differentaidmodalitiesandtherelevanceofnewaidapproachestotheotherregions,especially
inAsia.1
TheRomeDeclarationofHarmonization(February,2003)endorsedprinciplesofacountry-
basedapproach,consideringsuchfactorsascountryownership,governmentleadershipandthe
needtorecognizediverseaidmodalities.Whilesuchprinciplesarewidelyaccepted,practical
criteriaregardinghowtoapplygeneralprinciplesinthecountry-andsector-specificcontextis
yettobeestablished.
Morerecently,theWorldBank2004clarifieditsviewsontheuseofaidmodalitiesinthe
Africancontext,intheIDAStrategicFrameworkforAssistanceforAfrica.UKDFID2004
publishedapolicypaperonbudgetsupport(named"PovertyReductionBudgetSupport"),while
CanadianCIDACIDA2002,Lavergneetal.2003declareditspolicytoadopttheprogram-
basedapproach.Thus,weconsideritimportanttodeepenthesediscussionsandestablisha
commongroundforapplyingdifferentaidmodalities,takingaccountofcontextualfactors.
Againstsuchabackground,thispaperaimstoaddressthefollowing:
?Toprovideaconceptualframeworkfordecidingthechoiceofaidmodalities,basedonthe
countryandsector-specificcontext;
?Toclarifyfeaturesofrespectiveaidmodalitiesandshowexamplesofhowandunderwhat
conditionsspecificmodalitiesand/ortheirmixcanhelpaddressdevelopmentneedswhile
fosteringownershipofrecipientcountries;and
?Tosuggesthowdonorscaneffectivelyassistinachievingsustainablegrowthandpoverty
reductionbyproperlypracticingaid("gooddonorship")anddrawimplications.
Althoughthetopicofaidmodalityhasgainedpopularityintherecentaidliterature,itmostly
focusesonclarifyingconditionsforintroducingaspecificaidmodalityratherthanlookinginto
complementaritiesamongdifferentaidmodalities.Wearguethatitisnotrealistictoassumethat
1Anumberofstudiesareunderwayorhavebeenrecentlycompleted,toassessthecontributionofnewapproachestoaid
effectiveness.Theseinclude:twoGBSevaluabilitystudiesOPM2002,EuropeAidandODI2004whichprovidean
evaluationframeworkforjointOECD-DACevaluationofGBS,andjointevaluationofexternalsupporttobasiceducation
NetherlandsMOFA2003.DFIDhasalsoconductedastudyontheuseofdifferentaidinstrumentsintheAsiancontext.

10
asingleaidmodalitycanresolvealldevelopmentneedsinarecipientcountry.Moreover,the
relativeusefulnessofaparticularmodalitytotheothermaydifferbycountry.Therearemarked
countrydifferencesintherelativeweightofaidindevelopment-relatedactivities,whichcould
haveimportantimplicationsfortheextentofanimmediateneedforfinancialtransfer,the
volumeofaidtransaction,andthenatureofrecipient-donorrelationship.Thusitisnecessaryto
gobeyondtheologicaldebatesonwhichaidmodalityis"superior"or"progressive"overthe
others.Greatereffortsareneededtounderstandthefeaturesofrespectiveaidmodalitiesand
examinehowthey(ortheirappropriatemix)canenhancedevelopmenteffectiveness,withdue
attentiontothecountry-andsector-specificcircumstances.2
AseriesofstudiesWorldBank1998alsofindthataideffectivenesscriticallydependsonthe
institutionsandpoliciesofrecipientcountries.Furthermore,thefungibilityargumenthighlights
theimportanceofpolicypriorities,budgetallocationandmanagement.Thesefindingshave
contributedtoresolvingthe'micro-macroparadox':evenifaidiseffectiveattheprojectlevel,no
macroimpactcanbefound.RobinsonandTarp2000Forprojectstobeeffective,goodpolicy
andgoodinstitutionsarerequiredtobackthemup.
Therewaswidespreadfrustrationwith'stand-alone'projects,dueto:(i)coordinationfailure,with
anumberofaidprojectsbecomingdevelopmentenclaves;(ii)under-budgetingofrecurrent
expenditures,withdonor-drivenprojectsleadingtoinefficientpublicspending;(iii)high
transactioncostsofaiddelivery,withtheproliferationofaidprojects(oftenwithdifferent
reportingrequirementsandsometimeswithcompetingobjectives)imposingheavy
administrativeburdensonrecipientcountries;and(iv)paralleloff-budgetsystemsundermining
theeffectivenessofgovernmentsystemsandaccountability.
Particularlyinhighlyaid-dependentcountriesinsub-SaharanAfrica,itwasfeltthatdonor
projectswereincreasinglyisolatedfromlocalrealitiesandthattheywouldmakenoorrather
limitedsustainabledevelopmentimpact.Thesituationhadledtofurtherundermininglocal
2RomeDeclarationonHarmonization,attheHigh-LevelForumonHarmonizationheldonFebruary24-25,2003.3Theissuesonconditionalityarosecontroversyandweredebatedfromvariousaspects.Killick1997focusesonthedifficulties
ofproperlyenforcingconditionality,whileCollierandothers1997analyzehowtheimpositionofincreasingly
detailedconditionsmaycreateseriousincentiveproblems.
.

11
ownershipandcapacity,thusimpedingdevelopmentprogress.Andersen2000,Moselyand
Eeckhout2000
Thiswasalsothecasefortechnicalassistance(TA)projects.Inthe1990s,aseriesofcritical
reportsonTAwerepublished,includingtheBergReportBerg1993.Theirmaincriticismsare:
(i)supplydrivennatureofTA;(ii)excessiveemphasisontangible,measurableoutputas
opposedtoinstitutionaldevelopment;(iii)bypassingexistinggovernmentsystem;and(iv)
distortionsinthemarketforTA(generallyviewedasafreegood).Asaresult,recipientshave
littleincentivestodeclinetheresourcesoffered,buthaveverylittletosayintheultimateform
andgoalsoftheproject.Underthesecircumstances,TAprojectscaneasilyendupaddressing
lowpriorityneeds.TAproliferatesandsimultaneouslyundermineslocalcapacityandownership.
Arndt2000,IDCJandICNet2003
ThelimitationsoftheParisDeclarationarethatitdoeslittletotakeintoaccountthepolitical
realitiesofrecipientcountries(Booth,2011)and,byextension,theconstraintsunderwhich
donoragenciesoperate.Fordonorstobeeffectiveinpolicydialogue,theyshouldunderstandthe
geostrategicimportanceofthecountry;thestrengthofgovernment;whetherthestateisneo-
patrimonial,developmentalorboth;andthenatureandextentofdevelopmentalbottlenecks
(MolenaersandRenard,2011).Martensetal.(2002)exploreincentiveswithindonoragencies
andinsidepartnercountrygovernmentsandhowthesecanconstrainthesuccessofaidactivities
indifferentways.WithafocusonEUinstitutions,theyfindthatmultiplepoliticalprincipalsand
objectivescanresultinlessclearlydefinedobjectives.3
1.7.ResearchMethodology
ThepaperforthepurposeofconductingtheresearchoncomparativeanalysisoftheEthio-China
andEthio-Germanyeconomiccooperationusedthesecondaryresources.Therefore,itused
publishedbooksandun-publishedmaterials.Italsousedthegovernmentofficialdocuments
uploadedthroughthewebsitesoftheorganizations.TheResearcheruseditspersonalcontact
withtheconcerningexpertsandofficialsoftheEthiopiangovernmentofficeshasalsocollected
data,publicdocumentsandotherimportantinformation.
3MolenaersandRenard,2011.Martensetal.(2002)

12
ThisthesisisthereforetoshowedtheeconomiccooperationofthetwowithEthiopiawhichis
GermanyinonesideandChinainothersideandtomakecomparativeanalysisoftheirstrengths
andweaknesses.Germanyischosenbecause,itisoneofthemajordonorsfromEuropean
countriesandithasmainlyinvolvedwithtechnicalassistanceorcapacitybuildingthantheassets
buildingofphysicalactivitieslikechina.Regardingtheaidmodalitiesespeciallywithreference
toitseffectivenesstherearetwomainarguments.
1.8StructureoftheResearch
Thestructureofthepaperconsistsoffivemainchapters.Thefirstchapteristheintroduction.
wherethereaderisgiventheopportunitytodiscoverthepaper’sareaofresearchproblem,
purpose,significanceaswellaswhatmethodsusedduringtheresearch.Thesecondchapteris
discussedatthetheoreticalframeworkonwhichthisresearchbasedandthethirdchapter
comprisesoftheEthio-Chinaeconomiccooperation,backgroundoftherelationofthetwo
countries.Inchapterfour,thethesisdiscussestheEthio-Germanyeconomiccooperation,the
backgroundoftherelation,EuropedevelopmentassistancetoEthiopiaspecificallyGermany.
Whilethefinalchapteroftheresearchdiscussesoncomparativeanalysisofthetwowithregard
topolicyissues,modalitiesofassistance,quantityandqualityofassistanceandaideffectiveness
attheendtheconclusionssumupoftheresearchthathasbeenconducted,frombotha
theoreticalandempiricalpointofview.

13
ChapterTwo
TheoreticalFramework
2.1OverviewofInternationalRelationsTheories
Therearedifferentscholarswhoviewedinternationalrelationsfromvarioustheoretical
perspectives,amongthemtheRealists,LiberalistsandMarxistsarethemainones,thoughthere
areothertheories,ononewayortheothertheyarerelatedtothesemaintheories.
Realismbelievesthattheworldviewitpresentsrepresentstherealityofinternationalpolitics
datingbackatleasttothetimeoftheGreekhistorianThucydides(5thcenturyBC).Statesarethe
mainactorsinrealism.Asmostrealistsbelievedbasedonaverynegativeandunchanging
conceptionofhumannature(BADHUMANNATURE),theywanttosurvive,willseekto
accumulatewealth,andforcetoenablethemtosurvive.Notatraceofgoodoraltruismin
peopleorstates.Onlyactintheirownself-interest.(Holsti:1985:56)
Therefore,basedonthisanalysisrealistsingeneralseeworldpoliticsasSELF-HELPsystem;
statesasthemainactoroftheworldpoliticsdowhattheylikeinaharshsystemstateofnature.
Sincepoliticsinvolvesastruggleforpowerbetweenstatesinordertopursuitoftheirnational
interest,itisalsoneededforthesurvivalandprotectionofsovereigntyaswellasforfreedomof
action.Diplomacycanhelpasoneoftheinstrumentsforgainingastate'sobjective,butthere
mustbemilitaryforce/war.(Ibid:1985:58)4
“Thucydides,Machiavelli,Hobbesandindeedallclassicalrealists,sharethat
viewtoaGreaterorletterextent.Theybelievethatthegoalofpowerthemeans
4Diplomacycanhelpasoneoftheinstrumentsforgainingastate'sobjective,buttheremustbemilitaryforce/war.(Ibid:1985:
58)

14
ofpowerandtheusesofpowerareacentralpreoccupationofPoliticalactivity:
internationalpoliticsisthusportrayedas-aboveallelse.'Powerpolitics':an
arenaofrivalry,conflictandwarbetweenstatesinwhichthesamebasic
problemsofdefendingthenationalinterestandensuringthecontinuedsurvival
ofthestaterepeatthemselvesoverandoveragain.”(JacksonandSorenson:
2007:61)
AsopposedtotheRealisttheorythereareotherschooloftaughtwhichareexplainingtheworld
intheirapproachamongthemespeciallytheLiberalandMarxismapproacharethedominant
ones,thelatterisalsocalledWorldSystemsorDependencytheory."Thesemodelschallenge
boththewar/peaceandstate-centeredfeaturesofrealism,buttheydosoinwaysthatdiffer
sharplybetweenthemselvestoo.Ratherthanfocusingonwarandpeace,Marxistsdirect
attentiontoquitedifferentissues,includingunevendevelopment,poverty,andexploitation
withinandbetweennations."(Ibid:1985:13)
Forthesetheoriesinsteadofstates,classesandkeygroupsplaymajorrole.AsImmanuel
Wallerstestatesit,”inthenineteenthandtwentiethcenturiestherehasbeenonlyoneworld
systeminexistence,theworldcapitalistworldeconomy."(Wallerstein,1974:390)Forhim,the
“worldcapitalistsystem"ischaracterizedbyahighlyunequaldivisionoflaborbetweenthe
peripheryandcore.Thoseattheperipheryareessentiallythedrawersofwaterandthehewersof
woodwhereasthelatterappropriatethesurplusoftheentireworldeconomy.Thererelationship
isalsocharacterizedastheformersaredependentonthelatterinwhichitwouldnotbebroken
easilysincethedependencyismuchmorecritical.(Ibid:1974:390)
Marxistmodelshavebeensubjectedtotrenchantcritiques.Thestate,nationalism,security
dilemmas,andrelatedconcernsareatthetheoreticalperipheryratherthanatthecore.
“Capitalismwasfromthebeginninganaffairoftheworld-economy,"Wallersteinasserts,”notof

15
nation-states."AvirtueofmanyMarxisttheoriesisthattheytakealonghistoricalperspectiveon
worldaffairsratherthanmerelyfocusingoncontemporaryissues.(Wallerstein:1974:391)5
Althoughthetheoriesdescribedtothispointtendedtodominatedebatesduringthepastcentury,
“constructivism”hasrecentlyemergedasasignificantapproachtoworldpolitics.
Constructivismisdifferfromothertheoriesinwhichunlikemany”post-modernists”,theywork
withinthetheoreticalandepistemologicalpremisesofthesocialsciences,andtheygenerally
seektoexpandratherthanunderminethepurviewofothertheoreticalperspectives.Intheir
emphasisontheconstructionofsocialreality,itsproponentschallengethematerialistbasisof
theapproachesdiscussedabove.Becausethesocialgivesmeaningtothematerial,manycore
concepts,includinganarchy,power,nationalinterest,securitydilemma,andothers,areseenas
sociallyconstructedratherthanastheineluctableconsequencesofsystemstructures.Moreover,
interestsandidentities–forexample,thosewhoaredesignatedas”allies”or”enemies”–arealso
socialconstructs,theproductsofhumanagency,ratherthanstructurallydetermined.Thetitleof
awidely-citedworkbyAlexanderWendt,”AnarchyisWhatStatesMakeofIt,”provides
somethingoftheflavoroftheconstructionistperspective.Wendtshowsthatbecauseanarchycan
havemultiplemeaningsfordifferentactors,itmaygiverisetoawiderrangeofbehaviorsthan
postulatedbyrealism(AlexanderWendt,'AnarchyisWhatStatesMakeofIt',International
Organization,46,2,Spring1992:391-425.quotedbyHolsti:1985:19)
Constructivisttheorydoesn'tacceptthebasicassumptionofneo-realisttheorythatthestateof
anarchyisastructuralconditioninherentinthesystemofstates.Insteaditarguesthat'Anarchy
iswhatstatesmakeofit'.Fortheconstructivistsanarchyisaconditionofthesystemofstates
becausetheychoosetomakeitso.InthisregardBeavessaysthat;6
5″Capitalismwasfromthebeginninganaffairoftheworld-economy,"Wallersteinasserts,”notofnation-states."Avirtueof
manyMarxisttheoriesisthattheytakealonghistoricalperspectiveonworldaffairsratherthanmerelyfocusingon
contemporaryissues.(Wallerstein:1974:391)6AlexanderWendt,'AnarchyisWhatStatesMakeofIt',InternationalOrganization,46,2,Spring1992:391-425.quotedby
Holsti:1985:19)

16
"Anarchyistheresultofaprocessthatconstructstherulesornormsthat
governtheinteractionofstates.Theconditionofthesystemofstatestodayas
self-helpersinthemidstofanarchyisaresultoftheprocessbywhichstatesand
thesystemofstateswasconstructed.Itisnotaninherentfactofstate-to-state
relations.Thus,constructivisttheoryholdsthatitispossibletochangethe
anarchicnatureofthesystemofstates."(Beavis:2012:20)
Theconstructivistapproachisofrelativelyrecentvintage,butitbearsconsiderableresemblance
tothevenerablesocialsciencedictumthatweallperceiveourenvironmentthroughthelensesof
beliefsystems,andthusthat,”Itiswhatwethinktheworldislike,notwhatitisreallylike,that
determinesourbehavior.”(KennethBoulding,”NationalImagesandInternationalSystems,”
JournalofConflictResolution3(June1959;120).
Overalltheabovementionedtheoriesandothershaveseentheworldattheirview.Exploration
oftherelationshipbetweenpower,knowledgeandthecreationofdiscoursesinvolvesa
politicizationanddeconstructionoftheseconcepts.Regardingtheunequaldistributionofthe
worldwealthandthemysteryofthericherandthepoorercountriestobereachandpoorisalso
thetheorieshaveputtheirpremises.
Amongthesetheoriesthereisamajoronewhichseestheworldrelationasfillingofthefinancial
andtechnicalgapofthedevelopingonesfromthevoluntarilysharingofthedevelopedones
pocket.Forthistheorytheworldisdividedintotwo,theonewhohaveandtheonewhohave
not,inshorttherich/developedcountriesandthepoor/developingcountries.Aid/Loanor
developmentassistanceisthusaninstrumentoffillingthegapoftheformerfromthelatterby
creatingamutualrelation.Indeedinthisregardalsowecanraisefewquestionssuchas:howhas
thedevelopment/aiddiscoursebeencreated?Whatareitsclaimstolegitimacybasedon?
Throughwhatprocessesdoesitdeconstructandnormalizeitssubjects?Inwhatwaysdothese
processesexcludeothernarratives?Fortreatingoftheseissues,therefore,itwillbeimportantto
examinetheGaptheoryasrelatedtoaidordevelopmentcooperationinthesubsequentsub-
Chapter.

17
2.2OriginandDevelopmentofGapTheory
Aid(alsoknownasinternationalaid,overseasaid,orforeignaid,)isavoluntarytransferof
resourcesfromonecountrytoanother,givenatleastpartlywiththeobjectiveofbenefitingthe
recipientcountry(OECD,2006).Itmayhaveotherfunctionsaswell:Aidcanbegiventoshow
theadiplomaticapproval,ortostrengthenmilitaryfriendshiportorewardgovernmentsbehavior
whichislikedbydonors.Inadditiontothatithasanaimtoextenddonorscultural,ideological
influenceaswellastoprovideinfrastructureneededbydonorforextractionofresources.
FormerUSAIDofficial,CarolLancaster,inherbookForeignAid(2007)definesforeignaidas:
"avoluntarytransferofpublicresources,fromagovernmenttoanotherindependentgovernment,
toanNGO,ortoaninternationalorganization(suchastheWorldBankortheUNDevelopment
Program)withatleasta25percentgrantelement,onegoalofwhichistobetterthehuman
conditioninthecountryreceivingtheaid."(Lancaster,2007:9)7
Aidisnotarecentphenomenon.Ashistoryprovessomeprivateaidflowedfromwestern
countriesasaformofmissionaryschools.In19thandearly20thC,aidgivenfromgovernment
sourceswasverysmallcomparingfromnow.However,afterWWII,inthecontextsofEuropean
reconstruction,decolonization,andcoldwarespeciallyfortheinfluencingofcoldwaraidhas
expandedallovertheworld.Withregardtoaidthereisalsoaconceptcalleddisbursement."Aid
isoftenpledgedatonepointintime,butdisbursements(financialtransfers)mightnotarrive
untillater.Aidinvolvesthetransferoftechnologyandknow-how,notjustfunds.Policyadvice,
andtrainingandeducationprogramscanspreadnewwaysofthinkingaboutgoverningand
management.”(Goldsmith,2001:10)
Therearealsodifferenttypesofaidsamongthem;Developmentaidordevelopmentcooperation
(alsodevelopmentassistance,technicalassistance,internationalaid,overseasaidorforeignaid)
isonetypeofaidgivenbygovernmentsandotheragenciestosupporttheeconomic,socialand
politicaldevelopmentofdevelopingcountries.Developmentaidismainlydistinguishedfrom
humanitarianaidwhichisitisaimedforalleviationofpovertyinthelongterm,ratherthan
alleviatingsufferingintheshortterm.Thetermdevelopmentcooperation,whichisused,for
7CarolLancaster,ForeignAid,2007;9)

