The EU has resumed budget support for Ethiopia, after suspending payments five years ago because of the country’s civil war in Tigray. 

The move, which will release €140m per year in funding for Addis Ababa, was announced by the bloc’s international partnerships commissioner Jozef Sikela, who is in Addis for a two day EU-Ethiopia Business Forum that concludes on Wednesday (22 April). 

The funding was “testament to our confidence in Ethiopia’s reform agenda and our long-term commitment to this partnership,” said Síkela — remarks that will be leaped upon by prime minister Abiy Ahmed as proof that the zeal for economic liberalisation which defined the early years of his premiership has not been extinguished by the Tigrayan conflict.  

Sikela also said that the EU would provide €150m in investment in Ethiopia’s digital infrastructure and €269m for a series of energy projects. 

Abiy, who took power in 2018, was awarded the Nobel Peace Prize the following year for his role in ending a lengthy war with neighbouring Eritrea.

But the war with Tigrayan separatists in northern Ethiopia thrust his government back into the diplomatic freeze.  

That included the halting of around €90m in EU budget support amid concerns over restricted humanitarian access to conflict-affected areas and allegations of human rights violations and war crimes by the Ethiopian army. 

Though the civil war between federal troops and the Tigray People’s Liberation Front (TPLF), which killed 600,000 people, officially ended with a peace agreement in 2022, there have been isolated clashes since, with the TPLF accusing prime minister Ahmed’s government of provoking unrest and withholding funds to pay local civil servants. 

Abiy’s government has also had major diplomatic disputes with its neighbours Eritrea and Somalia prompting concerns about a new regional war. 

The EU sees Ethiopia as a potential ally. 

Last year, the commission announced $156m [€133m] of investment into a grid-expansion project to allow Ethiopia to expand national transmission lines and to export electricity to its East African neighbours from the Grand Ethiopian Renaissance Dam (GERD). The GERD was inaugurated last autumn and is the world’s largest hydroelectric dam. 

However, the EU is not alone in making economic offers to Abiy.