ETHIOPIA & PRESIDENTIAL ADVISOR
9105 OU26 - Ethiopia -- Go-Between
I increasingly found myself acting as a go-between with the Ethiopian government for the first British Ambassador, and then – through him - for most other western ambassadors. The problem the ambassadors had was that they were denied almost all contact with the government of Ethiopia. The reason for this was that the new government was absolutely terrified of being corrupted or even of being tainted by exposure to the outside world. They'd seen how the Derg had been corrupted by all the influences, not just by the Russians who were their main supporter but by western corporations and governments. As a result they had resolved to maintain their innocence, their purity, by having no contact at all at the top level. Of course contact still had to go on at the lower levels of government; but the western ambassadors were not happy with this -- since they wanted to know what was in the minds of the leaders of the new country.
This turned out to be my role. Thus, I went backwards and forwards between my various contacts, sometimes Meles but mostly Seeye, with whom I got on particularly well. I especially remember a couple of conversations with him. One of these was started by my saying very directly "The western ambassadors don't understand what you mean by communism." He laughed "I don't know what it means myself. I guess we're no longer even Communist but are moving to social democracy. I think that communism just means a loaf of bread. I see my job as getting food into the mouths of our starving people. I would do anything that is necessary for that, even selling myself to the devil." I don't think that the western ambassadors quite understood what that was all about.
Another question was “How did the governments see its role in leading Africa”. The previous Ethiopian governments had seen their role as leading the whole of Africa. Indeed the Organisation for African Unity (OAU) was based in Addis at this time, having one of the biggest complexes of buildings there. To my, and the ambassador’s surprise, Meles reply to this was that he wanted to make Ethiopia a big player in the Middle East; ranking alongside Egypt. This was a complete reversal of strategy -- though I am not convinced that it was ever put into play.
In order to facilitate communications, after the year or so of my acting as go-between, I arranged with the President to set up a contact group. Eventually he and I worked out who was a suitable minister to handle this and the western ambassadors put forward James Glaze as their representative. Accordingly, my role as contact was diminished.
James Glaze was a lovely guy. He was a wonderful Ambassador for Britain, but totally different to the normal kind. He loved Ethiopia almost as much as the United Kingdom. Just as important, Meles and the other ministers recognised this was the case and trusted him, and respected him.
In the meantime I was involved in two major sets of negotiations. The first of these was with the World Bank and the IMF. As an incredibly poor nation, Ethiopia was looking for a first tranche of one billion dollars, to be followed by a second one of a similar amount, to start its reconstruction programme. The World Bank was going to fund this, but as always the IMF had to get involved. I was called in once more to see James Glaze, who said that they had the usual stand-off between the country and the IMF. Both were digging their heels in, taking impossible positions. My job was to persuade the Ethiopian government to give way. I didn't relish that, since I thought the IMF was a bad influence in such situations. But nevertheless I went off to talk to Seeye.
At that time, giving in to the IMF demands had effectively ruined a number of countries and the Ethiopian government well knew this. However, I suggested to Meles that we sit down and look at what the major problems really were. At that time the IMF typically demanded what it called a 'structural adjustment' package. In other countries this included significant changes to the various government institutions, especially the financial institutions. As Ethiopia didn't have these, there was no real problem here.
The major remaining problem, which had been disruptive elsewhere, was that the IMF invariably insisted on the devaluation of the currency - and that was indeed the main demand in the case of Ethiopia. It looked an impossible situation. However, we worked out was that what they were talking about was the official exchange rate. In fact, the official exchange rate was meaningless, since most of currency came in and out illegally and was rated at about half the level on the official exchange.
Accordingly Meles and Seeye, and I, worked out our strategy. The first part of this was to throw the IMF off the scent. Thus, I orchestrated a campaign where the government complained of being raped by the IMF -- as everyone else had been. When the IMF demanded negotiations, we complained even louder, and pointed out the devaluation would destroy the country; but of course, with the real illegal rate being what mattered, this was not actually important. Our real intention was to persuade the IMF to modify their argument to take into account what we wanted in return. We had worked out that the one thing that would be affected by any devaluation in the official rate was fuel imports. Accordingly, seemingly in a spirit of conciliation, we eventually put forward the demand that fuel imports be subsidised, so that the devaluation did not have any impact on them. The IMF gladly accepted what they saw as a small price to pay.
The IMF thereafter quoted this as being one of their most successful negotiations ever. What they didn't realise, of course, was that the Ethiopia government got everything it wanted. The devaluation had almost no impact on the price index, which rose by just 6 percent over the next year; and the economy took off.
It was the sort of negotiation I really enjoyed. It was really a giant game of poker. The IMF simply never knew what our cards were, or even what rules we were playing by!
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