18
example,bytheWorldHealthOrganization(WHO)(WHO:2009)partnershipshouldexist
betweendonorandrecipient,ratherthanthetraditionalsituationinwhichtherelationshipwas
dominatedbythewealthandspecializedknowledgeofoneside.Mostdevelopmentaidcomes
fromtheWesternindustrializedcountriesbutsomepoorercountriesalsocontributeaid.Aidmay
bebilateral:givenfromonecountrydirectlytoanother;oritmaybemultilateral:givenbythe
donorcountrytoaninternationalorganizationsuchastheWorldBankortheUnitedNations
Agencies(UNDP,UNICEF,UNAIDS,etc.)whichthendistributesitamongthedeveloping
countries.Theproportioniscurrentlyabout70%bilateral30%multilateral(OECD,2009)
Donorshavejustifiedaidwithvarioustheoriesandpoliticalmotivations,amongthem,Gap
theoryisthemainones."Thistheoryassumesthatpoorcountriesaretrappedinaviciouscycle
ofpovertybecausetheyareunabletosaveandhencehaveinsufficientcapitaltoinvestin
growth-promoting,productivity-enhancingactivities"(Erixon,2001:3).
Asantelistssomespecificmotivesadonormayhaveforgivingaid:defensesupport,market
expansion,foreigninvestment,missionaryenterprise,culturalextension.(Asante,1985:249)On
theimportanceofaidhoweverstillthereisadebate;ononesidethepeoplearguedthatitisnot
effective:i.e.,itdidnotdowhatitwasintendedtodoorhelpthepeopleitwasintendedtohelp.
Thisisessentiallyaneconomiccriticismofaid.Thetwotypesofcriticismarenotentirely
separate:criticsoftheideologybehindapieceofaidarelikelytoseeitasineffective;andindeed,
ineffectivenessmustimplysomeflawsintheideology.Statisticalstudieshaveproducedwidely
differingassessmentsofthecorrelationbetweenaidandeconomicgrowth,andnofirm
consensushasemergedtosuggestthatforeignaidgenerallydoesboostgrowth.8
Somestudiesfindapositivecorrelation,butothersfindeithernocorrelationoranegative
correlation.InthecaseofAfrica,Asante(1985)givesthefollowingassessment;
SumminguptheexperienceofAfricancountriesbothatthenationalandatthe
regionallevelsitisnoexaggerationtosuggestthat,onbalance,foreignassistance,
especiallyforeigncapitalism,hasbeensomewhatdeleterioustoAfrican
8Asante,1985:249)motivesadonormayhaveforgivingaid:defensesupport,marketexpansion,foreigninvestment,
missionaryenterprise,culturalextension

19
development.Itmustbeadmitted,however,thatthepatternofdevelopmentis
complexandtheeffectuponitofforeignassistanceisstillnotclearlydetermined.
Butthelimitedevidenceavailablesuggeststhattheforms,inwhichforeign
resourceshavebeenextendedtoAfricaoverthepasttwentyfiveyears,insofaras
theyareconcernedwitheconomicdevelopment,are,toagreatextent,
counterproductive(ibid,1985:251)
Aideffectivenessisoneofasubjectwhichhassignificantdisagreementamongthescholars.
AccordingtoEasterley,fewscholarssuchasPeterBauerandMiltonFriedmanarguedinthe
1960sthataidisineffective.Manyeconometricstudiesinrecentyearshavesupportedtheview
thatdevelopmentaidhasnoeffectonthespeedwithwhichcountriesdevelop.Thereisalso
happenedanegativesideeffectsofaidwhichincludeanunbalancedappreciationofthe
recipient'scurrencycommonlyknownasDutchDiseaseaswellasitalsohelpsforthe
increasingofcorruption.(Easterley,2002:49).9
Anotherargumenthasbeenthat"Westerncountriesoftenprojecttheirownneedsandsolutions
ontoothersocietiesandcultures.Inresponse,westernhelpinsomecaseshasbecomemore
'endogenous',whichmeansthatneedsaswellassolutionsarebeingdevisedinaccordancewith
localcultures"(Heller,2008:5).Thereisalsoanargumentthataidinaformofdirectdonation
createsdependency.Forthisreasonnowadaysthereisashifttoactivationoflocalassetsand
creationofmicrocredits.Foryoungrecipientcountriesaidhasalsoineffectivebecauseofethnic
tensionsarestrong;theethnicconflictshavepreventedefficiencydeliveryofaid.Thereisalsoa
problemonhowdevelopmentprojectsaresometimesconstructedandhowtheyaremaintained
bythelocalpopulation.Often,someoftheprojectsareconstructedbyhighertechnologywhich
can'tbemanagedandunderstandbylocalpopulation.Afterthecompletionoftheprojectto
repairandtoeffectivelyadministerisalsoaproblem.(Gestrand,2008;54).
Thereisalsoacriticismwithrelationtoconditionality."Intheexampleoftiedaid,donor
countriesoftenrequiretherecipienttopurchasegoodsandservicesfromthedonor,evenifthese
arecheaperelsewhere.Otherconditionsincludeopeningupthecountrytoforeigninvestment,
9Easterley,TheCartelofGoodIntentions:Bureaucracyversusmarketsinforeign
aid2002:49

20
evenifitmightnotbereadytodoso"(GlobalIssues,2007).Becauseofalltheseproblemsitis
believedthataverylargeamountofaidissimplywasteduseleseely.Forinstance,for
Netherlandsonly33%ofthedevelopmentaidissuccessfulwhileanother33%failsandofthe
remaining33%itseffectisnotknownexactly.ThismeansthatforexamplefortheNetherlands,
1.33to2.66billionislostasitspends4billionintotalofdevelopmentaid(or0.8%ofthegross
nationalproduct).(Gestrand,2008;)
OnaidEffectiveness,Africaisoftencitedasthemainplacewhereforeignaidhasnegatively
impacteditspoliticalactivitiestoo."Africais"aiddependent"inthesensethatfewofitsstates
cancarryonroutinefunctionsordeliverbasicpublicserviceswithoutexternalfundingand
expertise(Arthur,2001,35).Itisalsoundeniablefactthatforeignaidhascreatedanegatice
influenceonotherhandthereisanimprovementinthequalityofgovernmentthrough
democratization,civilservicereform,andotheractivities.
Aiddependencycannotbequantifiedexactlyforallcountries,butareasonablecutoffpointis10
percentofgrossnationalproduct(GNP)(Ibid,2001:41).ThereforeforanycountryifODA
representsmorethan10%ofitsnationalincomeitssovereigntyisquestionable.FromAfrican
states,in1975-79,seventeenofthemmeanannualODAwasover10percentofGNP.Intheyear
From1980-89,25countrieswereinthisheavilyaid-dependentcategorywhileduring1990-97,
therewerethirty-oneAfricanaidrecipientswhoseODAaveragedmorethan10percentofGNP
(Ibid,2001:43-44).Thesecountriescountsome365millionpeople,orclosetotwo-thirdsofthe
sub-Saharanpopulation.Mostoftheforeignaidprojectsarealsorunbyexpatriates.Accordingto
arecentUNstudy,almostfortythousandforeignersareservingasforeigntechnicalpersonnelin
theseprojects.(MarkMalloch:2002:17).10
Giventheseobservations,wecancometoourconclusionthataidmayhelpthedeveloping
countriestofilltheirfinancialandtechnicalgap,however,withouttheproperuseofit,itmay
alsohasanegativeeffectinmanyways,startingfromcreatingdependencyuptoexploitationof
thenaturalresourcesoftherecipientcountries.Basedonthisbasicideahencethisresearch
10ODA,Africanaidrecipients,2001:43-44

21
examinedtowhatextentEthiopiaismakingadvantagefromChinaandGermany’seconomic
cooperationinthefollowingchapters.

22
ChapterThree
Ethio-ChinaEconomicCooperation
3.1BackgroundoftheRelation
TheEthio-Chinarelationhasgrownthroughtime.ChinaisnowthemainpartnerforEthiopia’s
developmentendeavorsandbestfriendininternationalpoliticalforums.Atpresent,Ethiopiahas
exemplaryrelationshipwithChina.ItisalsosupportEthiopia'ssocio-economicdevelopment
endeavorsandbusinesswithChinahasalsobeenencouraging.Asthegovernmentbelieves
ChinasharesitsdevelopmentexperienceswithEthiopia.It'salsoprovidestechnicalsupportto
enhanceEthiopia'sdevelopment.Furthermore,Chinarepeatedlyshowsitsbasiccommitmentto
supportEthiopiainthepoliticalanddiplomaticfieldstoo.
China'srelationshiptoEthiopiaisnotsomuchlongcomparingtoothers,asGemorawsaidthe
firstcontactbetweenthemcanbestartedduringChinesedelegationsvisitedEthiopia,Sudanand
otherAfricancountriesin1956and1957."Inthenearpast,theAsian-AfricanBandung
conferenceofApril18-25,1955hadgreateffectontheestablishmentofmoderndiplomatic
relationsbetweenChinaandtheAfricancountries.Attheconference,therewererepresentatives
fromLiberia,SouthAfrica,Libya,Egypt,SudanandEthiopiaSubsequently;Chinesedelegations
visitedEthiopia,SudanandotherAfricancountriesin1956and1957.ThethenChinesepremier,
ChonEnLaialsovisitedanumberofAfricancountriesin1963and1964includingEthiopia
fromJanuary30toFebruary1,1964."(Gemorawe:2008:2).11
However,afterthevisit,Ethiopiadidnotestablishdiplomaticrelationsbecauseofthefollowing
mainreasons:first,EthiopiawasunderHaileselassiewhoisconservativefeudalemperorandhe
fearedthatcommunistideologynottodisseminateinthecountrythroughChinesediplomats
whocametothecountry,thesecondreasonis,theregimewaswest-orientedandhadaclose
relationwithUSA.Third;ChinawassupportingtheEPLF(EritreanPeople'sLiberationFront)
morallyandmaterially,whichwasfoughtagainsttheEthiopiangovernment(Abir,1974:131).
11Gemorawe:2008:2

23
Lateron,EthiopiaandChinaestablisheddiplomaticrelationsonDecember1,1970.Therelation
tilltheeruptionofthePopularrevolutioninEthiopiawasgoodandthetwocountrieshave
passedtheirhoneymoonbeautifullywhichcontinueevenaftertheEthiopianrevolution.The
changeofgovernmentinEthiopiawhichisthedemiseoftheEmperorin1974madesignificant
changestothetworelations.Thesuccessorwhichisamilitarygovernmenthasmadevarious
actionstoimproveitsrelationswithchina.Therefore,inthefirsttwoyearshighofficialsofthe
MilitarycouncilhasvisitedChinaandfewbatchesoftheofficialswenttoChinaforideology
studiesandothertrainingssincetheMilitarycouncilhasalreadydeclaredthatitsgovernment
ideologyisSocialism.Itsrelationhoweverdidn’tcontinueafter1977becauseofthemilitary
governmentrelationwithUSSR.(AddisDilnesa,2005:245).12
During1991,theruleoftheMilitarygovernmenthascometoanendandsubstitutedbythe
EthiopianPeople'sRevolutionaryDemocraticFront(EPRDF)whichcameafter17yearsofcivil
conflictagainstMilitarygovernment.Thenewgovernmenthassetouttodeliverdemocracy,and
transformtheEthiopianpoliticalsystembasedonfederalsystem.Itsforeignpolicyalsodictated
forpeacefulco-existenceandforfreemarketeconomy.Thistimecoincidewiththeendofthe
coldwarandastartingofnewworldorderwhichheraldedtheendofcompetingideological
divisionsoftheworldwhichhasbeencharacterizedbypromotionofhumanrights,good
governance,democratizationandexpandingtheworldeconomythroughfreetrade(Hendorson,
1998:51).
InpartofChina,ithasalsodirecteditsattentionmoretoeconomicandtosomeextentpolitical
aspectsanddevelopedbilateralrelationswithEthiopiaandmanyAfricancountriesinanall
roundway.Accordingly,ChineseactivityinEthiopiahasincreasedveryfastfromyeartoyear
andasweseeninsubsequentchaptersChinaisnowabestfriendoftheEthiopiagovernmentand
theEthiopianinallaspects.
12AddisDilnesa,ChinacomestoAfrica,(2005;245)

24
3.2China'sEconomicRelationtoEthiopia
3.2.1BackgroundoftheChina-AfricaRelation
BeforedealingwiththeEthio-ChineseEconomicrelation,itwillbemoreimportantand
advantageoustodiscusstheoverallrelationofChinatoAfricaasfollows.
ThehistoryofChina-Africarelationmainlytracedbacktothe15thC.Duringthistimebythe
sponsorshipofYongleEmperorofChina(reigned1403-1424),thethirdemperorofMing
Dynasty,conductsevennavalexpeditionsintheperiodof1405-1433.(TheEncyclopediaof
WorldHistory:2007)ThesenavalexpeditionputChinaastheworld'stopnavalpower,
accordingly,thefleetlandedinmorethanfortycountries.Amongthese,easternAfricawasone
ofthemwhichhelpedinitsfourthvoyagebetween1413-1415thediplomaticandtrading
relationstobestartedbetweenChinaandtheAfricancontinent.(TimeMagazineAsiaEdition:
Dec.2007:3)13
3.2.2.TheBandungConference–AfricanandAsianNationsMeet;
FormoderntimesrelationsofAfricaandChina,aconferencewhichistakenplaceinBandung,
Indonesia,in1955,willbementionedasamainremarkingtimesinceduringthistimea29
AfricancountriesandChina'srepresentativeheldameeting.Thisconferencecouldhelpto
remarkthebeginningofChineseappreciationofitsroleofthethirdworldwithregardto
combatingadversariesandgaininginternationalrecognition.Theconferencehadbeentaken
placeintheaimofpromotingeconomicandculturalcooperation.(Delman,Jørgen:2007slide
3).TheothermainachievementoftheconferencewasalsoChinaintroduceditsFivePrinciples
offoreignrelations.14
TheseFiveCorePrinciplesarealsoknownasTheFivePrinciplesofPeacefulCoexistence.
TheseprinciplesoriginallycameintoexistenceduetotheIndiaandChina'sagreementsforthe
avoidanceoftheirconflictswhichroseduetoTibetin1951.Therefore,theydiscussedalotina
13TimeMagazineAsiaEdition:Dec.2007:3,diplomaticandtradingrelationstobestartedbetweenChinaandtheAfrican
continent.
14Delman,Jørgen,2007,slide3

25
wayofavoidingfurtherconflictsandtofindapossiblesolutionsinfutureandfinallytheydrew
uptheFivePrinciplesofPeacefulCoexistencein1954whichare:
1.Mutualrespectforeachother'sterritorialintegrityandsovereignty
2.Mutualnon-aggression
3.Mutualnon-interferenceineachother'sinternalaffairs
4.Equalityandmutualbenefit
5.Peacefulco-existence
3.2.3ChineseAidtoAfrica–aBriefHistoricalOutline
WecanseeChina'saidtoAfricarelationsbydividingwiththemainphases.Thefirstphaseof
China’saidtoAfricacanbesaidtohavebegunfromthemid1950sto1979.Duringthisperiod,
ChinagaveaidtoAfricaasaninstrumentofsupportingsocialistcountriesandliberation
movements.MainlyminimizationofMoscow'sinfluenceandnotgivingrecognitionofTaiwan
asasovereigncountry,byAfricancountriesplayamajorplace.(Kragelund,Peter;2007,slide
3)15
China’spolicywasalsoleadtorecognisethoseAfricanstatesthathadachievedindependence,
andencouragingandsupportingofAfricanliberationstrugglesinprogress.Chinaannouncedits
eightprinciplesofEconomicandTechnicalaidinGhanain1964wherebyitsroleinAfrica's
washighlystressed.WiththeExpansionofChina'scontacttoAfricathroughaidsothatbythe
endof1965,seventeenofthe38AfricanstateshadrecognisedChina(comparedtofourteenwho
continueddiplomaticrelationswithTaiwan),andchinahasfurthercontinueditslinkageswithat
leastadozenAfricanliberationmovements.
From1975-1978ChineseaidprojectsinAfricawereseeninthelightindustry,agriculture,
healthandtransport.Tomentiononeoftheprojectsis;constructionoftheTAZARARailway
whichwasakeyprojectfinancedandexecutedbyChina.Theconstructionoftherailwaywas
startedin1970andoperationcommencedsixyearslater.Atthattime,itwasthelargestforeign-
aidprojecteverundertakenbyChina.TherailwaywasalsoservedthelandlockedZambiaand
eliminateitsdependencyonformerRohodesiaandSouthAfrica.
15Kragelund,Peter;ThepotentialroleofNon-traditionalDonors'inAfrica,2007.

26
ThesecondphaseofChina’saidtoAfricacanbesaidtobefrom1979-1989.Themainfeatureof
thisrelationwas;ChineseaidwasheavilycutdownduetochangingrelationswithMoscowand
Washington,aninternalreorganisationoftheChineseeconomywhichwasalsoailing.Theyare
nowfocusingonmutualbenefitsandeconomicsustainability.During1988,onlythirteenAfrican
countriesreceivedChineseaid.(Kragelund,Peter;2007;op.cit.slide5)16
BeforetheBandungConferencein1955,therelationshipbetweenChinaandAfricawaslimited.
Sincetheconferencedeclaredthatitrespectssovereignty,non-interferenceininternalaffairsof
othernations,economicalandtechnicalcooperation,mutualbenefit,theneedsandrightsof
developingcountries(includinginvestmentandthestabilisationofprimaryproductprices),as
wellaspeacefulcoexistenceamongallstates,bothsidesagreedtostarttheirnewchapterswith
mutualbenefitofeachothers.Inreturn,theconferenceresultedforthenewshapeofAfricaand
itswesternalliesandUSSRcontactalso.(Mawdsley,Emma;2007;op.cit.p.408)
Inadditiontoitseconomicaid,theChineseideologicalcommitmenttoAfricawasexpressedin
themodestaimsofsupportinganti-colonialliberationmovementssuchastheNational
LiberationFront(FLN)inAlgeriaandalsoinassertingofthenewlyindependentAfricanstates
economicandpoliticalautonomy.Theforeignpolicyrelationswerealsotacticallydrivenbythe
needtocreatealliesinordertosecurethemorefledgingPeoplesRepublicofChina.Italso
gearedtowardstodisplacetheTaiwan-based”RepublicofChina”attheUNwhichitfinally
achievedin1971where26ofthe76votesinthePRC’sfavourcamefromAfricancountries.
BesidesthatChinaalsomovedinthelongruntoencouragesocialrevolutionandspreadofits
ideologytoAfricaasopposedofcolonisedandwesternideology.(Ibidp.408)17
China'seconomicrelationmostlyexpressedthroughtechnicalcooperation(doctors,nurses,
agriculturalistsandengineers),educationalscholarships,diplomatictiesanddelegations,thisis
becauseofChineseeconomicweaknessanditsowndomesticdemandsforinvestments.But
otherkindsofassistancesuchasmilitaryequipmentandinfrastructuraldevelopment(e.g.the
TAZARARailway)werealsogiven.ThereisalsoofferedloanandgrantstoAfricansbutitwas
smallamountwhencomparingittootherdonors.(Ibidp.409)
16Kragelund,Peter;ThepotentialroleofNon-traditionalDonors'inAfrica,200717Ibidp.408

27
AsstatedbyM.B.Yahuda,”inadditiontoconsistinglargelyofintermediatetechnology,all
Chineseaidprojectsweregivenwithout’strings’,andsince1964withoutinterest”.(Yahuda,
M.B.(1978),p.409)Ashealsofatherlynotedthat,theywerepaidatthelocalrates,theytrained
theirlocalequivalentswiththeaimofleavingtheprojects,sothattheycouldbelocallymanaged,
operatedandmaintained,andtherebysparepartscouldbelocallyproduced.(Ibid,(1978),p.409)
18
WithregardtoAfricainresponsetoChineserelation,thereisalsoshownvariouspoliticaland
ideologicaldispositions,situationsandpreferencesamongtheAfricastatesandmovements.
Mostofthemwelcomedwhatchinaprovidesfortheirnationaleconomy.Aswellastheyalso
appreciateitsidentificationwiththeoppressedones,itsdemandforgreaterequality,andjustice
withintheworldsystem.Theyalsoacceptitsmoralfinancialandtechnicalassistance;shortly
AfricaleadersseeChinaastheirbestfriendtoo.
WhenwetalktoAfricaandChinarelationsitshouldbetosayfewpointsonitstraderelations,
inthisregarditisobviousthattheChineseexportstoAfricaaredominatedbymanufactured
goods,textilesandfoodgrains.Withregardtoitsimportsmanganese,iron,fish,timber,cooper
andplatinumarethemajorthings.Inanyeconomicandgeostrategicfactors,thequestforoil
especiallynaturalgasisthepriorforChina'seconomicinteresttoAfrica.In1999,Africa
providedanestimated18%ofChina’simportedoil(JaffeandLewis2002),aproportionthathas
risensince.(JaffeandLewis.(2002),inMawdsley,Emma(2007)op.cit.p.412)
3.2.4.TheFOCACMeetings
2000isthecriticaltimefortheChina-AfricarelationsbecauseatthistimetheForumonChina-
AfricaCooperation(FOCAC)hasbeenheld,thisissaforumwhereconferencesonaministerial
levelhavebeenheldeverythreeyears.ThefirstconferencewasheldinBeijingonOctober10th-
12th,2000,whereministersofforeignaffairsandministersresponsibleforforeigntradeand
internationalcooperationfromChinaand44Africancountriesmetanddiscussedthefuture
China-Africacooperation.(http//www.focacmeeting.org.June2;2008).19Theparticipants
18Yahuda,M.B.(1978),p.409)”inadditiontoconsistinglargelyofintermediatetechnology,allChineseaidprojectswere
givenwithout’strings’,andsince1964withoutinterest”.19http//www.focacmeeting.org.(June2;2008).

