WHEN ETHIOPIA inaugurates the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile on September 9th, it will be Africa’s largest hydropower source (see map). But to Ethiopians, millions of whom helped pay for it by buying shares, it is far more than that. “This project means the end of Ethiopia’s geopolitical insignificance,” Abiy Ahmed, Ethiopia’s prime minister, declared on September 1st. “I have nothing more to say than to thank the Creator.”

Yet Mr Abiy’s enthusiasm is not universally shared. The dam could be an economic boon, but it has long caused rancour between Ethiopia and Egypt and, to a lesser degree, Sudan. Years of negotiations have failed to produce an agreement on how the three countries will share the water from the river, particularly in times of drought. The dam has the potential to benefit the entire region. But at present it looks like yet another threat to stability in the Horn of Africa, which is already suffering from multiple conflicts.

In theory, the GERD could boost the region’s economy. At full capacity, it could generate close to 6,000 megawatts of electricity, double Ethiopia’s entire output before the dam was built. Currently, just over 22% of the country’s 122m people are connected to the grid. The dam could supply millions more with power, both in Ethiopia and through power deals with neighbouring countries. At present just six of 13 turbines are working. But Ethiopia is already earning some $100m a year from selling electricity to Sudan, Kenya and Djibouti, according to the national power company. Mr Abiy claims the dam will eventually generate $1bn a year in revenue.

That will happen only if Ethiopia builds better transmission lines to connect more people to the grid and to send more power to its neighbours. At the moment the main beneficiaries of the power surplus generated by the dam are miners of cryptocurrencies. More than two dozen crypto-mining firms set up shop in Ethiopia in 2024. Their data centres, which have their own power lines, are expected to consume nearly a third of the country’s electricity this year. Meanwhile, most electricity-deprived Ethiopians will probably have to wait years for their grid connection. At the current pace of expansion, the national power company expects just 27% of households to be connected by 2030, far off the national target of 96%.

Even if Ethiopia manages to get electrification right at home, the GERD’s geopolitics are worrying. Egypt and Sudan are concerned about the effect of the dam on their access to the Nile, on which they depend for most of their water supply. Egypt is already water-stretched, partly because it uses much of its water for agriculture and its irrigation systems are old and leaky. It worries the GERD could be used to choke off its supply. Sudan, which has been locked in a civil war for more than two years, is hoping to increase its agricultural output. The GERD could provide it with the irrigation required to do so. But that would come at the cost of water that would otherwise flow to Egypt, a major backer of Sudan’s de facto government in the civil war.

Experts disagree on how serious a threat the dam poses to Egypt. So far, its operation does not appear to have reduced the amount of water flowing downstream. One recent study suggests that Ethiopia would rarely be able to withhold enough water to cause serious harm. Things may look different if there is a prolonged drought, but the disagreement should not have been insurmountable.

However, Egypt and Ethiopia, in particular, have used the dam to stoke nationalist fervour. Ethiopian politicians have portrayed Egypt as a colonial power threatening its sovereignty. Abdel-Fattah al-Sisi, Egypt’s president, has described the dam as “a matter of life and death” for Egypt, but has at times seemed to relish the feud, according to people involved in the talks. Sudan’s de facto government, meanwhile, could ill afford to alienate Egypt by being seen to compromise with Ethiopia. The last round of negotiations broke down in 2023. In a joint statement last week Egypt and Sudan said the dam breached international law and posed a continuing threat to their water security.

All this makes the official opening of the dam a dangerous moment. By playing up the gravity of the threat from the GERD, says a former Western diplomat involved in the talks, Mr Sisi committed himself to “doing something about it” now that it is complete. “The question is: what?”

Egypt’s options for confronting Ethiopia directly are limited. Bombing the dam, as it once threatened to do, would be foolhardy, not least because it would cause catastrophic flooding in parts of Sudan controlled by the national army. Instead Egypt appears to have decided to support the Ethiopian government’s foes. It is said to have recently begun sending weapons to the Fano, an Ethiopian rebel movement that is fighting Mr Abiy. It has also strengthened ties with Eritrea, Ethiopia’s neighbour and enemy.

That is particularly dangerous because it feeds into another water-related feud. Over the past two years Mr Abiy has become increasingly open about his desire to gain control over a port on the Red Sea. Many fear he is planning a military offensive to recapture parts of Eritrea’s coastline, over which Ethiopia lost control when Eritrea seceded from it in 1993. “The Red Sea, after all, was in our hands thirty years ago,” mused Mr Abiy on September 1st. “The mistake [of losing it] will be corrected tomorrow.” The worry is that, should war break out, Egypt could back Eritrea. That would help fuel another regional imbroglio, much like the one that has destroyed Sudan.■

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