Ethiopia’s Abiy Has Civil War Edge as Tigray Rebels Retreat

(Bloomberg) -- Ethiopian government forces have made major advances in their fight against Tigrayan dissidents after a 13-month conflict that's triggered humanitarian and economic crises.

Tigrayan leader Debretsion Gebremichael this week ordered a strategic retreat by his troops and urged the United Nations Security Council to oversee an end to the civil war. The move, which comes after the national army recaptured several key towns in northern regions bordering on Tigray, raised hopes that an end to hostilities may be in sight, though the government has continued bombing rebel positions. 

“I have ordered those units of the Tigray army that are outside the borders of Tigray to withdraw to Tigray with immediate effect,” Debretsion, who heads the Tigrayan Peoples Liberation Front which ruled the region, said in a Dec. 19 letter to UN Secretary-General Antonio Guterres. “We trust that our bold act will be a decisive opening for peace.”

The government is facing mounting international pressure to end the conflict, with the UN Human Rights Council setting up a team to investigate possible war crimes and the U.S. and other nations threatening to impose sanctions. So far Prime Minister Abiy Ahmed has eschewed negotiations with the TPLF, describing it as a terrorist organization. 

“If we do see a movement of Tigrayan forces back into Tigray, that is something we would welcome,” State Department spokesman Ned Price told reporters on Monday. “It's something we've called for. And we hope it opens the door to broader diplomacy.”

Abiy is facing domestic pressures too. The conflict has exacerbated the impact the coronavirus pandemic has had on the economy, and led the government to approach creditors this year for relief on its $30 billion debt. Yields on Ethiopia's 2024 Eurobonds had almost quadrupled since the fighting began in November 2020 and the securities are now trading cheaper than similar-maturity debt of Zambia, which is in default.

On Tuesday, the yield dropped 76 basis points to 22.95% by 1:37 p.m. in London -- the biggest decline since May 2020, according to data compiled by Bloomberg.

The government reiterated its commitment to end the conflict “in a peaceful way and through political means,” although its previous overtures to the TLPF had been ignored, Billene Seyoum, Abiy's spokeswoman, told reporters in the capital on Tuesday. “Any political solution will always be centered on justice, centered on accountability and dialog.”

While fighting has largely been confined to Tigray and the bordering states of Ahmara and Afar, where thousands of people have been killed and millions are in need of aid, the economic pinch is increasingly being felt in Addis Ababa, Ethiopia's capital. The prices of food and other essentials have skyrocketed and residents have had to dig into their pockets to support the war effort.

“The war has caused huge economic damage,” said Tesfaye Erkasso, who runs a vehicle-repair business in the capital and is optimistic that the fighting will end soon. “I wonder how long it will take us to recover from this. As a nation we can't hold out any longer.”

The tourism industry, already hard-hit by the pandemic, is reeling as the U.K., U.S. and other countries press their citizens to leave the country. Some establishments are on the brink of closing and are seeking loan extensions, according to Aster Solomon, president of the Addis Ababa Hotel Owners Association, which has more than 170 members. 

The conflict erupted when Abiy ordered an incursion into Tigray after forces loyal to the region's ruling party attacked a federal army base.

The prime minister, who took office in 2018, remains popular in the capital and elsewhere despite the war -- his party won June elections by a landslide, although several opposition candidates were jailed. Pro-government protests in Washington D.C., London and 25 other cities earlier this month drew large crowds of expatriate Ethiopians and Eritreans.

In Addis Ababa, thousands of residents have joined self-styled civilian-defense units in support of Abiy, after Tigrayan fighters advanced to within striking distance of the city before being driven back.

About 30,000 high-school students and teachers in the capital also responded to a call from city administrators to help harvest crops for families of soldiers at the front line, donate blood and collect litter. All secondary schools were shut in support of the initiative. 

Residents have also pitched in to prepare rations for the military and those displaced by the conflict. 

A cessation in the fighting will come too late for Kebede Wolderufael, who had to close his restaurant and guest house in the northeastern town of Dessie and estimates his losses at 29 million birr ($595,000).

“I built the guest house with my entire life savings generated from the restaurant,” said Kebede, who was contemplating retiring. “I have to go back to square one.”

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