28
acknowledgedtheprincipleofoneChina.Theyalsoadoptedtwodocumentsofagreements
whichare:ADeclarationofMinistersandaPlanofActionfortheperiodof2000-2003.The
mainthingwhichtheyagreedaccordingtothedocumentsisbothpartieswereagreedtosupport
eachotherintheinternationalforums,sothatChinatosupportdebtcancellationandthatAfrican
countriestoberepresentintheUNSecurityCouncilbyoneseat.(BeijingDeclarationofthe
ForumonChina-AfricaCooperation:2008)
Afterthreeyears,on15th-16thDecember,2003,thesecondFOCACconferencewasheldin
AddisAbabaEthiopia.Allparticipantswhowereat2000's,firstconferencewererepresentedin
thisconferenceandplanofactionfor2004-2006adopted.Atthisconferencethesame
representativesfrom2000werepresent,andanotherplanofactionwasadoptedfortheperiodof
2004-2006.Theconferencehelpedtogrowuptherelationtoonestepinwhich,theyshowedtheir
interestandreadinessfordeeperpoliticalcooperationandtocoordinatetheirforeignpolicies.
Theyalsoagreedtoprotecttheprinciplesofrespectfornationalsovereigntyandnoninterference
inothercountries.OnChinaside,italsopromisedtoincreaseitsparticipationinUN'speace
keepingmissions.20
ThethirdFOCACmeetingwasheldin2006,atBeijingonNov.3rd-5th.TheAfricancountries
addedby4andtheywere48participants.Atthemeeting,likein2000,twodocumentsof
agreementwereadopted:ADeclarationofMinistersandaPlanofActionfor2006-2009.The
differencehoweveris,here,theagreementswerefurtherexpandedregardingtheprinciplesof
sovereigntyandnon-interference.Thepoliticaldialoguealsotakenplaceeveryyearbythe
foreignministerslevelatNewYorkparalleltoUN'sgeneralassembly.Duringtheirmeeting
bothagreedthattheUNtobemoredemocraticstructuresandwesternersnottousehumanright
asaconditionforaid.Theyalsoremarkedthateconomicrightcomefirsthanhumanrightthey
expressedtheirwishtotakeplaceanotherDoharoundofWTOwhichgivesespecial
considerationfordevelopingcountriesaswell.Theyalsowishedtoincreasetheircontact
betweentheparliamentsandestablishmentoftwincitiesrelationbetweenChineseandAfrica
cities.
20YUNSUN,ThesixforumofChinaAfricacooperation,(December7,2015)

29
ChinaalsoexpresseditsunreservedapprovalforAUandtheNewPartnershipforAfrica’s
Development(NEPAD),italsopromisedtohelptheAUbuildacongresscentreinAddis
Ababa,Ethiopiawhichiscompletedin2012itsconstruction.Basedonthethemeof"deepening
thenewtypeofChina-Africastrategicpartnershipforsustainabledevelopment."
ThefourthMinisterialConferenceoftheFOCACwasheldatSoho-Square,intheEgyptian
resortofSharmel-Sheikhon8to9November2009.Themeetingreviewedhowtheconsensus
oftheBeijingSummithasbeenimplemented.ItalsoadoptedaSharmel-Sheikhdeclarationand
anactionplanfor2010–2012tochartthepathforfurtherChina–Africacooperation.Chinese
PremierWenJiabao,EgyptianPresidentHosniMubarakandAfricanheadsofstateor
governmentfrom49countriesattendedtheopeningceremony.21
A$10billionlowcostloanwasannouncedonNovember9,2009,doublethe$5billionloan
announcedandimplementedatthe2006BeijingSummit.A1billionU.S.dollarspecialloanfor
smallandmedium-sizedAfricanbusinesseswasalsoestablished.Chinaalsoannouncedeight
newpolicymeasuresaimedatstrengtheningrelationswithAfricawere"morefocusedon
improvingpeople'slivelihoods".WenannouncedthatChinawillwriteoffthedebtofsomeof
thepoorestAfricannations.HesaidChinawillconstruct100newclean-energyprojectsonthe
continentcoveringsolarpower,bio-gasandsmallhydro-powerandgraduallylowercustoms
dutieson95percentofproductsfromAfricanstateswithwhichithasdiplomaticties.Healso
statedthatChinawouldundertake100jointdemonstrationprojectsonscientificand
technologicalresearch,receive100Africanpostdoctoralfellowstoconductscientificresearchin
Chinaandassistthemingoingbackandservingtheirhomecountries.Thenumberof
agriculturaltechnologydemonstrationcentersbuiltbyChinainAfricawillbeincreasedto20,50
agriculturaltechnologyteamswouldbesenttoAfricaand2,000agriculturaltechnology
personnelwouldbetrainedforAfrica,inordertohelpstrengthenAfrica'sabilitytoensurefood
security.
ThefifthMinisterialConferenceoftheFOCACwasheldon19to20July2012inBeijing,China.
TheFOCACSummitandsixthMinisterialConferencehasbeenheldon4to5December2015
21http//www.focacmeeting.org.(November8;2009).

30
inJohannesburg,SouthAfrica.Thetwosidesreviewedwithsatisfactionthedevelopmentof
relationsbetweenChinaandAfricaandapplaudedthepositivecontributionFOCAChadmade
overthepast15yearssinceitsinceptioninadvancingthecomprehensiveandin-depth
developmentofChina-Africarelations,andagreedthatFOCAChadbecomebothakeyplatform
forcollectivedialoguebetweenChinaandAfricancountries,andaneffectivemechanismfor
practicalcooperation.
3.2.5TheBeijingConsensus
AsseeninthevariousFOCACdocuments,itseemsthatChinaandtheAfricancountriesin
overallagreeonsomefundamentalprinciplesthathavebeennamedtheBeijingConsensus.
AccordingtoMawdsley,(Mawdsley,Emma(2007)op.cit.p.413)22
?Thepresentworldorderisunjustandinequitable,anddevelopingcountriesshouldstick
together
?Theurgeofgreatersouth-southcooperation
?Therighttoself-determination
?Multilateralismandpeacefulnegotiationofinternationaldisputes
FromtheseentirehistoricalfactsonecandeductthattodayChinaandAfricaarebestfriendsand
theircooperationisgrowingthroughtimewiththemutualinterestofonestotheothers.Thefact
forEthiopiaisnotdifferentfromwhatwediscussedaboveandasweseeinthefollowingsub-
ChapterthePeoplesRepublicofChinaisacomradeinallyoffightingpovertyforEthiopia.
22Mawdsley,Emma,(2007)op.cit.p.413)"theConsensusreferstothatChineseleaders,overthelastdecades,haveasserteda
setofforeignpolicyprinciples.Althoughthecoherenceimpliedbythetermissomewhatmisleading,andmoreimportantly,itis
notadesignationthattheChinesegovernmentusesorendorsesthefollowingfourelementscanbedrawnoutfromtheterm."

31
3.3Ethio-China'sEconomicCooperation
3.3.1.MajorFactorsoftheEthio-ChinaEconomicCooperation
AsGedeonstatedinhisarticleof”EthiopiaandChinaPoliticalRelation”thereareanumberof
factorsmentionedasadeterminedfactorsofEthiopianandChina’sbilateralcooperation,among
themfewofwhicharethefollowing;(Gedeon,2008,3)23
OntheEthiopiansidethefactorsarecategorizeaseconomicassistance,alternativepartnertothe
West,Rolemodelanddiplomatically.First,Ethiopia’smadeefforttoseekforeignaid,loansand
investmentfromChina.InthisregardChinarenderedalltypesofassistancewithoutany
preconditionexceptoneChinapolicy.Currently,Ethiopia’squestfordevelopmenthasleditto
forgecloserrelationswithChina.AsformerEthiopianPrimeMinisterMelesZenawisaidatthe
2006forumonChina–Africacooperation,”Ourchallengenowisnottofightcolonialism,but
fightingpovertyandbackwardnessandachievingeconomicindependence.Africaneedsthe
supportofitsfriendstoovercomethesechallenges”(AfricanBusiness,2006:39).Thisstatement
clearlyexplainsEthiopia’sdispositiontowardsChina.
AccordingtotheEthiopiangovernmentdata,EthiopiahasreceivedoverUS$500millionin
concessionalloansfromtheChinesegovernmentandafurtherUS$1.5billionofinvestmentsin
telecomsinfrastructure,aswellasUS$1.5billioninshort-termtradecredits.In2003,the
secondphaseoftheAddisAbabaRingRoadwasopened.Chinahasfinancedanumberof
developmentprojectsinEthiopia,includingtheGoteraflyoverprojectinAddisAbabawhichis
with60millionRMBandconstructionofMaganagna-Kebena-MenelikHospitalandKebena
Bridge-AratKilloRoadProjectwith40millionRMB.ManyChineseenterpriseshavealso
involvedinEthiopia’sconstructionsector.(Source:MoFEC;2011)24
AccordingtoThelatestreportproducedbytheMinistryofFinanceandEconomicCooperation
oftheFederalDemocraticRepublicofEthiopia,China'seconomicassistanceclimaxedat7
BillionUSDin2016.Theinterestingfactorforitseconomicrelationisalsoitsrapidgrow.
23AfricanBusiness,2006:39)Ourchallengenowisnottofightcolonialism,butfightingpovertyandbackwardnessand
achievingeconomicindependence.Africaneedsthesupportofitsfriendstoovercomethesechallenges”24MoFEC,2011

32
Secondfactoris,EthiopiaalsoseesChinaasanalternativetotheWest.Forexample,As
Gedeonstated:"Chinahasofferedtomakegoodanyshortfallinassistancefollowingthe
suspensionofEuropeanUnionaidduetotheallegedhumanrightsviolationsduringandafterthe
2005Ethiopianelection.Hence,China’sforeignpolicyofnon-interferencehashelpedAfricans
andEthiopianleaderstoactfreelyintheirdealingswithChina."(Gedeon:2008:4)TheChinese
cooperationisfreefromallthingsespeciallythenon-interferenceontheinternalaffairsofthe
AfricancountriesgivesthemmorepreferableforAfricanstatesthanthewest.Thelattersomuch
shoutforthehumanrights,fairandfreeelectionsaswellasthemultipartysystemandtheyalso
attachedtheirassistancewiththeseprinciples,butforChinesethesearenotpreconditionsfor
theireconomicassistanceandasaresultEthiopiacouldachieveasuccessfulrelationwithChina
comparingtothewestwhichwillseeitinthispaperwithcomparingtoEuropeanrelationwith
Ethiopia.
ThirdfactorcanbethatChina’sdevelopmentisalsoconsideredasarolemodelforEthiopia.As
itisobviousthatinthepasttwodecadeChinaregisteredarapiddevelopmentandthroughit,it
coulderadicatepovertywhichisnowthemainproblemofEthiopia.Besidesthat,"Chinahas
helpedmillionsofitspeopleoutofpovertyandtransformeditselffromabackwardagricultural
countryintoacountrywiththehighestgrowthrateintheworld"(Gaye,2008:15-19andNdubisi,
2006:16).During1950and60sindeedtherealsoamotiveontheEthiopianformereducation
towardsdevelopment,especially,mostofthehighereducationstudentsfoughtthefeudalregime
byraisingthegrowthandchangeofChinesepeople,andforthemChinawastheirrolemodel.25
Thelastbutnottheleastfactoris,ChinaisalsoadiplomaticallyofEthiopiaondifferentissues
suchasdemocratizationprocessandhumanrightsatinternationalforumsliketheUnitedNations
andG-77.(Gedeon:2008:6)AtawarwhichwasdonebetweenEthiopiaandEritreaduring1995-
1999,Chinahasdecidedtomediatetheissuesonbalancedapproachthaninterferinginthe
internalissuesofthewar.
OnthepartofChinatherearealsomainfactorsthatmakesChinatobeafriendofEthiopia.As
Gedeonputit,fewofthemcanbecategorizedasfollows:Inthefirstplace,Ethiopiaplays
25Gaye,2008:(15-19)andNdubisi,2006:(16.)"Chinahashelpedmillionsofitspeopleoutofpovertyandtransformeditself
fromabackwardagriculturalcountryintoacountrywiththehighestgrowthrateintheworld"

33
importantroleinAfricanpoliticsbecauseofitsstrategiclocationintheregionastheseatofthe
AfricanUnion,EconomicCommissionforAfricaandotherspecializedorgansoftheUN.Hence,
attractsChina'sforitsroleintheContinent.ThoughEthiopiaispoor,landlockednationand
lacksvastrowmaterial,itisasourceofBlueNileandameetingplaceforlargelyMuslimNorth
AfricaandlargelyChristianSouth.(Ibid:5)26
ThesecondimportantfactorwhichstrengthenedthebilateralrelationsistheChineseneedfor
markets.China'sindustriallyCommandeconomyhaveledoversupplyofproductioninthe
domesticmarket.(MingandWilliamson,2003:12).FormostofChinesecompaniesgettingnew
marketsfortheirproductsiscrucial.Ethiopiawithapopulationofaboutmorethan100million
peopleaccordingtolatestcensusandevenmoreattractivemarketforChineseproducts,trading
andinvestmentopportunities.Chinaisnowadaysamajorpoweringeopoliticalandeconomic
competitionwithotherEuropeancountries,USAandtheemergingoneslikeIndia.Thereforeit
isinChina’sinteresttogainaccesstothemarketsandresourcesofAfricaincluding
Ethiopia.(Gedeon:2008:6)
Athirdreasonis,thegrowingneedforrawmaterialsandoil.Chinabecameanetoilimporterin
1993.ItwasrankedasthesecondlargestoilimporteraftertheUSin2004(Luft,2004:1).
Particularlyduetoitsstrategicimportanceforeconomicgrowth,theprocurement
ofsecureoilsuppliesisaprincipalnationalinterestandformsafundamentalpart
ofChina’sforeignpolicy.EthiopiaisoneofthelargestcountriesontheAfrican
continentandisbelievedtohavesignificantnaturalresourcesalthoughyettobe
identified.Chinesecompaniesclearlyrecognizetheresourceandmarketpotential
andattachconsiderableimportancetoEthiopia.ThisisevidentinChinese
companyZhonguanPetroleumExplorationBureau(ZPEB)exploringoilaround
GambellaandOgadenareasofWestandEastpartofthecountry.(Gedeon:2008:6)
Withregardtotheirpoliticalanddiplomaticrelationsindeedtherearealsogeneralhistorical
factorswhichcontributedtowardsenhancingbilateralrelations.Theyhavecooperatedclosely
andsupportedeachotherininternationalissues.Forexample,duringHaileSelassie'sregime
26Ibid:5

34
EthiopiaandChinahadsufferedfromthefascistaggression,especiallyEthiopiawasdirectly
attackedbyFascistItalythoughtheyweremembersofthethenLeagueofNations.Chinain
supportofEthiopiastronglycondemnedtheaggression.InreturnEthiopiawasthemain
supporterofChina'sclaimforamembershipoftheSecurityCouncilofUN,however,Ethiopia
andChinadidn’thavediplomaticrelationatthattime.Among76countrieswhogavevotein
favorofChina(in1971),Ethiopiawasoneofthem.(Fraser,1969:24331quotedby
Gedeon:2008:8).
IngeneralsayingusingitsopportunityofoneofthefivepermanentmembersoftheSecurity
CouncilofUNanditseconomicpowerChinaisnowstandonAfricaincludingEthiopia,sideon
variousissuessuchashumanrights,safeguardingtheirsovereigntyandinregardtocreating
moreviable,justifiableandrationalinternationaleconomicandpoliticalsystem.Atcontinent
levelChinaisalsosupportingAU'seffortswhichisworkingfortheAfricaninterests.For
instancerecentlyChinaprovidedaheadquartersbuildingandconferencecenterwhichisfully
constructedbyChinesegovernment.Asitisstatedsince2000EthiopiaandChinaarealso
workingforthefulfillmentoftheircommitmentwhichhasmadeontheFOCACmeeting.
(source:MoFEC;2011)27
Thererelationisalsocurrentlyfurtherstrengthenedbyaflowoflargeamountofdevelopment
assistancefromChinatoEthiopiaasweseeinthefollowingsub-Chapter.
3.3.2.TradeandInvestmentRelations
ThebilateralrelationsbetweenEthiopiaandChinahavebeengreatlydevelopedespeciallyin
politicalandeconomicfieldssincethecomingintopowerofEthiopianPeople’sRevolutionary
DemocraticFrontin1991.However,theirtraderelationisnotwithoutanychallenges.First
Ethiopiaandchina'seconomicbilateralrelationineconomicfrontisimbalanced.Despitethefact
thatthevolumeofexportandimportisincreasingsignificantlystillitsbalancedskewedmoreto
China.Ethiopia’sexportstoChinareached$132mlnin2006,whileavalueofChineseexports
toEthiopiais$432mln,whichisa$300mlngap(Gamorawe:2008:8)thevolumeisstill
increasingthroughtimebutnochangeinitsbalance.Therefore,astheMinistryofTradeof
27MoFEC;2011.

35
Ethiopia'sdocumentshowedtradebetweenthetwocountrieshadregistereda20%increasedby
thelastyearswhilein2009aloneitreached12%increase.(Hayal;2010:10)
EthiopiaalsosuffersasignificanttradedeficitwithChinabecausealotofproductsareentered
intothecountryfromChinawithlessprices.Ethiopiaisanagrariansocietysothatitsproducts
areprimarysectorsandinreturnthemanufacturedandprocessedgoodsimported.Besidesthat
suchgoodsliketextiles,clothing,plastics,shoes,electronicsdevicesandothersdumpedin
Ethiopiawithlesspricesothatthedomesticfactoriescannotcompetewiththeirproducts.All
theseissueshavechallengesonthetwostraderelationship.(ibid:10)
3.3.3BuildingInfrastructure
EthiopiahasbenefitedfromChina'seconomiccooperation,throughbuildingofitsinfrastructure.
MainlyChineseconstructionfirmsdominatetheroadsector.Inthisregardnoonedenythat
Chineseengagementandtheirpositiveimpactontheconstructionsector.Theyalsohelpedin
reductionofcosts,inwhichChinesecompanieschargereportedly20-25%lessthantheir
competitors.Asweseefromthefollowingsampletablecurrentlytherearemanymainprojects
supportedbyloanandgrantswhichiscounted7billionUSDthatareimplementedbyChinese
companiesaccordingtotheAgreementbetweentheEthiopiangovernmentandthecompanies.
Table3.1
NoProjectTitle
EstimatedTotal
cost(InMillion
USD)ChineseCompany
APower
1Adamawindpowerproject(phaseII)345HydrochinaandCGCEC
2GenaleDawa(GD-3)hydropower451
ChinaGezhoubaGroupCompany
CGGC
3Hallel-WerebesaHEPProject(518MW)474SinohydroCorporationLtd.
4Mesobo-HarenaWindPark(51MW)127
HydroChinaCorporation/CGC
OverseasConstructionGroupLtd.
5
GibeIIIAddisAbaba400kvPower
TransmissionandSubstationproject163
1.TBEACo.Ltd.
2.ShanghaiElectricGroupCo.Ltd.

36
6
Koka-Diredawa230kvDoubleCircuitPower
TransmissionProject78.7
ChinaWanbaoEngineering
CorporationandJPPC
7
Metu-Gambella230kvPowerTransmission
andSubstationProject27.8
ChinaWanbaoEngineering
CorporationandSinohydro
CorporationLtd.
18
AlamataMekele2ndcct230kvLine
ReinforcementProject18.9
BTransport
9AddisAbaba-MeisoRailwayProject1289
ChainCommunicationConstruction
Company(CCCC)
10Meiso-Djibouti981CCCC
11AddisAbabaLightRailwayProject475CCCC
12Mekelle-Wlidya716CCCC
CIndustry
13KesemSugarProjectComplex(15-20MW)210
ChinaNationalCompletePlant;
ExportCorp.Ltd.(COMPLANT)
14OmoKuraz(2)project290
JIAGXIJIANCIANG
INT.ENGINERRINGCO.LTD
15OmoKuraz(3)project290
JIAGXIJIANCIANG
INT.ENGINERRINGCO.LTD
16OmoKuraz(5)project500
JIAGXIJIANCIANG
INT.ENGINERRINGCO.LTD
DRoad
17ADDIS-AdamahighwayphaseII253CCCC
18Addis-Adamatollroadproject612.00CCCC
Source:MoFEC:Ethio-China
CooperationDirectorate;2017
China'seconomicassistanceisvaryfromsharingtechnicalskillsthroughtrainingandcapacity
buildinguptobuildingofhighdams,roadsandpowersupplyprojects.Ethiopiaishighly
benefitedbyfinancingoftheprojectsaswellasobtainingthelatesttechnologysothatasoneof
thedocumentsclearlystatedthereisnothingwhichdonothaveChinesefootprintinEthiopia's

37
highlevelprojects,Consequently,EthiopiaisoneofthebeneficiariesasChinaishelping
Ethiopiatoreducepovertyandfosterdevelopmentendeavor.
AccordingtotheofficialstatementoftheMinistryofFinanceandEconomicCooperation,
China’sinvestmentinEthiopiareachedoverUSD7billionduring2016Chineseinvestorsin
Ethiopiaareengagedinsteelmanufacturing,pharmaceuticalproducts,machineriesandtextile
sectors,constructionofanindustrialparkandothers,Chinawaswillingtobeengagedinsugar
developmentwithregardtothecountry’sinterestofengagementintheindustryaddingthatit
wouldprovidefinancetothetelecom,energyandtransportsectors.(source:MoFEC;2017)
Therefore,theexistingfriendlyrelationshipbetweenthetwocountriesreflectsthatthecountries
reapbenefitsoutofthebilateralpoliticalandeconomicrelations.AsitisstatedaboveEthio-
Chinarelationshiphasencounteredsomechallengessuchasimbalancesoftrade,dependencyof
EthiopiatoChina,theChinesecompaniesunderbiddinglocalcompanies,theideological
differencesofthetwoandothersbutforbothofthemoneisabestfriendtoothersincurrent
economicandpoliticalera.Itsinvestmentanddevelopmentassistanceisalsothebestoneforthe
accomplishmentofEthiopiaascomparingittoGermanycontributiontothecountry.

38
ChapterFour
Ethio-EuropeEconomicCooperation
4.1.Europe-AfricaRelation
AswedidforEthio-Chinarelationsintheabovechapter,itwillbealsoveryimportantto
examinetheEurope;AfricarelationsfirstbecauseinonewayoranothertheissuesofAfrica
andEuropeaswellastherelationshipsofthesetwocontinentstouchtheEthio-Europerelation
andinallmattersEthiopiaasapartofAfricacan'tbeseparatelyseenitsrelationwithEurope
disregardingtheAfricaandEuropecontact.Sothissub-chapterisdevotedontherelationshipof
EuropeandAfricaspecificallyEthio-Germanycooperation.
4.1.1.BackgroundoftheEurope-AfricaRelation
AfricaandEuropehaverelationsthatdatebackaverylongtimeinhistory.Itismainlyfocusing
onoldEgypt.However,tospeackaboutonshapingofthecontemporaryperioditwouldbedated
backtothelastfivehunderedyeras.Duringtheselongyearsthetworelationshavepassed
differentphaseswhichcanbemainlydivuidedinthreephasesaccordingtothesecretariatof
CODESRIA.(CouncilfortheDevelopmentofSocialScienseResearchinAfrica).Theseare
mentionedasfollows.(CODESRIASecretariat;2000)28
ThefirstphasewasaslavetradeperiodinwhichthewholeregionofAfrica,theirpopulation
wastransfertoEuropeinordertoserveintheirplantation."Consideringthenumbersofpeople
transferredfromthecontinent,notafewhistorianshaveobservedthattheslavetradehasbeen
thebiggest,mostsignificanttransportationofpeoplefromonepartoftheworldtotheotherin
themodernworldsystem."(ibid:2000)29
Thenextphasewasashortperiodwhichcoveredtheperiodbetweentheabolitionofslavetrade
andthecomingofcolonialpower.ItismostlycharacterizedbytheunequalexchangeofAfrican
rawmaterialsbybasicEuropeanconsumergoods.
28CouncilfortheDevelopmentofSocialScienseResearchinAfrica.(CODESRIASecretariat;2000)

39
Thirdly,thecolonialeracameintoexistenceasaresulttheAfricanstatessovereigntycameto
anendandtheirpeopleswereputbydirectruleoftheEuropean.TheEuropeanhavescrambled
Africafortheireconomicinterestandusedthecontinentasasourcefortheirrawmaterialsand
dumpingplacefortheirproducts.TheknownandhugeAfricancivilizationalsodestroyedbythe
colonialpowersincludingtheircultures,languagesandtraditions.Africagotanewidentity.
Finallyin1950sand1960stheendofcolonialpowerbecamerealizedbytheindependenceof
GhanaandSudanandfollowedbymanyothers.Africastatesgaintheirindependencebutwith
theremnantsofcoloniallegaciessothatmostofthenewstatesrelationwiththeirformer
colonialpowersdidn’tbreakoutsimply.Thecolonialpowersandinternationalfinancial
institutionsothatbecamethekeyplayeronAfricanissuesanddominantofworldeconomic
system.
4.1.2.EuropeancountriespoliciestowardsAfrica
ForexaminingAfricanpolicytowardsAfricafewscholarslikeOlivierusedtwomacro-regions
approachwhichareNorthAfricaandSub-SaharanAfricaapproaches.Theformerismore
treatedundertheEUneighboredPolicyandtheMediterraneancountriesunionpolicy.SinceEU
isneartotheregionusingitsproximityfortheregionprivilegeditsinterestbyvarious
agreementsandbilateralrelations.WhileforSubSaharancountriesEUusedtheACP(African
CaribbeanPacific)regionalframework.IndeeditsrelationwithAUandregionalorganizations
isalsothemajorones.(Olivier:2011:57)30
AftertheendofcoldwartheEuropeanstrategicinterestbecominganewshape,beforethatEU
restricteditsrelationswithAfricaondevelopmentpolicies.ParticularlyitssupportoftheWorld
BankandIMFforStructuralAdjustmentProgramme(SAP)resultedfailedforthecontinent
forcedtheEuropeanstosearchforanewpolicy.(ibid:59)
AsTullsaid"Intheearly1990s,AfricalostmoreandmoreinimportanceasEuropeanattention
wasabsorbedbyeconomicopportunitiesinAsiaandevenmoreimportantlybytheenlargement
oftheEUtoEasternEurope.Nonethelessthesamedecadesawsomepolicychangestowards
30Olivier,(2011:57).

40
Africa.TheEUinconsistentlyplacedemphasisonthepromotionofdemocracyandhumanrights
whiletheissueofAfrica’ssocio-economicdevelopment,includingitstraderelationswith
Europe,wereneverproperlytackled."(Tull:2008:3)Theseresultedstructuralimbalance
betweenthetworegionstobecontinueandstillnoanypossiblesolutiontoaddresstherelation
sofar.
Sincemid1990s,however,EuropeanpoliciestowardsAfricashiftedtoanotherphase.Duetothe
eruptionofvariousconflictsinAfrica,theconceptofpreventingconflictscametotakeplacea
majorroleforEuropeanPolicymakers.Indeed,thispolicyhoweverdidn’tbringanyeffectsas
weobservedinRwandancasenoEuropeancountryincludingaformercolonyBelgiumdidn’t
wanttosendtheirtroopsandstoptheviolence.Themainfactorfornotpreventingpeacein
AfricawasbecauseofthedifferentforeignanddefensepoliciesofEuropeancountries.Finally
allresponsibilityshiftedtoUNandAUfromEuropeancountries.(Tull:2008:3)31
InshortthememberstatesofEuropeanUniondidn’thaveanyactivepolicywhichworkin
Africa.GermanywhichisthelargestEuropeancountryfocusedonEasternEuropethanAfrica.
FortheirpartthoughUKandFrancewereformercolonial,powerstheydidn’tmuchinterferein
Africanissues,AfricawasnotconsideredapoliticalpriorityforUK'sforeignpolicyuntilPrime
MinisterTonyBlairsecondterminoffice.InFrancethegovernmenttookthedecisionto
devaluatetheFrench-backedFrancCFACurrencywhichsentshockwavestoAfricans.(ibid;3)
SincetheturnoftheCenturyduetodifferentfactorsAfricaandEuroperelationhastakenanew
shape.Itisfirstduetoterrorism,failedstates,internalandregionalwarsEuropehascomingwith
anewinternationalsecuritychallenges.ThisresultedEuropetoengageonAfricansecurity
issueswithotheraligncountrieslikeUSA.Secondly,growingEuropeaninvolvementinAfrica
bolsteritsCommonForeignandSecurityPolicy(CFSP)anditsEuropeanSecurityandDefense
Policy(ESDP)inanattempttopositionitselfasaglobalplayerinworldpolitics.(ibid:4)
Onecouldn’tbeneglectedfactis,afterthecolonialera,thereisanewtypeofrelationsbetween
theliberated,newlyindependentAfricanstatesandtheirformerEuropeancolonizers."Thepost-
31Tull,(2008:3)ThemainfactorfornotpreventingpeaceinAfricawasbecauseofthedifferentforeignanddefensepoliciesof
Europeancountries.FinallyallresponsibilityshiftedtoUNandAUfromEuropeancountries.

41
independencephasewasonecharacterizedby’apparent’benevolenceonthepartofthe
Europeancountries,eventhoughexploitationanddominance,butmoresubtle,continuedto
hamperAfricancountries’attemptstosettheirownautonomousagendasanddevelopmental
trajectories.FortheEuropeans,traderelationswiththeresourcerichAfricancountriesarehighly
important:aboutone-thirdofEuropeanexportsarewithdevelopingcountriesandmorethanone
fifthofthesecountries’exportsgototheEurope.Inaddition,theEuropecontinuestorelyon
Africaasarelativelyinexpensivesourceofoilandkeyrawmaterials."(Olivier:2011:54)
FollowingtheColonialEra,theColdwareracameintoexistence.Thiserawasremarkedby
convertingoftheirex-coloniestobetheirclientandthisinreturnhelpsAfricandictatorsto
skillfullyexploittheirstatusasbeingamemberofoneofthecampwhichwasledbyUSAand
formerUSSR.Theyalsogothugesupportfortheirinterestfromthesuperpowers.Eversince,
throughtheinternationalorganizationsandfinancialglobalizations(whichareledby
multinationalcorporations)EuropeancountrieshavecontinuedtoexerttheirbenefitoverAfrica
foritsdomesticpolitics,andmarketsandnaturalresources.Thisphasewascommonlyrefereed
as'Neo-colonialism"
ForOlivieritwouldbeunfair,however,toemphasizeonlythenegativedimensionof
African/Europeanhistory.Europewaseffectiveasadevelopmentandmodernizingagent.
ThroughtheestablishmentoftheEuropeanEconomicCommunity(EEC),Europeattemptedto
supportAfricandevelopmentbasedondevelopmentaidandtrade.Asfarbackas1957,the
TreatyofRomeestablishedthefirstframeworkforcooperationbetweenthethenEECandthe
African,CaribbeanandPacific(ACP)countries.Theformercolonieshavealsogotpreferential
accesstotheEuropeancommonmarketundertheYaounde´Conventionin1963,supersededby
theLome´Conventionfrom1975until2000.BesidesgrantingofpreferentialaccessLomealso
providedanopportunityforinter-regionaldialogueasseverallevelssuchas;ajoint
parliamentaryassembly,regularpoliticaldialogueatthehighestlevel,liaisonwithcivilsociety
andintergovernmentalmeetings).(Olivier:2011:54)32
32Olivier:(2011:54)Europewaseffectiveasadevelopmentandmodernizingagent.ThroughtheestablishmentoftheEuropean
EconomicCommunity(EEC),EuropeattemptedtosupportAfrican37developmentbasedondevelopmentaidandtrade.Asfar

42
EuropeanpoliciestowardsAfricacanbecharacterizedasmoreofinternalinstitutionaldynamics
andinternationalambitionsthanspecificgoals.BecauseAfricaismarginalizedbysecurityand
politicalstakesanditsinteresttootherglobalforcesisdifferent.AsTullsaid;"Africahas
becomeatraininggroundfortheEuropeanUnion’sESDP.Inthissense,’Africapolicyservesas
awayofcreatingaunitedEuropeonthecheap.'(Tull:2008:12)
Withregardtoitstraderelationalsothereisaslightshiftontheirrelations.Forinstance,by2000,
AfricanCaribbeanandPacificcountries’shareoftheEUmarkethaddeclinedtohalfthelevelof
the1970s,whereasimportsfromtheEUcontinuedtorise.Africa’sshareofworldtradedeclined
from3.1percentinthe1970sto1.8percent,in2000;itsshareofworldtradeoverthisperiodfell
from6percentin1980toapproximately2percentin2000.(Farrell:2010:73)33
AfricanrelationswiththeEUhavepassedvariousphasesorlevelsofdependencyafter
colonization.Wecansaythatthesephasesarefromvulnerabledependencetolessdegreeof
dependency.Thoughdevelopmentaidandtradeisoneoftheinstrumentswhichstrengthenthe
relation,itismoreoftowardstoEuropeandasaresultAfricandependencyisachallenging
issue.Finally,inthepastdecade,theworldhasobservedadifferenttypeofrelationswhichisthe
growingofSouth-SouthcooperationbetweenAfricaandotheremergingmarketsandthe
growingstrategicinterestsofAsiancountries,especiallyChina,affectedthetraditionalrelation
ofEuropeandAfrica.Italsobecameafactorfordecliningofitsleverageonthecontinent.
(Olivier:2011:56)
Ingeneral,asallagreed,currentlythereisaparadigmshiftfromEurope-Africanrelationandas
thefigureshowsAfrica’stradingpatternsareshiftingawayfromWesternEuropetowards
South–Southcooperation.TotalAfricantradewithWesternEuropedeclinedfrom51percentin
1990to28percentin2008,whileitsSouth–Southtradestoodat50percentin2008.African
tradewithAsiaalone(mostlyChina)hasinthesameperiodmanagedtoovertakethelevelof
WesternEurope(29percent).(Tull:2008:16).Undoubtedly,AfricaandEuroperelationcurrently
backas1957,theTreatyofRomeestablishedthefirstframeworkforcooperationbetweenthethenEECandtheAfrican,
CaribbeanandPacific(ACP)countries

43
isdecliningandtheinvolvementofChinainAfricaisalsorisingasweseeinthefollowing
pages.
4.1.3.China'sroletoAfricaanditsImpactonAfrica-EuropeRelations
SincetheEuropeanandAfricancooperationhastakenplacedifferentphasesatdifferenttimes,
China’srapidlyincreasinginvolvementinAfricaoverthelastfewyearshasdrawnsignificant
attentioninEurope.Therearedifferentreasons,tomentionfewofthem:Firstly,TheEuropean
consideredthemselvesalongwithUSAandChinaaswellastheinternationalfinancial
institutionstobethemaininfluencepartiesforAfricanexternalrelations.Secondly,theyare
becominghopelessbecauseofthewidespreadpovertyandwarsinAfricaandtheypredictthat
Africadidn'tcometobeaselfrelianceandpowerfulcontinenceinnearfuture.(ibid:1)34
ThecomingofChinatoAfricaobservedmanyissuesontherelationofEuropewithAfrica.It
willalsoverycrucialtoseehowperceivedEuropethecomingandinvolvementofChinain
Africa.GenerallyspeakingwecansaythattheperceptionofEuropetoAfricaisfairlyand
sometimesnegatively.Themainactorssuchasthemedia,politiciansandcivilsociety
organizationshaveechoedanumberofconcernswithregardtoitseconomicandpolitical
involvements.Ineconomicterms,ChinaaccusedbyEuropeancounterpartsasanexploiter.Due
toitsheavyemphasisonnaturalresourcesitisalsoarguedaschina-Africarelationsasunequal
andleadAfricatodiminishtheprospectofitseconomicdevelopmentinfuture.Inpoliticalterms
alsoChina'sprincipleofnon-interferenceintodomesticaffairsofotherstatesaswellasnot
directlyinvolvedininternalconflictsofAfrica'sstatesalsoatalkingissueforEuropean.
(Tull:2008:4)
FromthePointofEuropeansideresentmenttowardschina'sengagementisstronginwhich
theystartedtoinvolveinbudgetaidsandsupportstoAfrica.However,usingofthisbudgetto
China'sfirmactivitiesattractedEuropeantocriticizeAfrica.RecentlyindeedEuropeare
advocatingthebudgetsupportasaninstrumentofdevelopmentpolicy.Italsoraisedsome
concernsfromEuropeansidesuchas;firstly,resentmenttowardsChina’sengagementinAfrica
isstrongincaseswhereEuropeanbudgetsupportleadstosituationswherethemoneyisusedby
34(ibid:1)

44
AfricanrecipientcountriestofinanceoperationsbyChinesefirms.Whilethisisunderstandable,
EuropeandonorsarehardlyinapositiontocriticizethechoicesbeingmadebyAfrican
governments.Inrecentyears,Europeandonorsthemselveshaveadvocatedthebudgetsupportas
aninstrumentofdevelopmentpolicy.
AsecondsourceofconcernisthatChinaitselfhasbecomeamajordonorinAfrica.Thisalso
becameafactortorisegiventhatanumberofEuropeancountriesstillprovidedevelopmentaid
toChina,thisraisesanumberofquestions,i.e.shouldEuropeandevelopmentassistancefor
Chinacontinue?Canacountrybeanaidrecipientandadonoratthesametime?Theresulting
confusionhaspracticalimplications.Forexample,ChinaisasignatorytotheParisDeclaration
onAidEffectivenessof2005,anagreementwhichcommitscountriestoincreaseeffortsin
harmonizationandalignmentinordertoenhancethequalityandimpactofaid.Thedeclaration
istoincreasetheaccountabilityofdonorcountriesvis-à-visrecipientcountries.Chinahassigned
thedeclarationunderstandingthatitisarecipientcountryandseemstobereluctanttoaccept
obligationsthatderivefromthefactthatitisalsoadonorcountry.(Tull:2008:5)35
AthirdreasonrevolvesaroundEuropeanconcernsofAfricancountriesaccumulatingnewdebts
vis-à-visChina.ThereisaconcernfromEuropeanthattheygiveAfricaextensivedebtreliefson
otherwaytheyhavelendhugeamountofloanfromChina.Theyarealsoperceivedtheiraction
isunderminedbyChina.
Fourthfactorisalsoobservedinthewayoftheircooperation.Europeansmuchencouragedto
fosterthemultilateralrelationsthatmeanstohaveagoodcooperationwiththeAfricanUnion,
AfricanregionalinstitutionssuchasNEPADandatthesametimetheyexpectotherstodothe
same.FromChina'spointofvieweventhoughthereisaFOCACmeeting,ithighlyencourages
bilateralrelations.FOCACusedasaforumforstrengtheningthisbilateralcooperation.Thishas
anegativeimpactandwidenthegapbetweenEuropeandChinawiththeirpolicytowardsAfrica.
AsBayartarguetherearetworeasonsforthedifficultyofidentifyingaconsistentEuropean
responsetoChina'sinvolvementinAfrica.Theseare;First,thereisstillnounanimous
assessmentaboutitsimpactonthecontinent.Second;Europeansarefollowingbehindtheir
35Tull:2008:5)

45
interestandthekindofengagementinwhichtheirinterestrequires.(Bayart:2000:395)Forhim,
"therewillbeanAfricawithoutEuropeans.EuropeisstillAfrica’smostimportanttrading
partneranddonorandthelong-standinghistoricallinkagesbetweenthetwocontinentsarefar
toointertwinedtobeeffacedbyChina.SuchreasoningwouldalsomisreadAfrica’shistoryof
extraversionwiththeoutsideworld."(ibid:395)36
InshortwecanagreethatregardingEurope'srelationwithAfrica,itiscorrecttosaythatthe
comingofChinesehascontributedforarenewedEuropeaninterestinAfrica.European'salso
shouldthinktwicethattheirinterestandobjectivesinAfricashouldbelaidonanewground.
theyalsoshoulddesignthenewstrategywhichhelpstheinterestofAfrica.Insteadofthinking
thatAfricaisalwaysthesubjectoftheiraspirationtheyshouldlearnfromChinathatAfricahas
itsowninterestandtherelationshipshouldbebasedontheirmutualbenefitsanditshouldbeina
wayofpartnership.(Tull:2008:11)
4.2EthiopiaandEuropeCooperation
4.2.1.OverviewoftheRelation
TherelationofEthiopiawithEuropeanisnotsomuchdifferentfromwhatwesaidabovewith
therelationofEuropeandAfrica.EthiopiaisoneoftheoldestcountriesinAfrica,itsrelation
withEuropeancountriesstartedbackalmost5thand6thC,especiallythecomingofSpainto
helptheEthiopianarmyduringitswarwithIslamicforcesthathelpedbyottomanTurkeyprint
itsfootonthecultural,religiousandpoliticalrelationsofthecountrywithEurope.Thetrade
routeswhichcrossedthecenterofthecitytojoinwithDjiboutiandRedseaalsomarkedthe
economicrelationsofEthiopiaandEurope.
Themainrelationhoweverstartedduring19thcentury.Itwastheremarkingtimethatthe
EthiopianandItalianColonialforcesfoughtforthetotalcontrolofthecountryasthewholeof
AfricawasonthetimeofcolonizationbytheEuropeanforces.Thewarhasbeentakenplaceat
Adwa,northernpartofEthiopiaonMarch2,1992andconcludedbythedefeatofItaly.
ConsequentlythegreatpowersofEuroperecognizedtheEthiopiangovernmentasasovereign
36Bayart:2000:395"therewillbeanAfricawithoutEuropeans.EuropeisstillAfrica’smostimportanttradingpartneranddonor
andthelong-standinghistoricallinkagesbetweenthetwocontinentsarefartoointertwinedtobeeffacedbyChina.Such
reasoningwouldalsomisreadAfrica’shistoryofextraversionwiththeoutsideworld."

46
stateandmostoftheborderexcepttheSouthEasternpartdemarcatedwiththethencolonial
powers(GreatBritain,ItalyandFrance)whichwerecolonialpowersoftheneighboring
countries.BesidesthattheEuropeanstatesstartedtoopendiplomaticrelationswithEthiopia;
amongthemItaly,France,GreatBritain,Germany,Belgiumandothersopenedtheirdiplomatic
missionsinAddisAbaba,thecapitalofEthiopia.
4.2.2.EuropeanEconomicRelationtoEthiopia
ThoughtheEuropeanandEthiopiahasstartedtheirdiplomaticrelationsbeforeacenturyago,
actualeconomicrelationstartedduringthe1950s,especiallytheendofIIWWandthe
establishmentofUnitedNationshelpedtofostertheireconomicrelations.AmongtheEuropean
countriesGermany,UK,FranceandItalywerethemainoneswhichexporttheirgoodsto
Ethiopiaandinreturntheyimportcoffee,agricultureproductsandotherrawmaterials.
AccordingtotherecentstudydonebyEthiopianMinistryofTrade,theChinaisstillEthiopia’s
favorableexportmarket(42.7perecent).Accordingly,foroverhalfadecadeorso,onaverage,
overonethirdofthetotalexportwasdestinedtothismarket,followedbyEurope(29.1percent)
andtheanother16.8%worthofgoodstofellowAfricannations,with8.5%ofEthiopia’s
shipmentsgoingtocustomersinNorthAmerica.Butconsideringthedynamics,individual
markets,GermanyisbyfarthemajordestinationmarketsforEthiopia’sexport,inEurope.
(source:EthiopianMinistryofTrade:2018)37
WithregardtodevelopmentaidEuropeancountedstillagreatsharebutindeedtheAsiantaking
leadingones.TheaidcomesfromEuropecanbeclassifiedintotwowhichistheaidthatflow
fromEUandfromeachofbilateralstates.Forthepurposeofthispaperwewillfocusonthe
latterones.
Since1950'sEthiopiahasgotvarioustypeofassistancefromitsdevelopmentpartners.Among
themUnitedKingdom,France,Finland,ItalyandIrelandarethemajorones.Asweseefromthe
followingtablecurrentlyalmost415Projectsaretakingplacebythesupportofatotalof23
bilateraldonorswhichestimatesatotalof10BillionUSD.ComparingtotheseEuropeansare
37EthiopianMinstryofTrade:2018

47
muchgreaterthanUSAandAsia.Theycount14outof23donorswhileintheircontribution,
theysupport259projectswiththeamountof5.37billionUSDwhichmeansinpercenttheyare
supporting62%oftheprojectsandtheircontributionis53%ofthetotalcost.Chinaalone
supports45projectswith7billionUSDwhichisalmost72%ofthetotalEuropean(14
countries)contribution.AccordingtothelatestprojectionbyMoFEC,itshowsthatChinese
commitmentisbetterthanEuropeandinfuturethepredictionshowsthatChina'saidandloan
willbetheleaderfromallofbilateraldonors.AccordingtothelatestprojectionmadebyMoFEC
withthelastfiveyearsChina'scontributionwas300%incrementwhiletheEuropeansisalmost
25-30%.(MoFEC;2012-2014)
BilateralCooperationDevelopmentassistance(Jan.2005-Dec.2011)In000USD
Table4.1
/Donor
Agency/
Nhu
mber
of
proje
cts
Funding
Total
Costs2005200620072008200920102011
Actual
Commit
ments
Actual
Commitmen
ts
Actual
Commit
ments
Actual
Commitme
nts
Actual
Commit
ments
Actual
Commitme
nts
Actual
Commi
tments
Austria183739.351690.032365.7430651.073159.675714.69053389.87
CIDA
Canada18
10179.49010663.6300015497.2
1
41277.37
China45
13168.740117157237887.855108201386053.2609798.
22
2881538.
7
Czech
Republic5
300000001991.522544.01
DFID50
212289.0
7
460412.18142931.39372902.27245.07347077.15400421.
77
1965825.
1
Finland10
0013307.272957.1759310.9
3
033437.0
3
147997.1
3
France222283.794790.6201200066536.36657.29485312.600173.7

48
2961
Germany26
133485.1
6
034007.45003876.16124175.
06
451085.4
7
Hungary1074359100000743591
IRISH
AID29
13676.9183232.513011.5515525.1447193.9
6
12679.3314121.6
8
225027.9
5
India20650000016623000231230
Iran10000000250
Italy22
337376.0
8
4435.762881.7742394.213992.1816532.864392.06500063.4
8
JICA61
117129.1
8
5976.2111721.71017080.7
6
66803.5682571.5
4
317772.4
2
Korea17
00402035180400015803.7
1
27341.71
Kuwait40629020194530240000106355
Netherlan
ds19
3961.511330.735579.60024238.270102770.2
1
Norway12
000040364.2
7
0059097.35
SIDA
Sweden29
544134942.725433.33026858.2
6
9973.290178578.4
1
Saudi
Arabia5
188004525.81000100002500058325.81
Spain15
00086893.4703707.58150909241510.0
4
Turkey1000000100000100000
USAID3
00000846036.310846036.3
1
TOT
AL
(415)
871830.2
3
1472829.5363080.41039182.2941791.
37
2767349.6206343
1.7
1009678
1
Source:MoFEC:BilateralCooperationDirectorate;AidManagementPlatformReport,March
2012.

49
OneofthemaindonorfromEuropeanlistasweseeintheabovetableisUnitedKingdom.
Ethiopia’srelationshipwiththeUnitedKingdomisonethathasseenbothqualitativeand
quantitativeimprovementsincetheadoptionofthecountry’sForeignPolicyandNational
SecurityStrategy.EthiopiahashadhistoricrelationswiththeUnitedKingdomforcenturies.The
twocountrieshavehadrichdiplomaticrelationsinthepastcoveringarangeofareas,including,
butnotlimitedto,trade,culture,educationanddevelopmentcooperation.Infact,GreatBritain
wasamongthefirstfewcountriestoopenanembassyinAddisAbabaoveracenturyago.
Ethiopians,ofcourse,willneverforgettherolethatBritishforcesplayedinEthiopia’sfight
againstfascismduringtheSecondWorldWarandthesacrificestheymadeinsupportof
Ethiopia’sindependence,despitethemajorcomplicationswithrespecttoensuringEthiopia’sfull
andcompleteindependenceafter1941.Moreover,bothcountrieswentalongwaytowards
puttingdifferencesbehindthemandworkingresolutelytowardscreatingmutuallyrewarding
diplomaticrelations.ThiswasstrainedafterthefallofthelastEmperorandfacedalotof
challengesduringthemilitaryregime,challengesthatlasteduntilthecomingtopowerofthe
EPRDF.
Equally,andmoreimportantly,onabilateralleveltheirpartnershiphasledtoeffective
developmentcooperationthathasshownincreasedexpansionoverthelastdecadeandhalf.
GreatBritainisoneofthemostdependablepartnersinEthiopia’sfightagainstpovertyasits
expandingdevelopmentsupporthasclearlyindicated.Ethiopiatodayisthesecondlargest
recipientoftheUK’sdevelopmentsupportnexttoIndia.Andoutofthetotaldevelopmentaid
thatEthiopiareceivesfromtheUK,nearly80percentgoestotheprovisionofsocialservices
suchaseducationandhealthcareandotherdirectdevelopment-relatedactivities.(source;DFID:
Ethiopia)38
SuccessivegovernmentsintheUKhavedemonstratedaconvictionthattheirdevelopment
cooperationmustbringaboutcleartransformationinthelivesofbeneficiaries.Therelationis
alsobelievedtobestrengtheninfutureforthisevidenceeventheUKgovernmenthasshownits
interesttocontinuetogrowitsdevelopmentcooperation,despitethecurrentfinancialcrisis
facingtheUK,thatitbelievesEthiopia’spro-poorpoliciesareprovingthattheywork.Itisalso
38MoFEC;BriefnoteonEthio-UkCooperation,2010

50
equallyimportantthattherelationshipbetweenthetwoisreachinganexcellentexampleofthe
levelofmaturity.(MoFEC;BriefnoteonEthio-UkCooperation,2010)
TopprioritiesofUk'saidtoEthiopiaare:
?Addressingtheunderlyingcausesofpovertyandfragilitythroughnewsupportforwealth
creation,peaceandsecurityandtacklingtheeffectsofclimatechange
?Ensuringbetteraccesstobasicservices,enablingmillionsofpeopletogotoschool,drink
cleanwaterandaccessbasichealthcare
AndtheUKgovernmentcommittedtospendanaverageof£331millionperyearinEthiopia
until2015.(DFID:Financialplan:2012)39
AnotherEuropeancountrywhichhelpsEthiopiaisFinland.IndeedFinlandisnottheonly
ScandinaviancountrywhichcontributesforEthiopia'sdevelopment,asitisobservedSIDA
(SwedenInternationalDevelopmentAgency)isavanguardinhelpingoftheEthiopian
governmentwiththeexpansionofprimaryschools;overmorethanthreehundredprimary
schoolshasbeenbuiltbytheSIDAassistancefrom1950sto1980sinruralEthiopia.Norwayis
alsoassistingtheEthiopiangovernmentwithfewpowerprojects.
Overall,Finland'sdevelopmentcooperationwithEthiopia2000-2008hasbeentightlyfocused,
relativelycoherentandhighlyrelevant.IthasrespondedtotheEthiopianpovertyreduction
strategies,andhasbuiltonspecificFinnishexpertise,thuscontributingFinnishvalueaddedin
thetwomainsectorsofcooperation.Seenasawhole,thedevelopmentcooperationhasbeen
reasonablyefficientandeffective,andimpactshavebeensignificantinthewatersector.The
Finishaidismainlyfocusontwosectors;namelywaterandEducation.(noteonbetween
FinlandandEthiopiacooperation;2012)
Interventionsinthewatersectorhaveexpandedfromasinglewater,sanitationandhygiene
projecttoacomprehensiveprogrammethatcomprisesmanagementofwaterresourcesaswellas
issuesoflandmanagementandrelatedgrowthinterventions.Whilethisgoesbeyondthe
traditionalwatersector,theprogrammeasawholeisclearlycoherent,especiallyduetoitsclear
39DFID:Financialplan:2012

51
geographicalfocusontwoneighboringregions.Agoodbalancehasbeenstruckbetweenproject
interventionsandpolicydevelopment.TheCommunityDevelopmentFund(CDF)funding
modalityinvolveslocalcommunitiesandtheprivatesectortoanunusualdegreeintheEthiopian
context.TheCDFmodelhasbeenhighlysuccessful,andhasresultedinveryhighscoreson
efficiency,effectiveness,impactsandsustainability.Themodelisnowbeingtakenupforwider
use,bytheGOEaswellasUNICEF,andisthuscontributingtothegeneraldevelopmentofthe
WASHsector.
OtherinterventionofFinlandcooperationisEducationsector.Therehavebasicallybeentwo
channels,bothhighlyrelevant:fundingforamulti-donorprogrammetoincreasethequalityof
education(the(TDP)TeachersDevelopmentProgramme,replacedbythebroaderGEQIP
(GeneralEducationQualityImprovementProgramme(in2009),andthebilateraltechnical
assistanceprogramforSpecialNeedsEducation(SNE).
OnFrenchbilateralassistanceitisconcentratedprimarilyonsectorsandprogramsaimingat
capacityandinfrastructurebuildinginkeysectorsforEthiopiawhereFrenchexpertisecanbring
aspecificadded-value,e.g.water,urbandevelopmentandgovernance;
Thereforeduringlasttimeconsultation,bothgovernmentsagreedtoconcentrateontwosectors
directlyrelatedtotheachievementsoftheMDGs:
1.Waterandsanitation,
2.Developmentofurbaninfrastructures.andonthreecross-cuttingsectors:
3.Governance,inparticularthejusticesector,
4.Universityandresearchcooperation,
5.TheroleofFrancophonyfordevelopmentandforculturaldiversity.(Partnership
agreementbetweenFranceandEthiopia:2006-2010)
InadditiontotheabovementionedEuropeancountriesthereareotherswhichengagedinthe
developmenteffortsoftheEthiopiangovernment,tomentionthem,Italy,Austria,Spain,
Netherlands,Irelandarethemajorones.Alltheyhaveincommonistheyareconcentratedonthe

52
scatteredprojectswhicharetakingplaceatagriculture,healthandeducationsectors.Indeedthey
alsoparticipateinlargeprogrammessuchasSafetynetandbudgetsupports.(MoFEC;Brief
notes,2011)40
Theprojectsarealsomostlyfocusedontechnicalcooperationratherthaninfrastructureworks.
AmongallbilateraldonorsonlyItalywiththesupportofElectricpowersupplyandFrancewith
thesupportofwindpowersupportEthiopiainphysicalworks.TheEthiopiangovernmentto
buildhighways,railways,electricsupplyprojects,buildingofhealthandeducationfacilities
dependedonAsianassistanceespeciallyChinaandfewMiddleEastcountries(TheSaudiand
KuwaitDevelopmentFundsaresupportingroadprojectsbygivingconcessionalloan).
WithregardtothequalityofassistanceallEuropeancountriesusedtheirprofessionalsasa
technicalexpertsandthemoneyismostlyreleasedbytheirchannels.Besides,theprocurement
andimplementationsoftheprojectsareguidedbytheirowncountriesproceduressothatthe
ownershipoftheprojectsbytheEthiopiangovernmentisminimalasopposedtotheParis
Declarationsandotherinternationalagreements.However,itwillbediscussedmoreatthefinal
ChapterofthisPaper.NowinordertoseetheEuropeanmodelofassistanceindetailwewillsee
theGermany'scooperationtoEthiopiawithspecialemphasisasfollows.
4.2.3.Ethio-GermanyEconomicCooperation
4.2.3.1.Germany'spolicytowardsAfrica
GermanyisoneoftheEuropeancountriesthatareassistingtheEthiopiangovernment.Intrade
relationGermanyisthelargestbuyerofEthiopiancommoditiesfromEuropeancountries.Their
diplomaticrelationshasalsoagedmorethanacentury.Germanyengagedintotwochannelsof
assistancewhichisaTechnicalCooperationledbyGIZandfinancialassistancebyKFW.Before
dealingwiththerelationofEthiopiaandGermany,herewewillseetheoverallaidofGermany's
government.AstheWhitePaperwhichisissuedin2000forGermany'saidpolicyasstated
clearly,theconstellationofdevelopmentproblemsandchallengesfacingsub-SaharanAfricais
40MoFEC;Briefnotes,2011)

53
extreme,thus,promptingtheinternationalcommunitytofocusitsdevelopmentcooperation
increasinglyonthiscontinent.Itreadsasfollows;41
TheaimofGermany’sdevelopmentcooperationwithAfricaistoachievesustainable
improvementsinlivingconditionsinlinewiththeMillenniumDevelopmentGoals.
AttainingthisgoalrequiressubstantialeffortsbytheAfricancountriesthemselves,
supplementedwithcoordinatedsupportfromtheinternationaldonorcommunity.
Germany’seffortsaregearedespeciallytowardsthenationalPovertyReduction
StrategyPapers(PRSPs–seepage25ff.),whereweareworkingmoreintensively
withtheEUandthemultilateralinstitutionsonthebasisofadivisionoflabor.
Bilateralcooperationwiththepartnercountriesconcentratesonareasinwhich
Germandevelopmentagencieshaveamassedmanyyearsofexperienceandhave
comparativeadvantages:goodgovernance,thewatersector,andprivatesector
promotion.Energysupply,renewableenergiesandenergyefficiencyarealso
becomingincreasinglyimportantinourcooperationwithAfricaasaresultofclimate
change.(whitepaper:2000:20)
TheGermangovernmentprovidessupportfortheAfricanregionalorganizationsonatargeted
basis,especiallythenewAfricanUnion.TheNewPartnershipplaysakeyroleinthenew
politicaldynamisminSub-SaharanAfricaforAfrica’sDevelopmentlaunchedbyAfricanheads
ofstatein2001andnowamandatedinitiativeoftheAfricanUnion(AU).
Germany’sFlowofAid
Germanygovernmenthasanintentiontoincreaseitsaidflowsbasedonitspoliciesand
principles,accordingtothefactsandfiguresobtainedfromGermanysourcesitsODAhas
increasedfrom2,065.8billionin2002to2,335.0billionin2006.Infactithassomefluctuations
between2003-2005.Thismeansitincreasedby7.2percentforbilateralaidduringtheyears
whileitshows10.2percentreductionformultilateralaidindeeditwasalsoa6.5percent
incrementin2004ascomparedto2001asabaseline.(source;Germany'sMinistryofEconomic
cooperationanddevelopment(Bmz):2012)
41whitepaper:ThenationalPovertyReductionStrategyPapers(2000:20)

54
ThebudgetoftheFederalMinistryforEconomicCooperationandDevelopment(BMZ)is
containedintheGermannationalbudget(individualbudgetplan23).In2009,fundingfor
developmentcooperationwasincreasedby679millionEuros.(ibid)
Infiscalyear2009,provisionhasbeenmadeforspendingintheorderof5.814billioneuro.This
isanincreaseof13.23percentcomparedwithfiscal2008.TheFinancingPlanfor2008to2012,
whichhasalsonowbeenadopted,envisagesfurtherincreases.Atthegovernmentnegotiations
inSeptember2014,theGermandevelopmentministry(BMZ)pledgedatotalof129million
EurostoEthiopiafromtheperiod2015-2017.TheGermangovernmenthasthusmadeaclear
commitmenttofightingpovertythroughouttheworld.(ibid)
4.2.3.2.BackgroundoftheEthio-GermanyEconomicCooperation
Asitisstatedabove,theEthio-Germanyrelationhasstartedbefore100yearsback.In2005,the
100thanniversaryoftheestablishmentofofficialrelationswascelebrated.Thoughthepolitical
relationisupanddown,itseconomiccooperationisgrowinghigh.Forinstance,recentyears
haveseennear-constantgrowthinthevolumeofforeigntrade.
FromtheEthiopianpointofview,GermanywasthebiggestbuyerofEthiopiangoodsinthe
financialyear2010/2011.Ethiopia’smainexporttoGermanyiscoffee,andGermanyis
traditionallythelargestbuyerhere,takingover30percentofthecountry’stotalcoffeeexports.
Themainexportsintheotherdirectionarefinishedproductssuchasmachinery,engines,motor
vehicles,chemicalsandmedicines.Asderegulationoftheeconomyprogresses,German
enterprisesarebeginningtoinvestinEthiopia,especiallyintheflowersectorandtheleather
processingindustry.AninvestmentprotectionagreementwassignedinJanuary2004.(A
SummaryReportforEthio-Germanynegotiations,MoFEC,)42
Developmentcooperation
EthiopiaisaprioritycountryofGermandevelopmentcooperation.Germanyhavingprovided
someEUR1.3billionfordevelopmentprojectsinEthiopiasinceaidbeganmorethan50years
ago.Atthemostintergovernmentalnegotiationsin2008,EUR96millionwerepledgedto
42AgenceydepresseAfricanie,(2017)

55
Ethiopiafortheperiod2009-2011.(BMZ;2008).On2017negotiationGermanyalsohas
announcedatotalof€212.6milliontosupportimplementationofagriculture,educationand
biodiversityprojectsandprogrammesinEthiopia(source;AgenceydepresseAfricanie,2017)
Developmentcooperationfocusesonthefollowingthreepriorityareas:
?SustainableLandManagement
?EducationandTraining
?Sustainableeconomicdevelopment
AndthroughmultilateralchannelstheGermanygovernmentagreedtosupporttheProtectionof
BasicServicesprogrammewithatotalof20millionEuros,detailsareshowninthefollowing
table.
Germany'scontributionfor2012-2014
Table4.2
InmillionEuro
.no.AreaofinterventionTechnical
Cooperation
Financial
cooperation
Total
1SustainableLand
Management
111021
2EducationandTraining162238
3SustainableEconomic
Development
12820
4ProtectingBasicService32023
Total4260102
Source;(summaryrecordoftheEthiopiaandGermanygovernmenttogovernmentnegotiations,
may2011,Bonn)
Alongwithnumerousotherdonors,GermanyisparticipatinginaWorldBankprojectto
guaranteetheprovisionofbasicsocialservicesatdistrictandmunicipallevel.Fundingis
providedforbasicservicesinthehealth,education,watersupplyandagriculturalsectors.

56
TheTechnicalCooperation,whichisconductedbyGTZisaimedatstrengtheningandenhancing
thecapacityandperformanceofhumanpoweraswellastheinstitutionsofarecipientcountryon
thebasisofjointcooperationprojects.Itinvolvestheassignmentoftechnicalpersonnel,training
andthesupplyoftechnicalequipment.(GIZ/Ethiopiareport;2012)
AccordingtothedatagetfromtheMinistryofFinanceandEconomicCooperationofEthiopia,
thetotalvolumeoftheofficialcommitmentstodatebothintheformoffinancialandtechnical
assistance(includingthenewallocation)amountsto507.5millioneuro.Outofwhich,307.8
millioneuroisforfinancialcooperationandthebalanceisfortechnicalcooperation.
CommitmentbyformofAssistance(in%)
Figure4.3

57
ResourceAllocatedbyGermanGovernment
TheGermanGovernmentallocationforEthiopiastartingtheyear1993-2014
Table:4.5
inmillionEuro.
N
o
Type
of
assista
nce
199319941995199619971998200020012002-
05
2005-
07
2008-
11
2011-
14
Total
1Financ
ial
30.623.017.933.212.8-15.340.051.04242307.8
2Techni
cal
11.210.210.210.216.316.96.713.025.029.0
54
60262.7
Total41.833.228.143.429.116.96.728.365.080.096102570.5

58
Figure:4.6
(Source:MoFEC:BriefNoteonEthio-GermanyCooperation;2014)
StatusofOngoingEthio-GermanCooperation
Thedevelopmentcooperationofthetwocountrieshavebeenguidedandcoordinatedby
Government-to-Governmentconsultationandnegotiationmeetings.Inlinewiththis,theEthio-
GermanBilateralConsultationmeetingdevelopmentcooperation,whichtookplaceon
November,2017inAddisAbaba.Bothcountrieshaveagreedtocontinuecooperationin
Education,sustainablelandmanagement,strengtheningdroughtresilienceandenhancing
agriculturalproductivity,includingagriculturalmechanizationandtechnologyforsmall-holder
farmers,
Inviewoftheabove,StrategyPapersforthefocalareashavebeenformulated.Thesestrategy
papersaredesignedtoserveasaframeworktoimplementthefocalareasinthecoming10to12
years.Regardingtheseprogrammes,SustainablelandManagement,CapacityBuildingin
governanceandTVET,thedetailsarethefollowing:

59
1.SustainableUtilizationofNaturalResourcesforImprovedFoodSecurity(since2010,it
changedtoSustainableLandManagement(SLM))Programme.
Thepurposeoftheprogramistohelpsecureasufficientleveloffoodproductioninthehighland
regionsofTigray,AmharaandOromiyatoimprovethelivingconditionsandincomesofrural
householdsandotherusersofnaturalresourcesandthusmakeacontributiontopoverty
reduction.
TheGermanGovernmenthasmadeavailable10.95MillionEurosasagrantintheformof
financialassistanceand5.9millionEuros(ofwhich3millioneuroarefundsremainingfrom
individualprojectsintegratedintotheprogram)intheformoftechnicalcooperationforthis
programme.Sofaratotalof16.9millionEuroallocatedforthispriorityarea.Theprogramwill
beimplementedasacombinedFinancial/TechnicalCooperationprogrambasedonclose
cooperationwiththeongoingTechnicalCooperation(TC)projects,SocialForestryProject
Tigray,IntegratedForestManagementProjectAdabaDodola,LandUsePlanningOromiya,
IntegratedFoodSecurityProgramSouthGondar,andCapacityBuildingforFoodSecurity,
whichformthecoreoftheagreedPriorityAreaStrategy.
Theprogrammecompriseserosioncontrolforsoilandwaterconservation,especiallygully
treatmentandtheplantingofstabilizingvegetationoncommunallandsinthewatercatchments
areasofseveralcommunitiesforwhichintegratedlanduseplansweredrawnupinthecourseof
ongoingTechnicalCooperationprojects.Erosioncontrolactivitiesconsistofacombinationof
physicalandbiologicalmeasures.Theywillbeaccompaniedbyactivitiesinonewater
catchmentsareainvolvingtheimprovementandexpansionofthelocalroadnetwork,the
rehabilitationandtechnicalimprovementoftraditionalirrigationperimeters,andliningofwells.
Theprogramhasapilotcharacter.Itistheonlyprogramtosynthesizetheexperiencegained
withtheideastestedintheTCprojectsandtoimplementthatexperienceinacomplexand
broad-basedapproachbasedonFinancialCooperationtools
Thefinancialassistance,whichis10.95millionEuroswereallottedforruralroadbuilding,
small-scaleirrigation,andrehabilitationofdegradedareasin2001.Thisprogrammecontinues

60
forthelastthreeyerasandaccordingtothelatestgovernmenttogovernmentnegotiationthe
Germanygovernmenthasallocatedatotalof21millionEurowhichis11and10MillionEuros
fortechnicalandfinancialcoopertaionsrespectively.
SignificanceoftheGermanContribution
Linkingupwiththeexperiencemadeinconnectionwithanumberofsingleprojects
implementedsincethebeginningofthe1990s,thefuturesignificanceofthenewpriority
strategydescribedhere(policyadvice,capacity-building,investmentsandtraininginthe
sustainableutilizationofnaturalresourcesforfoodsecurity)isbasedonthefollowingaspects:
?Concentrationonthe3highlandregionsAmhara,OromiyaandTigrayshowingserious
damagetotheenvironment(de-forestation,soilerosion,landdegradation)andahigh
andstillgrowingpopulationnumber.
?Exemplarypursuanceofthewell-testedpluri-levelapproach(cross-linkingamong
federalgovernment,regionalstategovernmentsandcommunitiesorlocallevels).
?Exemplaryproceduralmethodology:developmentandtestingofconceptsandmethods/
technologiesforanadaptedandsustainablemanagementandexploitationofavailable
land,waterandforestresources,withspecialconsiderationbeinggiventotheWoreda
SectoralManagementapproachandinvolvingtheintegrationofthetargetgroupsinto
theplanningandimplementationofprojects(participatoryapproach).Thismethodology
isalreadyservingasanation-widemodel.
Ethio-Germandevelopmentcooperationpursuesthefollowingstrategictargets:43
?improvementoftheinstitutionalandlegalframework,especiallyattheregional,Zonal,
WoredaandKebelelevel,throughsupportinpolicyandadministrativereform;
?developmentofproductionincreasingandsoil,forestandwaterconservationmeasures
andtheirdisseminationbypublic,non-governmentalandprivateinstitutions(biological
erosioncontrol,newvarieties,improvedseeds,soil-cultivationtechniques,etc.);
43MoFECBilateralDirectoratereport:2012

61
?supportoffarmerstoincreaseanddiversifyfoodandnonfoodproductionand
exploitationofuntappedpotential(IntegratedWatershedManagement);
?improvementoftransportroutesandservicesinruralareaswithintheframeworkofrural
travelandtransportprogram;
?basicandfurthertrainingtoraisethetechnicalcompetenceoffarmerhouseholds,
mediatorsandpublicandprivateserviceproviderswithintheframeworkofcapacity
buildingprogram;
?distinctionbetweenfoodasemergencyaidanddevelopment-orientedmeasuresforpoor
householdslikelytosufferfromfooddeficits;
2.VocationalTraining(TVET)
TheGermanGovernmentissupportingthecountry'sefforttoreformtheexistingvocational
trainingsystemandtogeartrainingtowardsdemandandjobopportunitiesintheformaland
informalsectors.Priorityisattachedtoincreasingprivatesectorinvolvement.Thesupport
focusesonstrategicandsystemdevelopmentatregionalandfederallevels,andonthetrainingof
teachersandmanagementpersonnel.
WithinTVET,theEthiopianGovernmenthasalsorequestedtheGermanGovernmenttosupport
theoverhauloftheconstructionsectorthroughtheprovisionofGermanexperts.Afive-year
ConstructionSectorCapacityBuildingProgramdocumentfocusingonhumanresource
developmentwasforwardedtotheGermanside.Inresponse,theGermanside,onthebasisof
theassessmentmadebythemissionthatvisitedEthiopiain2004,madenewresources
amountingto1.6millionEurosavailable,andreprogrammed2.6millionEurosfromother
projectsinconsultationwithMOFEC.Inaddition,theGermansidehasmobilizedresources
fromdifferentinstrumentslikeDAAD,CIM,SES,DED,InWEntetc.Inviewofthis,morethan
130Germanexpertsareexpectedtocomeandrenderservicesin17construction-training
institutions.However,sofaritisonly15CIMand42short-termSESexpertsprovidedtheir
servicestotheprogram.(MoFECBilateralDirectoratereport:2012)44
44MoFECBilateralDirectoratereport:2012

62
Witheconomicgrowthratestoppingoutatover10percentinrecentyears,Ethiopiaisshowing
thatitsindustrialdevelopmentreformpoliciesareparamounttothefutureofthecountry.The
government’sambitiouspoliciesandreformagendasattesttoitscommitmenttomodernizeand
globallyintegratetheeconomy.Througheducationandemployment,itaimstoimprovethe
livingconditionsofallEthiopians.
Realizingthattheadvancementsoftheso-called”AsianTiger”economiesoverthepastdecades
werebasedonanindustrialdevelopmentmodelfromGermany,theEthiopiangovernmentwent
tothesourceandsecuredtheGermanDevelopmentCooperationasapartnerintheEngineering
CapacityBuildingProgram(ecbp).Launchedin2005,ecbp’sobjectiveistoimprovethe
frameworkforeconomicandprivatesectordevelopmentthroughdemand-orientedengineering,
technicalandvocationaleducationreform,qualityinfrastructureupgradingandbusiness
improvementthroughoutthecountry.
The10-yearprogramisnowfinishedthroughitsplannedtimeframe.Todate,ithasentailed
expendituresofover€80millioninmatchingcontributionsfromtheGermanandEthiopian
Governments.Thissubstantialfinancialcommitmentonbehalfofbothgovernmentsisbeginning
toshowtangiblereturnsinecbp’sfourmajorcomponentsandbeyond:
?Design,improvementandimplementationofcountry-widereformsinthefieldof
engineering,intechnicalandvocationaleducation,andinqualityinfrastructure.
?Restructuringandmodernizationofthecorepublicinstitutionsofthosereforms
(universities,TechnicalandVocationalEducationTraining(TVET)colleges,theQuality
andStandardsAuthorityofEthiopia,etc.).
?Qualityimprovementoftherespectivepublicservices(demand-orientedcurricula,labor
marketorientedsystems,teachertrainingandfurthertraining,assessmentsystems,
employmentimpact);andprivateservices(qualitymanagementandassessment).
?Introductionofasystematicapproachtoprivatesectordevelopment,increaseofEthiopian
industrialproductexport,andthefirstforeigndirectinvestmentsinEthiopian
manufacturingindustries.Increaseofmanufacturingdepthandvalueaddition,aswellasof
qualityandproductivityinEthiopianindustries.Identificationoffactorsforbusiness

63
climateimprovement;firstexchangesandincreaseddialoguebetweengovernmentand
industries.Introductionofprivate-sectororientedtechnologytransfersystemsat
universitiesandTVETcolleges.
Interactionbetweenthegovernments,universities,technicalinstitutionsandbusinessesof
GermanyandEthiopiahaveincreasedsubstantially,andwillhelpwiththelong-term
sustainabilityofthereformsundertakenbyecbp.Ecbp’sindustrialdevelopmentmodelfocuses
onconnectingtheEthiopianindustriestointernationalmarketsforgrowth,technologytransfer
andemployment.QualifiedstafffromuniversitiesandTVETcollegeswillformthefoundation
ofthesegrowingindustriesandprivatesectorinthefuture.
Ecbp’sprivatesectordevelopmentoperatesonavaluechainapproach.Avaluechain
encompasseseverystepinproductionfromrawmaterialtofinishedproduct,i.e.fromanimal
hidesandskinstoleathershoes.Avaluechainalsoincludeseverythinginbetweenandadded
alongtheway,suchastransportation,packagingmaterials,andaccessories.Itisthereforea
systemic,sector-basedapproach,providingdeepinsightsintoeconomicsubsectorsforrespective
policyreformandanincreasinglyfavorablebusinessenvironment.ecbpworkscloselywith
stakeholdersfrominternationalmarketdemandtotherawmaterialproducerandidentifiesthe
majorbottlenecksandconstraintsinthevaluechainalongtheway.
3.CapacityBuildingandGovernance
ThethirdprogrammeswhicharetakingplacebytheEthio-GermanyCooperationisacapacity
buildingandgovernanceprogrammeoftheurbanareascommonlycalledUrbanGovernanceand
DecentralizationProgramme(UGDP).Theprogrammeisaimedtoachievesustainabilityand
efficacyfortheGermancontributiontowardsstrengtheningthefederalanddemocraticsystem,
theinstrumentsofGermandevelopmentcooperation(technicalcooperationthroughtheGTZ,
financialcooperationthroughtheKfW,assignmentofdevelopmentaidworkersthroughDED
andintegratedexpertisethroughCIM,trainingandupgradingofexpertsbyINWENT-formerly
DSE/CDG)arenowbeingstrategicallycombinedinasingleprogrammeandcoordinatedwith
thecontributionsofotherdonorswithintheframeworkofthe"NationalCapacityBuilding
Program".

64
ForundertakingtheprogrammetheEthio-Germandevelopmentcooperationisconcentratedon
twotargetcomponents:
1.Strengtheningthestructureandcapabilityofthefederalsystem.
2.Developingthecitiesaspoliticalandeconomiccenters.
Anotherintegralpartofpromotingtheseareasisconsultancyoncreatingandimplementing
structuralandregulatorylegislationandcodes.Thecooperationprogrammeisfocusingon
Oromiya,Tigray,AmharaandSouthernRegionand6-10pilotcities.Cooperationisscheduledto
runfortenyears.
SignificanceoftheGermancontribution
Buildingontheexperiencefromaseriesofindividualprojectssuccessfullyimplementedsince
thestartormiddleofthe90s,thecurrentsignificanceofthepriorityareastrategydescribedwith
policyadvice,capacitybuilding,investmentandtrainingtostrengthenthestructureand
capabilityofthefederalsystemandforurbandevelopmentwilllieinthefollowingareas:
?Modelpursuitofthemultilevelapproachinnetworkingfederal,regional,subregional
(Woreda,Kebele)andcitylevel.
?Far-reachingconcentrationonthefourmostdevelopedandcapableregions(Tigray,
Amhara,OromiyaandSouthernRegion).Forindividualelementsofthestrategythe
emergingregionswithparticularlyhighpotentialforconflictwillalsobeinvolved;
concentrationon6-10pilotcities(AddisAbabawith3.5millioninhabitantsasamodel)
inthefourregions.
?Modelmethodologyintheprocedure:developinginnovativeconcepts,testing,
implementinganddisseminatingmodelapproachesorprocessestomovecloserto
solvingtheinitialproblem.
ThoughtheGermanycontributionismainlyfocusedontheabovethreeprogrammes,it
isdeniablethatGermanyhasengagedinoneroadprojects.Theroadprojectisaimedto
cover125kmsroadfromAddisAbaba,thecapitaltoGedo,S.Westpartofthe
country.Theprojecthasthreephaseswhichwasallocatedatotalof59.10millionEuro,

65
PhaseI(Addis-Ginchi,27.62millionEuro),PhaseIIGinchi-Ambo,19.48MillionEuro
andPhaseIII.Ambo-Gedo12.00MillionEuro)
TheAddis-Ambo112Kmlongroadispartofthetrunkroad,whichconnectsthecapitalcity,
AddisAbaba,tomajoradministrativeandcommercialcenterssuchasHoleta,AddisAlem,
Ginchi,Ambo,GedoandNekempte.FromAmbo-Gedoalsothethirdphase.
Theobjectiveoftheprojectistorehabilitateandupgradetheroadtoconcreteasphaltsoasto
improvetheridingqualityanddecreasemaintenancecostthroughoutthedesignlifeofthe
project.Theprojectcomprisestherehabilitationandstrengtheningof92Kmoftheexistingroad
plusconstructionof20Kmofnewroad.Thisroadprojectistheonlyconstructionmadeby
Germanyassistancewithinthelast53years.
Toconcludeourdiscussion,GermanyisthemaindonortoEthiopia,itcametoEthiopiawith
TechnicalCooperationAgreementin1964andforthelast53yearsithasintervenedinvarious
areaoffields.Thefinancialcontributionisalsostartedin1963andforthelast54yearshas
playeditsroleinEthiopia'sdevelopment.BesidesthatGermanyisoneofthemajortradepartner
ofEthiopia.ItisobviousthatGermany'scontributionisnotinsignificantinallmatters.Germany
andthewholeEuropeansengagedinEthiopia'sdevelopmentactivities;however,thequestion
whichcanberaisedhereistowhatextenttheeconomicrelationisstrongespeciallycomparingit
withitslongagerelationandahalfcenturiescontribution.Especiallyrecentlythecomingof
AsianspecificallyChinesetoEthiopiaandtheregisteredresultsininfrastructures,other
developmentprojects,tradeandinvestmentwillleadustocompareandcontrastbothandshow
therightwayofeconomicassistance.Thiswillbethesubjectofthefollowingchapter.

66
ChapterFive
ComparativeanalysisofChinaandGermanyassistancetoEthiopia
Ethiopia'seconomicrelationwithEuropeandChinaisstillhasitsownfeatures.Aswesawin
theabovechapters,EuropeanaretraditionaldonorstoEthiopia.Theirassistanceagedalmost
morethanahalfofacentury,whileinrecenttimestheAsiansarecomingtoEthiopiaasa
developmentpartner.Thequestionwhichshouldberaisehereiswhatarethedifferences
betweenthetwowithregardtothedevelopmentofEthiopiaandwhichoneismoreeffective
thanother;inotherwords,towhatextentEthiopiaisbeneficialfromChinaandGermany.
Thepurposeofraisingthesequestionsisnottosaythataidordevelopmentassistancethatcomes
fromonesideisnotimportantingeneral.Itisamerefactthateachofassistanceshasits
contributiontothecountrybutwithcomparingthemtowhatextentEthiopiahasgotmore
importancewillbetreatedhere.(Ethiopia'simportancewillbediscussed)Forthesepurposethe
paperwilltakefewmajorcommongrounds,thatis,itattemptstoevaluatethedevelopmentco
operationsfromthepointofthedonor'spolicies,theEthiopia'sdevelopmentstrategy,the
internationalagreementsanddeclarationsofaideffectivenessandtypesandmodalitiesofaid.
5.1.Developmentpolicies
5.1.1.China'sdevelopmentpolicy
InordertofindoutwhatChinaissayingaboutitsAfricapolicyandtheChina-Africarelationsin
general,andhowthesearestaged,itwouldbemoreimportanttoexaminetheChina’sAfrica
Policyof2006documentinbrief.45
Accordingtothedocument,Chinastatesthatpeaceanddevelopmentarethemainthemesand
thegreatestchallengeofourtimes.ChinaspeaksasthebiggestdevelopingcountryandAfricaas
thecontinentwithmostdevelopingcountries.InthePartIandPartIIofthedocument,Africa’s
positionandroleisdescribedasacontinentwithalonghistory,richinnaturalresourcesand
45CHIEN-HUEIWU,China’sAfricaPolicy,2006.

67
withahugepotentialfordevelopment.Thehistoryofthetwopartsisdescribedassimilarand
therebysayingthattheysharetheidentityofdevelopingcountries.Thefriendshipis”profound”
andtheclosepoliticaltiesexpressedbysupportingeachotherinthestruggleforliberation
provesthesincerityofalongstandingfriendship.Furthermore,Africa’sparticipationinthe
South-SouthcooperationbyhavingrelationswithChinaisverymuchappreciatedandexpressed
inaspiritofcommonbelongingness.InPartIIIaboutChina’sAfricaPolicy,theintensification
oftherelationsarepresentedas”anewstrategicpartnership”basedonpoliticalequality,mutual
trust,economicwin-wincooperationandculturalexchange.ThesekeywordsincludingtheFive
PrinciplesofPeacefulcoexistencearementionedseveraltimes,andtheyaredescribedasthe
basicprinciplesfortheChina-AfricacooperationwheretheoneChinaprinciple(i.e.HongKong,
MacauandTaiwanconsideredaspartofthatChina)attheendissaidtobethepolitical
foundationfortheestablishmentanddevelopmentoftherelations.(China-AfricaPolicy,2006)
WithregardtoitsrelationtoAfricatheprinciplesofmutualbenefitandtherespectofnational
sovereigntyplaymajorrole,andChinastressesthattheeconomiccooperationhastobe
beneficialtobothparties.AccordingtotheBeijingConsensustheinternationalsystemisunjust
andinequitable(dominatedbytheWest).Therefore,Chinaconsidersitselfasanalternativeforce
tothewest.ItisalsointhedocumentclearlystatedthatChinaisacloseallyofAfricainitspath
towardseconomicdevelopmentandithelpsthisprogressbyfinancialaidwithoutanypolitical
interference.ForChina-Africarelationthereisnoaplacefortheconditionsofdemocracy,
protectionofhumanrights,anticorruptionandotherspecificissuesunlikewhatwesternsput
it.(ibid)46
InPartIV,thedocumentmentionstheareasinwhichChinawishestocooperatewiththe
Africancountries.Theseareasaredividedintothepoliticalfield,theeconomicfieldand
education,science,culture,healthandsocialaspects.Inthepoliticalfield,thisissuggestedby
high-levelvisitsthatincludeexchangesbetweenlegislativebodiesandpoliticalpartiesandlocal
governmentsinordertocreatecommunication,understanding,friendshipandmutualtrust.
Internationally,ChinaoptsforawidecoordinationofforeignpolicywhereChinaandAfricacan
supporteachotherintheinternationalcommunitysuchaswithintheUNandtheWTO.National
46China-AfricaPolicy,2006.

68
sovereignty,territorialintegrity,nationaldignityandhumanrightsareconsideredasareaswhere
ChinaandAfricacansupporteachotherontheinternationalstage,anddevelopmentis
consideredatoppriorityontheagendatogetherwithareformoftheUNandtheWTO,sothat
thetwoinstitutionsbecomemoredemocraticandjust.Furthermore,thereisasectionabout
peaceandsecuritywhereChinastatesthatitwillcontributetotheUN’speacekeepingmissions
inAfricaandcontinuetohelptrainAfricanmilitarypersonnelandsupportdefenceandarmy
buildingofAfricancountriesfortheirownsecurity.Thisfitswellwiththeprinciplesof
multilateralismandpeacefulsolutionstoconflicts.Thereisalsoamotivefromchinato
cooperateinJudicialandpolicesectorsagainstcombatingtransnationalorganizecrimeand
corruption.
Inrelationtoeconomiccooperation,tradeandinvestmentaretwoimportantareas.Chinawants
toincreasetradewithAfrica,andstatethattheywilladoptmoreeffectivemeasurestofacilitate
Africancommodities’accesstotheChinesemarketandfulfilitspromisetograntduty-free
treatmenttosomegoodsfromtheleastdevelopedAfricancountrieswithaviewtoexpandand
balancebilateraltrade,sothatthetradestructurecanbeoptimised.Itisnotstoppedherethe
visionofthetraderelationisgoinguptoestablishingaFreeTradeAreabetweenAfricaand
China.ChinaalsoencouragesChineseenterprisetoinvestinAfricaandbroadenitstraderelation
withtheirAfricancounterparts.Forthispurposechinahaspromisedtoprovidepreferential
loansandbuyercredits,andalsotosigntheagreementontheavoidanceofdoubletaxation.
Furthermore,agriculture,infrastructureand(natural)resourcesareimportantareasof
cooperationwhereChinabelievesthatitcancontributewithtechnologyandeducationasto
agricultureandmanagementaswellastoinfrastructure,buttheimportanceoflocalcapacity
buildingisalsostressed.Inrelationtonaturalresources,Chinaencouragescooperationbetween
ChineseenterprisesandtheAfricannationsonthebasisofmutualbenefitandcommon
developmentanddevelopandexploitrationallytheresourceswithaviewtohelpAfrican
countriestotranslatetheiradvantagesinresourcestocompetitivestrengthandrealisesustainable
developmentinAfricancountriesandonthecontinentasawhole.Chinastatesthatitiswilling
toseekasolutiontoorcancelthedebtsthatAfricancountriesowetoChina,asfarastheycan.

69
Astotheareaofsocialdevelopmentandculturalexchanges,Chinaoptsforcooperation
regardingeducation,science,culture,health,mediaandtheenvironment.Chinaispresentedas
‘thegiver’asitwillcontinuetosendmedicalteamsandprovidemedicinesandmedical
materialstoAfricancountries,andhelpthemestablishandimprovemedicalfacilitiesaswellas
trainmedicalpersonnelinordertopreventandtreatHIV/AIDS,malariaandotherdiseases.
Chinaalsoencouragesexchangesofstudentsandthatitwillincreasethenumberofscholarships
andcontinuetosendteacherstoAfricatohelpinChineselanguagetrainingandcarryout
educationalassistanceprojects.Furthermore,Chinawillworkforanincreaseincultural
exchangewithinsports,artsandthemediasothatobjectiveandbalancedmediacoverageof
eachotherwillbethecase.Astothefieldofdisasterreductionandrelief,Chinastatesthatitwill
respondquicklytoAfricanCountries’requestforurgenthumanitarianaid.
InPartV,ChinadescribestheFOCACasaneffectivemechanismforthecollectivedialogueand
multilateralcooperationbetweenChinaandAfrica.Itisattachedimportanceasaframework
fromwherepoliticalconsultationandpragmaticcooperationcanbestrengthened,andthatalso
includestheNewPartnershipforAfrica’sDevelopment(NEPAD).
Indeed,ChinadoesnothaveaspecialpolicytoEthiopiaanditisalsonotexpectedtohavea
policyforonecountry.WebelievethattherearecommonideasthatEthiopiashareswhatChina
saysinthepolicyregardingitsrelationtoAfrica.WebelievethatbasedonthisPolicyChina’s
contributiontoEthiopiaandthetradeaswellastheinvestmentrelationsofthetwoisgrowing
witharapidrate.
5.1.2.Germany'sDevelopmentPolicy
TheGermanygovernmentinitsPolicypaperwhichisissuedisclaimthatitsdevelopmentpolicy
isaimedforthesuccessfulaccomplishmentoftheMillenniumDevelopmentGoalswhichwas
theworldleaderscommonlyagreedin2000toeradicatingpovertyintheworldandotherissues.
Accordingly,inSeptember2000,theheadsofstateandgovernmentof189countriesgatheredat
asummitmeetinginNewYork,whichwasresultedintheadoptionoftheMillennium
Declaration.ThatDeclarationwasmarkedthebirthofanewglobalpartnershipfordevelopment.

70
Subsequently,eightinternationaldevelopmentgoals,theMillenniumDevelopmentGoals
(MDGs),werederivedfromtheDeclaration:Thesegoalsareenumeratedasfollows.47
1.Halvingtheproportionofpeopleintheworldwhosufferfromextremepovertyandhunger.
2.Enablingallchildrentoreceiveprimaryeducation.
3.Promotinggenderequalityandwomen'sinvolvementinpolitical,economicandsociallife,
particularlyinthefieldofeducation.
4.Reducingchildmortality,byatleasttwothirdsforunder-fives.
5.Improvingmaternalhealthandreducingbythreequarterstheratioofwomendyingin
childbirth.
6.CombatingHIV/AIDS,malariaandotherinfectiousdiseases,haltingandbeginningto
reversetheirspread.
7.Ensuringenvironmentalsustainabilitybyintegratingtheprinciplesofsustainable
developmentintocountrypoliciesandprogrammesandreversingthelossofenvironmental
resources,reducingtheproportionofpeoplewithoutaccesstosafedrinkingwaterand
improvingthelivesofatleast100millionslumdwellersby2020.
8.Developingaglobalpartnershipfordevelopment.Thatmeans:
•developinganopentradingandfinancialsystemthatisbasedonlawsandispredictable
andnon-discriminatory;
•addressingtheleastdevelopedcountries'specialneeds;
•addressingthespecialneedsoflandlockedandsmallislanddevelopingstates;
•takingnationalandinternationalmeasurestodealwithdevelopingcountries'debt
problems;
•developingdecentandproductiveworkprogrammesforyouthincooperationwiththe
developingcountries;
•incooperationwithpharmaceuticalcompanies,providingaccesstoaffordableessential
drugsindevelopingcountries;and
•incooperationwiththeprivatesector,makingavailablenewtechnologies,especiallyinthe
fieldofinformationandcommunication.(MillenniumDevelopmentDeclarations,
September,2000,UNGeneralAssembly,NewYork)
47MillenniumDeclaration,signedinSeptember2000.

71
Accordingtothisdeclaration,achievementoftheabovemaingoalsofMDGsandsustainable
developmentgoalsarecommonresponsibilityofbothdevelopinganddevelopedcountries.
Moreover,moreandmorepeoplearerecognizingthatdevelopmentpolicyisnotonlyimportant
forthedevelopingcountriesbutisbeneficialforthedevelopedonesaswell.Equitable
globalization,worldwidestabilityandpeaceareineveryone’sinterests.
TheMainfocalareasofGermanyCooperation;
Asofficiallystated,Germanyconcentratesitsdevelopmentcooperationoneducation,health,
ruraldevelopment,goodgovernance,climateprotectionandsustainableeconomicdevelopment.
Theguidingprincipleinalleffortsistheprotectionofhumanrights.
BasedontheCoalitionAgreementbetweenthepartiesinGermany’sgoverningcoalition,which
formsthebasisforallactionstakenbytheGermangovernment,sixpriorityareasforGerman
developmentcooperationcanbeidentified:
1.Sustainablepovertyreduction.TheaimofinternationalandalsoGermandevelopment
policyistoachievetheMillenniumDevelopmentGoals,thereforemostgoalbeingreduction
ofpoverty.FortheGermangovernment,tack-lingeducationalpovertyisparticularly
important.
2.Reducingstructuraldeficits.TheGermangovernmentfostersgoodgovernanceinthe
partnercountrieswithwhichitisengagedindevelopmentcooperationandalsoin
internationalstructures.Onefocusofitseffortsisthephasingoutofagriculturalexport
subsidies.(theysubsidizetheirlocalagriculturalproducts)AnotherfocusofGerman
developmentpolicyistoachievegreaterpolicycoherencefordevelopmentwithinthe
Germangovernment,theEuropeanUnionandinternationalorganizations.
3.Strengtheningcivilsociety.Developmentcanonlytakeplaceasanorganicprocess,
stemmingfromtheheartofsociety.ThatiswhyGermany'sgovernmentwanttoencourage
morecivilsocietyengagementbothinitspartnercountriesandinGermanyandharnessitin
theinterestsofdevelopment.
4.Harnessingbusinessandindustry.Therecanbenosustainabledevelopmentwithout
sustainableeconomicdevelopment.Businessandtheeconomyplayakeyrolein

72
developmentcooperation.TheGermangovernmentpromotescorporatesocialresponsibility
anddevelopmentpartnershipswiththeprivatesector.
5.Enhancingeffectiveness.Germanyisworkingonmakingdevelopmentcooperationeven
moreeffective.Everyeurooftaxpayers'moneyshouldbemadetoworkashardaspossible
tofightpoverty.Thefirststeptowardsgreatereffectivenessandajoined-upsystemof
developmentcooperationisthemergerofthreeofGermany'sgovernment-owned
implementingorganizations,theGTZ,theDEDandInWEnt,toformaneworganization,the
GesellschaftfürInternationaleZusammenarbeit(GIZ).
6.Improvingvisibility.Tobesuccessful,developmentpolicyneedspublicsupport.Through
our(theGermany's)effortsinthefieldofawarenessraisinganddevelopmenteducation,(we
the(germany)creategreatergeneralawarenessandacceptanceoftheaimsandissues
concerned.(Source,MinistryofEconomicCooperationanddEvelopment;2012)48
AsitisclearlyshownfrombothpoliciesChinaismainlyfocusingonthetotaldevelopmentof
thecountry.Itismainlyreflectthepolicyofnon-interferencewithintheinternalaffairsofthe
country.TherelationshipbetweenEthiopiaandChinacanbeanexampleofthese,theChinese
governmentforthelast20yearsdidn'tinvolveinanyofinternalissuesofthecountry.While
Germanybasedonitshumanrightsanddemocraticprinciplesissuesinterfereintheinternal
mattersofEthiopiaandevenitstoppedtohelpEthiopiatwotimeswithinthelast20years;First
wasduringtheEthio-Eritreaborderconflictin1998andthesecondwasduringthe2005election
crisis.AstheMoFECrecordsshowGermanyalsoraisetheissuesoftheNonGovernmental
OrganizationsandAntiterrorismlawsofEthiopiaasthesearenondemocraticlawsandthey
shouldbecanceled.Basedonitsstandittriesnottoreleasetimelyitsassistancewhichcamein
thechannelofProtectingBasicServices(PBS).(BriefnoteonEthio-Germanycooperation:2010)
Inrecentgovernment-to-governmentnegotiations,Germanyhasraisedtheissuesofthesupport
ofprivateorganizationsandTVETs.TheEthiopiangovernmentofficialsbriefedtheGerman
sideasitisthegovernments’internalmattersandtheEthiopiangovernmenthasarighttouseits
policyconcerningtheroleofprivateenterprisesandTVETs.HoweverfromGermanysideit
didn’tgetacceptanceandfinallythemainprogrammewhichwasassistingbyGermany
48MinistryofEconomicCooperationanddevelopment;BriefnoteonEthio-Germanycooperation2012.

73
governmentwhichiscalledEngineeringCapacityBuildingProgramme(ecbp)hasbecomeoutof
thelistofGermanyassistedprojects.(Source:MoFEC,Minutesoftheconsultationmeetings;
January2010)
Fromthis,wecandeductthatGermanyisusingitsdevelopmentassistancetopressurizethe
Ethiopiangovernmenttofollowotherwaysthatwhatthegovernmentbelievesbutinmostofthe
timebecauseoftheEthiopiangovernmentfirmstandinsteadofchangingitspolicies,Germany's
contributioninterruptedthroughtimeoritdidn'tflowasitisexpected.ButforChinesesidesince
therearenoanypolicyissuespresentedfordiscussionaspre-conditionswithregardtoEthiopia's
internalissuestheaidcouldbeflownsmoothlyanditseconomicrelationisincreasingfromtime
totime.
5.2.DevelopmentStrategiesoftheEthiopianGovernment
OthermajorgroundtoevaluatethedevelopmentassistanceofChinaandGermanyisEthiopia's
owndevelopmentplanandstrategy.Inthisconnectionitwillbemorecrucialtoraisetheissueof
towhatextenttheycontributefortheaccomplishmentofEthiopia'snationalplan.Forour
discussionsoitwillbebettertoseetheEthiopianNationalPlanatfirst.
WecansayinonewordthatthemaindevelopmentobjectiveoftheEthiopianGovernmentis
povertyeradication.Hence,thecountry'sdevelopmentpoliciesandstrategiesaregearedtowards
thisend.Basedonthismainobjective,theEthiopiangovernmentissuedvariouspoliciesand
programdocumentsamongwhichthemajoroneisdescribedastheGrowthandTransformation
PlanII(GTPII)ofEthiopia,whichisaguidingstrategicframeworkforthefive-yearperiod
2015/16-2019/20.49
TheGTPIIrepresentsthefourthphaseoftheEthiopiandevelopmentPlanwhichcameafter
PovertyReductionStrategyProgram(PRSP)process,whichhasbegunundertheSustainable
DevelopmentandPovertyReductionProgram(SDPRP),whichcoveredthreeyears,2002/03-
2004/05andGrowthandTransformationPlanI.Asitisstatedinitsintroductorypartthe
PASDEP(planforacceleratedandsustaineddevelopmenttoendpoverty)carriesforward
49NationalPlanningCommission,GrowthandTransformationPlanII(GTPII)ofEthiopia,2015/16-2019/20,(Addis
Ababa;May2016),80-81.

74
importantstrategicdirectionspursuedundertheSustainableDevelopmentandPoverty
ReductionProgram(SDPRP)relatedtoinfrastructure,humandevelopment,ruraldevelopment,
foodsecurity,andcapacity-buildingbutalsoembodiessomeboldnewdirections.Foremost
amongthemisamajorfocuswasongrowthinthefive-yearperiodwithaparticularemphasis
ongreatercommercializationofagricultureandenhancingprivatesectordevelopment,industry,
urbandevelopmentandascaling-upofeffortstoachievetheMillenniumDevelopmentGoals
(MDGs)(PASDEP:2006:1).
TheGTPislaiditsfoundationonthisPASDEPandithasputastheobjectiveoftheGTPIIfor
thefiveyearsasfollows:
1.MaintainatleastanaveragerealGDPgrowthrateof11%withinstablemacroeconomic
environment.
2.Developthedomesticengineeringandfabricationcapacityandimproveproductivity,quality,
andcompetitiveness.
3.Furthersolidifytheon-goingpublicmobilizationandorganizedparticipationtoensurethe
publicbecomebothownersandbeneficiariesfromdevelopmentoutcomes.
4.Deepenthehegemonyofdevelopmentalpoliticaleconomybystrengtheningastable
democraticdevelopmentalstate.
Strategicpillars;50
Ethiopia'sobjectivesandstrategiesforsustainingrapidandbroad-basedeconomicgrowthpath
aredependentonthefollowingGTP'sstrategicpillars.
1.Sustainingrapidandequitableeconomicgrowthanddevelopment.
2.Increasetheproductivecapacityandefficiency
3.Speedupandcatalyzetransformationofthedomesticprivatesectorandrenderthemacapable
developmentforce;
4.Buildthecapacityofthedomesticconstructionindustry
5.Properlymanageandadministertheon-goingrapidurbanization
6.Acceleratehumandevelopmentandtechnologicalcapacitybuilding
50NationalPlanningCommission,GrowthandTransformationPlanII(GTPII)ofEthiopia,2015/16-2019/20,(Addis
Ababa;May2016),81.

75
7.Establishdemocraticanddevelopmentalgoodgovernance
8.Promotewomenandyouthempowerment,
9.Buildclimateresilientgreeneconomy.
Foreachofthepillarstheplanhasputsectoraltargetsindetail,Fromthisplanalsoonecan
understandthattheEthiopia'sgreatambitionistobefreefrompoverty;andtheplanasputitin
itsintroductorypart.Theobjectiveoftheplanistofulfillthevisionofthecountrywhichisto
reachmiddleincomecountriesby2025.Forthispurpose,firstandforemosttheplanput
ambitioustargetsforeachofthestrategicpillars.Especiallythemainaimoftheplanisto
transformthecountriesfromagriculturaleconomytoindustrializedeconomy;inthisregardit
requeststheconstructionofhugeinfrastructuresuchasindustrialparks,roads,bridges,railways,
powertransmission,highscalehydropowerdams,sugarandleatherfactoriesandothers.
AsitisindicatedinChapterIIIofthispaper,Chinaisnowinvolvinginallthesesectors.Chinese
companiesarehighlyengagedinbuildingofhighways,railways,powersupplyprojects,
industrialparkandsugarfactoriesinallpartsofEthiopia.WecanseeChinesefootprintinthe
capital'sringroad,highflyerroadandexpress(fast)roadstoo.
WhencomparingittoGermany'sassistance,theGermany'sdidn’tinvolveinanyconstruction
worksexceptthatofAddis-GedoRoadwhichhasconstructedbeforesomeyearsago.Another
EuropeancountryandtheformercolonyofEthiopia,Italy,hascontributedfortheGiligelGibeII
Hydropowerdam.AsitisstatedintheEthiopianGTP,Ethiopia'sdemandtofillitsfinancialgap
isveryhigh.

76
ThereforeinsatisfyingofEthiopia'sambitiontofillitsfinancialgapandconstructingof
infrastructures(road;railway,factories,)andaddressingofsocialissues(agriculture,health,
education,culture,tourism…)China'scontributionismuchhigherthanGermany.Initsvolume
ofaid,asitisstatedinChapterIVofthispaperchina'scontributionaloneishalfofatotalof14
Europeancountriescontributedinthe(2005-2011)anditisoverfivetimesmorethanof
Germany'scontribution.
5.3.AidEffectivenessandtheEthio-ChinaandEthio-EuropeEconomicRelations
Inamatterofgrantordevelopmentassistanceitisnotonlythevolumeofthemoneythatflows
tothedevelopingcountriesbuttheeffectiveutilityoftheresourcesisimportant.Therefore,
currentlytheissueofaideffectivenessisbecomingamajoragendaintheeconomicrelationof
thecountries.Forthelast50yearsthedevelopedcountrieshaveflowntheirassistancetotheir
formercoloniesandothersaswellasduringthecoldwarperiodtheyalsoallocatedalotamount
ofmoneyforthecountrieswhicharelinedintheirideologicalcamps,however,theresultgainis
notasitwasexpected.Duetothisbasicissuetheworldcometodesignanewwayofaid

77
effectivenessapproachandthecollectiveplanofactions.AmongthemtheParisDeclarationon
AidEffectivenessandtheAccraandtheBussanPlanofactionsshouldbementioned.
TheParisDeclarationonAidEffectivenessinitspreamblestateditsobjectiveasfollows:
We,Ministersofdevelopedanddevelopingcountriesresponsibleforpromoting
developmentandHeadsofmultilateralandbilateraldevelopmentinstitutions,meetingin
Parison2March2005,resolvetotakefar-reachingandmonitorableactionstoreformthe
wayswedeliverandmanageaidaswelookaheadtotheUNfive-yearreviewofthe
MillenniumDeclarationandtheMillenniumDevelopmentGoals(MDGs)laterthisyear.
AsinMonterrey,werecognizethatwhilethevolumesofaidandotherdevelopment
resourcesmustincreasetoachievethesegoals,aideffectivenessmustincrease
significantlyaswelltosupportpartnercountryeffortstostrengthengovernanceand
improvedevelopmentperformance.Thiswillbeallthemoreimportantifexistingandnew
bilateralandmultilateralinitiativesleadtosignificantfurtherincreasesinaid.(Paris
DeclarationonAidEffectiveness:2005:3)51
TheParisdeclarationisshortlycanbedefinedascommonpactofthedonorandrecipientsin
ordertoimprovetheeffectivenessofaid.Forthissuccessfullyachievementthesignatorieshave
agreedonthefollowingfiveprinciples:Ownership,Harmonization,Alignment,Resultsand
MutualAccountability.
?Ownership:Partnercountriesexerciseeffectiveleadershipovertheirdevelopment
policies,andstrategiesandco-ordinatedevelopmentactions.
?Harmonization:Donors’actionsaremoreharmonized,transparentandcollectively
effective.
?Alignment:Donorsbasetheiroverallsupportonpartnercountries’nationaldevelopment
strategies,institutionsandprocedures.
?Results:Managingresourcesandimprovingdecision-makingforresults
51ParisDeclarationonAidEffectiveness:2005:3

78
?MutualAccountability:Donorsandpartnersareaccountablefordevelopment
results.(ParisDeclarationonAidEffectivness:2005:5-18)
BothGermanyandChinaarethesignatoriesoftheParisDeclaration,Ethiopiaisalsosigned
theDeclarationsothatitmaybeimportanttoevaluatethetwo'seconomicassistance
effectivenessbasedontheabovecommonagreedprinciples.Beforethatitwillbecrucialtosee
thefollowingsurveywhichshowsEthiopia'sstageatAidEffectiveness.Thesurveywasdonein
2007butin2010accordingtothesurveyors'recordthereisnosomuchchangefromthisdata.
DIMENSIONS2007CHALLENGESPRIORITYACTIONS
OwnershipGood
NationalcapacityforImplementagreedcapacitybuilding
implementingthepoverty-reductionProgrammes
strategypaperContinuetoincreaseuseof
Scalingupoffinancialresourcesmulti-donoraidmodalities
andimprovingpredictabilityHonorinternational
Commitments
AlignmentMixed
Capacityconstraints,particularlyImprovedcommunication
atthelocallevelbetweendonorsand
FurtherstrengtheningandGovernment
increasinguseofprocurementContinuetoincreaseuseof
systemsandothergovernmentmulti-donoraidmodalities
SystemsImplementagreedcapacitybuilding
ProblemofgettingtimelyandProgrammes
reliableinformationAgreeonclearandmutually
Implicitconditionalitiesacceptableconditionalities
HarmonizationMixed
FinancialandlegalrulesrestrictMovetowardjointfundingby
useofnationalsystemsdonorsthroughmodalitiesthat
usegovernmentsystems
Implementagreedcapacitybuilding
Programmes
Managing
Mixed
ImprovingmonitoringandfeedImplementagreedcapacitybuilding
forresultsbackmechanismProgrammes

79
Mutual
Mixed
LackofagreementoncontentAgreeonselectedidentified
accountabilityofthemonitoringmechanismactionstoachievesettargets
2008SURVEYONMONITORINGTHEPARISDECLARATION:MAKINGAIDMORE
EFFECTIVEBY2010-©OECD2008;source:AidEffectivenesssurveybyOECD;2010
InordertoassesstheChinaandEthiopia'seconomicrelationandEthio-Germany'srelation,it
willbemoreimportanttoexaminetheproceduresofaidflowofthecountriesasfollows;
5.3.1ProceduresoftheDevelopmentCooperationofGermany
Everytwoyears,theBMZmeetsfornegotiationswiththegovernmentofeachpartnercountry.
Bothpartiessitdowntogetheraspartnersanddiscusstheircooperation.Atthesenegotiations,
theyalsoaddresssensitivesubjectssuchasreforms,civilsocietyactivityandobservanceof
humanrights.Theaimofthenegotiationsistoagreeonthepriorityareasofthecooperationand
onthevolumeofFinancialCooperation,whichcantaketheformofloansfordevelopment
projects,andTechnicalCooperation,forexamplepracticalsupportfromGermanexperts.The
BMZthencommissionsGermany'sgovernment-ownedimplementingorganizationstocarryout
theprojectsandprogrammes.Theseorganizationsinturnworktogetherwithpartnersinthe
countryconcerned,whichareselectedbythegovernmentofthatcountry.(WhitePaper:
2008:10)52
Asitisstatedinitspolicypaperandshowninexperiencethebaseforalltypesofcooperation
betweenGermanyanddevelopingcountriesismadethrough,theAgreementsbetweenthe
governmentsofthepartnercountriesandtheGermangovernmentformthebasisforbilateral
officialdevelopmentassistance.TheFederalMinistryforEconomicCooperationand
Development(BMZ)and,inspecificcases,otherfederalministriessuchastheFederalForeign
Officecontractthegovernment-ownedimplementingorganizationstoundertaketheagreed
developmentprojectsandprogrammes(ibid18)Theseorganizationsalsoimplementnumerous
multilateraldevelopmentinterventions.ThemajorinstrumentsoftheGermanyaidarethe
following:
52WhitePaper:2008:10

80
Entwicklungsbank(KfW)andtheDeutscheInvestitions-undEntwicklungsgesellschaft
(DEG),asubsidiaryoftheKfWGroup,areresponsibleforFinancialCooperation.
TheDeutscheGesellschaftfürTechnischeZusammenarbeit(GTZ)isresponsibleforTechnical
Cooperationwithpartnercountries.
TheGermanDevelopmentService(DED)isthespecialistinpreparinganddeploying
developmentworkers.
HumanresourcesdevelopmentandfurthertrainingaretheresponsibilityofInternationale
Weiter-bildungundEntwicklunggemeinnützigeGmbH(InWEnt)(CapacityBuilding
International,Germany).
InternationalexpertsareplacedinpartnercountriesbytheCentrumfürinternationale
MigrationundEntwicklung(CIM).
Insomecases,servicesareprovideddirectlybytherelevantGermangovernmentagenciessuch
astheFederalInstituteforGeosciencesandNaturalResources(BGR)orthePhysikalisch-
TechnischeBundesanstalt(PTB).
SinceJanuary2011,theseorganizationsnamelyded,InWent,CimandPTBaremergedwith
GTZandnowcalledGIZ.Theirtasksandobjectiveshoweveristhesame.
Inthe2010financialyear,theFederalMinistryforEconomicCooperationandDevelopment
(BMZ)hasaspendingenvelopeof6.07billionEuros.Thatis4.4percentmorethanin2009.The
BMZ'sbudgetmakesup1.9percentofthetotalfederalbudgetinGermany.
ThememberstatesoftheEUhavepledgedtoincreasetheproportionofgrossnationalincome
theyspendondevelopmentto0.7percent.InGermany,thefigurecurrentlystandsatalittle
under0.4percent.Thegovernmentwishestofurtherincreaseitsdevelopmentspending.The
BMZspendstwothirdsofitsbudgetondirectcooperationwithitspartnercountries,whilstone
thirdisspentthroughtheEUandmultilateralorganizations.TheMinistryspends11percentof
itsbudgetonsupportingcivilsocietyorganizations.And1.3percentisrequiredfortherunning
oftheMinistryitself.

81
5.3.2China'sProcedure
ForChineseprocedureitisusingonlyonechannelwhichisthegovernmentandgovernment
negotiations.Inmostcasesafterthecompletionofthepreparationofprojectdocumentsthe
concernedpartiesfrombothsidesnegotiatedirectly.Afterthenegotiationstheywillsignthe
loanoraidagreements.ThereisalsoanannualreviewmeetingspreparedbyEthiopiawhich
mainlydiscussontheimplementationsoftheprojectsandthenewsubmittedprojects.
ForourcomparisonregardingtheChinaandGermanyeconomicrelationswithEthiopia,itis
alsoeasytosaythatChineseprocedureismoresimpleandcomfortabletotheEthiopianside.
BasedonthePrinciplesofParisDeclarationsofAidEffectiveness,Ethiopiahasmoreownership
rightinitsrelationwithChinathanitsrelationwithGermany.BecauseitistheEthiopiaside
whichpreparesitsprojectsandsubmitforfundingbutforGermany's,theGermanygovernment
alreadydecideditsinterestandareasofinterventionsothattheEthiopiansideshouldsubmitits
requestaccordingly.ForinstanceGermany'sdoesn’tallowaconcessionalloanforconstruction
ofphysicalworks.Italsodoesn'tinterveneinsuchareassuchaspowersupply,miningorother
hugeactivities.
RegardingtheflowofchannelstheGermanysideusedtwochannels;thesearefortechnical
cooperationtheGIZandforfinancialtheKfW,eachoftheseinstrumentshastheirownworking
systems,guidance,rulesandproceduresbesidesthattheEthiopiangovernmentforasingle
projectshouldnegotiateandagreeothersupplementaryagreementsinadditiontothe
government-to-governmentsummaryagreement(forinstanceforGIZ,implementation
agreementandforKfwfinancingagreement).Theflowofassistanceisalsoaccordingtotheir
wayofsystemnotusingtheEthiopiansystem.
TheParisDeclarationstatedthatalldonorstoharmonizetheirsystemasoneandtheyshould
aligntheirprocedures,institutionsandcountriesstrategiestothepartner'sstrategiesand
procedures.InalltheseissueswecansaythatGermanyisstillyetandshouldworkmore.In
otherwayChinesesystem,procedureandrulesandregulationsaremostlygovernedbythe
Ethiopian.ItusestheEthiopiangovernmentfinancialsystem,theassistancecamethrough
Ethiopia'schannelsandinmostcasesitisalignedwithEthiopia'sprocedures.

82
5.4.TypesandModalitiesofAid.
TheAidtypesandmodalitiesarealsovaryforbothdonorsanditsimpacttoEthiopia.
5.4.1Typesofaid
TherearetwotypesofaidwhichGermanyandChinaareinvolvinginEthiopia'sdevelopment.
Thesearetechnicalandfinancialcooperation.Therearealsodifferentargumentsonthe
importanceofthetwo.SomearguethatTechnicalcooperationisimportantfordeveloping
countrieswhichhavelackofskilledmanpowerwhileothersarguethatbuildinginfrastructure
andsupportingthedevelopingcountriesbyfinancetheprojectsismoreimportantthansending
foreignexpertiseandprofessionals.
InEthiopiacasetheEthiopiagovernmentdoesn'tdenythatthereislackofskillandtechnology
inthecountry,however,themajorproblemislackofcapitalormoney.(EthiopianAgricultural
developmentledpolicy,GTP,Foreignpolicy).TheGrowthandTransformationPlanisalso
mainlyrequeststhedonorcommunitytoaddressthefinancialgapofthecountry.
InadditiontotheinterestofEthiopia,themeasurementandutilizationoftechnicalcooperationis
verydifficultinEthiopianside.AsonestudywhichdonebyMoFECindicatesEthiopiacouldn’t
getmuchbenefitfromtechnicalcooperation.Becausefirstofallmostofthetechnicalexpertise
cametoEthiopiaarenotbythelatter'srequestanddemand,itisthedonoritselfthatselectand
sendthem.Thereisnoevenaclearcriteriatoselectbestprofessionalswhichcontributeto
Ethiopia.AftercomingtoEthiopiaitisalsothereisn'taclearsystemtoevaluateandmeasurethe
performanceoftheexpertise.WiththesebasicweaknessesinEthiopiacasethetechnical
cooperationisnotpreferable.(MoFEC;TechnicalcooperationPolicydraft;2013)53
RegardingtheGermanycooperationaswesaidinabovechapters,Germanycontributedmorein
technicalassistance,thetechnicalcooperationwingGIZ(formergtz)isknowninEthiopia,since
1964'softheEthiopian-GermanyGovernmentsTechnicalCooperationAgreementalotof
GermanyprofessionalscametoEthiopiatoassistthegovernment,howevertheresultsgainisnot
encouraging.AsoneofthestudyshowsmostoftheexpertisewhocametoEthiopiaare
53MoFEC;TechnicalcooperationPolicydraft;2013

83
unqualifiedandtheyarenotbetterthanthelocalexpertise,forthesereasonwithinoneyear,in
2010,theEthiopiangovernmenthascancelledthecontractof23expertisewhocamefrom
Germanytoworkontheengineeringcapacitybuildingprogramme(source:MoFEC;2010).For
otherprogrammesitisthesamebutbecauseoflackofstrongmonitoringmechanism,the
cancelationofthecontractsdidn’thappen,howevertheecbpofficebyitsownstrongsystem
couldmonitorandcancelledtheunskilledonesfrequently.
ForavoidingoftheseproblemstheEthiopiangovernmenthastriedtoformulatethetechnical
cooperationpolicybutduetolackofefficientcooperationandwillingnessfromdonorssideit
couldn'tbepractical.Therefore,nowthegovernmentisencouragingthedevelopmentpartnersto
usedirectfinancialflowchannelsthroughmainprogrammessuchasSafetynet,PBS,(protecting
BasicService,wementionedhereabove)PSCAP(publiccapacitybuildingprogramme),GEQIP
(GeneralEducationQualityImprovementProgramme),SLM(SustainableLandmanagement)
programmes.AmongtheEuropeancountriesonlyUKusedalltheseprogrammes,Italy,Austria
andIrelandusedPBSonlybutothersarenotwillingtousethechannel.
OnGermanyside,itagreedtoworkwithPBSandSLMbutitisusingitsfinancialprocedureand
itsinstrumentsratherthanusingthecentralgovernmentsystem.
InshortfromthisanalysiswecansaythatalmosthalfofGermany'scontributionasitcomes
throughtechnicalcooperationandtheproceduresandsystemsoftheassistancearenotgoverned
bytheEthiopiangovernmentandthereisnoanymeasurementofitsresults,inmostcases
EthiopiaisnotusingefficientlytheGermany'sassistance.Whereasitisstatedrepeatedlyinthe
papersincetheChineseaidiscomingdirectlyforspecificprojectsandforhugeworksasadirect
flowofmoney,itismuchbetter.TheTechnicalcooperationwithChinaisalsodoneintheform
ofsendingEthiopianandpreparingaworkingvisitinChina.ThisitselfhelpstheEthiopianto
learnmorefromChinesebyseeingandphysicallyattendingtheprogrammesinPeoples
RepublicofChina.

84
5.4.2.Modalitiesofaid
Otherissuewhichshouldberaisehereforourcomparisonistheaidmodality.Germany'said
cametoEthiopiaintheformofgrantwhileChineseisintheformofloan.Forthelast53years
Germanydidn’tlendtoEthiopiabutChinesehaslentEthiopiawithconcessionalloanwhichisa
simpleratewithlongyearsofrepayment.Indeedwecan'tsaythatloanisbetterthangrantor
viceversawithoutanyconcretestudy.However,asanassessmentwhichdonebyMoFECshows
thatinEthiopiacase95%oftheloaniseffectivewhileforgrantonly78%iseffectivelyused
(MoFEC;BusinessProcessReeneginering:2014).54Thereasonforthisisinmostcasessincethe
loanisrepaidbacktheinitiativetousethemoneyandtheparticipationoftheEthiopiansidein
negotiations,inmonitoringandevaluationismoreactivethangrants.Sincegrantbyitsnature
createsdependencyonthereceiver,theEthiopiansideisnotmotivatedtoeffectivelyuseit.
InthisregardthuswecanconcludethatEthiopiaismorebeneficialfromChinesedevelopment
cooperationasitismostlychanneledintheformofloan.ThegrantwhichcametoEthiopiafrom
Germanyisnotmeanthattotallyunnecessaryandfruitlessbutwithemphasizingofusingitmore
effectivelyitisnothigherthanwhatChinaandotherscontribute.
54MoFEC;BusinessProcessReeneginering:2014

85
CONCLUSION
TheGaptheoryarguesthattheworldisclassifiedinvariouscategories;amongthemthemajor
categoryiseconomicalwhichis;thedevelopedanddevelopingcountries.Thedevelopedare
developedbecausetheyhavealltechnicalandfinancialcapacitieswhilethedevelopingarestill
lackalotofcapacitiesintechniqueandfinance.Unlesstheworldissharingtheresources
equallyandiftheeconomicgapiswider,theworld'speaceandsecuritywillalwaysbeindanger.
Forthistheory,oneofthemainrootcausesamongothersforthewarandconflictintheglobeis
theunequaldistributionofwealth.ForGaptheorydevelopmentaidisoneoftheinstruments
whichhelpsthatthedevelopedcountriessupportthedevelopingonestofilltheirlackssoasto
createtheperfectworldwhichisfreefromtension,warandconflict.
Inthiscourseofstudyindeedthemajorideathattobeaddressedisnotonlythevolumeofaidor
developmentassistancebutalsoitsqualityanditseffectivenessfortheachievementofbasic
needsofthedevelopingones.Ingeneralaidoranyeconomicrelationamongtheinternational
communitywillhelptostrengthenthepoliticalrelationofthesatesandithasagreateffectto
reduceanyconflictswhichariseinfuture.Astheliberalandothertheoriesargueifthestatesare
dependingeconomicallyonetotheother,theemergingofconflictisverylowbecausenooneis
againstitsinterest.
ThispaperattemptedtoanalyzetheEthiopia'seconomicrelationfromtheGermanyandChinese
perspective.Ethiopiaisclassifiedasthedevelopingcountries,withitsmorethan100million
populationandahugenaturalresourcesisstilloneofthepoorestcountry.Itisalsoafactthat
currentlythegovernmentofEthiopiaanditspeoplearetremendouslyfightingandstrugglingto
beoneofthemiddleincomecountriesinnearfuture.NowthemainagendaoftheEthiopia
governmentanditspeopleiseradicationofpoverty.
ThefightagainstpovertyinEthiopiaisalsosupportingbydifferentbilateralandmultilateral
donors.TheEthiopiagovernmenthasgotahugeamountofaidordevelopmentassistancefrom
itsdevelopmentpartners.ThedevelopmentpartnersarefromEurope,Americas,Asiaand
MiddleEastcountries.Ethiopiahasalsocloserelationintradeandinvestmentfromthe
internationalcommunity.Asthefiguresshowthedevelopmentassistancewhichcameinthe

86
formofaidorloanandthetradeandthedirectforeigninvestmentflowstothecountryis
increasingfromtimetotime.ItisalsoagreathopeoftheEthiopia'sgovernmenttofillitsgap
throughthiseconomicrelation.
Inthisconnectioninfactthereshouldberaisedtheeffectivenessofthiseconomicassistanceand
towhatextentithelpstheEthiopianinachievingoftheirdemands.Thisisthereforethepaper
attemptedtoexaminetheEthiopia'seconomiccooperationwithcomparingtoitsrelationwhich
haswithGermanyanditsrelationwithChina.
Thereisareasonforselectionofthesetwoandcomparingthem.FirstEuropeisoneofthemain
donorsandoldestcontinentwhichestablishedeconomiccooperationwithEthiopia,Germanyin
particularisthemajorcontributortoEthiopia'sdevelopmentendeavorsintechnicalandfinancial
cooperation.ItisthemainleadingtradepartnerfromEuropeancountries,thoughallEurope
countrieshavemoreorlesssimilarpoliciesandprocedures,theGermanyaremorefocusingon
technicalcooperationratherthanengagingininfrastructureworksorphysicalinvestments.
WhereasChina,fromAsiancountries,istheemergingdonor.Thankstotherecenteconomic
achievementanditseconomicpower,thePeoplesRepublicofChinaisaggressivelyengagingin
variousactivitiesofsupportingthedevelopingcountriestofilltheirtechnicalandfinancialgap,
includingEthiopia.Chinaisalsousingitsownpolicyandprocedurewhichguidesbyitsown
ideology.Onethingnottobeforgottenis,ChinaisthelatestcomertoEthiopiaasadevelopment
partner.
Thepaperhastriedtoexamineeachoftheeconomiccooperationbasedonitshistoricalfacts.It
alsoshowstheChinaandEuroperelationshistoryandthepoliciestheyfollowedtowardsAfrica
ingeneralsinceEthiopiaisoneofthepartofAfrica.Asweobservedfromthisresearch,China's
contributiontoEthiopiaishighlyincreasingwhileGermany'scontribution'sincrementisvery
low.During2008,Germanyallocatedforthethreeyears,thatwasupto2011,96millionEuro
whileafterthreeyears,in2011,itsallocationwas102millionEurowhichisonly4million
increment,recentlyin2016Germanypledgedafinancialsupportworth212.6millionEuros,
including87milliontobespenttosupportrefugeescomingtoEthiopiafromneighboringnations.
butforChinaevenbyoneyearitincreasedthreetimesor300%.Intheareaofintervention

87
Germanyismainlyinterveneinthreeareaswithtechnicalandfinancialcooperation,outofthis
47%,almosthalfoftheassistanceistechnicalcooperation,whichmeansthatispaidforits
experts.ButForChina,ithasengagedinconstructionofvariousphysicalworks.Theindustrial
parks,highways,railway,bridges,factories,hydroelectricpowerdamsandothersisinoneway
oranotherareaproductoftheChinesecontribution.Chinaisnowalsocooperatingforthe
constructionofmodernrailways,industrialparks,hugehydropowerdams,SugarandCement
factories.Therearealmost279ChinesecompaniesinEthiopiabutnotasinglefromGermany.
Astheresearchevaluatedfromtheperspectivesofdonors'policies,Ethiopia'snationalplan,
internationalagreedprinciplesofaideffectivenessandtheaidmodalitiesandtypes,Chinese
contributionisfullyachievedwhatEthiopiaisneeded.Andasitprovethatitspartnershipis
helpingthesucceedingofEthiopia'svisionofbeingamiddleincomecountrybyeradicating
poverty.
OnGermanysidetheresearchshowsthatthereshouldbesomuchtobedoneinfuture.Firstof
allGermany'spolicyofinterferingintheinternalaffairsofEthiopiamustbereduce.Asthe
internationalcommunityagreesEthiopia'sgovernmenthasafullrighttoissueitspoliciesand
laws.Germany'sinterferenceinEthiopia'spoliticalaffair,humanrightissues,private
organizationsandotherissuesaffectthesmootheconomiccooperationofthecountry.
Secondly,GermanyshoulddirectlyfollowthenationalplanoftheCountry.IndeedGermany's
contributionishelpingthenationalplanofthecountry,butastheplanclearlyputsit,itsmain
shortcomingisoninfrastructureworksandfinance.Therefore,insteadofdependingontechnical
assistance,ifGermanyisfollowingChinesemodelwhichisengaginginconstructionofroads,
railways,dams,factoriesorifitprovidesmoneydirectlyflowtothegovernmenttreasuryinthe
formofconcessionalloanordirectbudgetsupport,Ethiopia'sgovernmentcanfillitsgap
sufficiently.
Lastbutnotleast,Germanyshouldalsoworksmorefortheachievementsoftheprinciplesof
ParisDeclarationonAidEffectivenessandPlanofActions,thatmeans,onownershipofthe
projects,alignmentofitsprocedureandharmonizationofitspoliciestoEthiopia'sgovernment
strategies,institutionsandpolicies.

88
OnChina'sideitwillbemorecrucialtowideitscontributiontoothersectorssuchasculture,
mining,tourismandothers.Besides,itshouldtoworkmoreforthenarrowingofthetradein
balanceofthetwo.AsEthiopiaisamajorpoliticalfigureofAfricaandthemainactorforthe
peaceandsecurityoftheregionandtheworld,itseconomicgrowthwillhelpalsotobemore
stableanditscontributiontotheworldshouldbemorefromwhatitisnowdoing.Atlastthe
prosperousEthiopiawillbeagoodfriendofGermanyandChina.

89
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