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Ethiopia: Hailemariam Desalegn Calls China a Model for U.S. on Job Growth – WSJ

By Matina Stevis

Ethiopian Prime Minister Hailemariam Desalegn spoke to The Wall Street Journal at his palace in the capital Addis Ababa on Feb. 1. Photo: PETTERIK WIGGERS/PANOS PICTURES, FOR THE WALL STREET JOURNAL

ADDIS ABABA, Ethiopia—The prime minister said in a rare interview that President Donald Trump’s “America first” message is following the lead of key Ethiopian ally China in looking to stimulate domestic job growth.

“China has become a model not only for Ethiopia but now even for the new administration of the United States,” Prime Minister Hailemariam Desalegn told The Wall Street Journal on Wednesday, in an interview in which he urged President Trump to maintain a key trade deal and bolster cooperation against terrorism. “They are focused on bringing back jobs and manufacturing to the U.S., which obviously means the Chinese drive to have manufacturing at home has become a model even to the U.S.”

Ethiopia’s size, rapid economic growth and strong military have in the past two decades elevated Africa’s second-most-populous nation, which once depended on international aid for its famine-stricken populace. Thousands of its troops play a leading role in managing regional conflicts, while close ties to China, the Gulf states and the U.S. make it a power broker in a region marred by turmoil and poverty.

Still, its ascent has come with a strict control of the economy and, critics say, even-stricter control over dissent and human rights.

The 51-year-old leader, who took power after the death of Meles Zenawi in 2012, said his government wanted to bolster cooperation with Washington against jihadist groups and instability in the Horn of Africa, where it has deployed thousands of troops in war-torn nations including Somalia and South Sudan.

But he also cautioned the new president against abandoning the African Growth and Opportunity Act, or AGOA, a 17-year-old deal renewed by President Barack Obama in 2015 to boost U.S. trade with 40 African nations and offset China’s growing economic dominance there.

“I hope AGOA provisions will continue for the coming 10 years,” Mr. Desalegn said, adding that Mr. Trump’s “America first” message followed Beijing’s model.

Mr. Desalegn—who heads the country’s ruling Ethiopian Peoples Revolution Democratic front and its 36-member committee that makes key policy decisions—said he hoped to work with Mr. Trump to deepen collaboration against jihadist terror.

But the prime minister, who imposed a state of emergency in November to quell violent antigovernment protests, also rejected Western calls to open strategic sectors of Ethiopia’s economy and criticism of his government’s human-rights record.

“We have never been colonized because of our attitude.…We have the confidence, the moral authority and our people are also enough to tell us what they want to tell us,” Mr. Desalegn said.

A decade of rapid economic growth has underpinned the confidence of this nation of 100 million. The International Monetary Fund says Ethiopia’s economy posted double-digit expansion for the three years to 2016, when it slowed to 6.5%, following the region’s worst drought in 50 years and swelling domestic dissent. The IMF warned in October that Ethiopia’s debt load was becoming dangerous.

Mr. Desalegn deployed security forces to quell protests from marginalized tribes, sparking clashes that left hundreds dead and thousands incarcerated. A strict ban on social media remains in effect.

The crisis drew international attention when marathon runner Feyisa Lilesa used his second-place finish at the Rio Olympics to protest the crackdown on his Oromo tribe, and then defected to the U.S.

New York-based Human Rights Watch says the state of emergency is an extension of Ethiopia’s “brutal repression of freedoms,” but Mr. Desalegn said it is a “procedural matter” that would soon be lifted. “The state of emergency doesn’t hinder anything or anyone to invest, to work, to come as a tourist.”

To be sure, state control of the economy and domestic dissent hasn’t quelled investor appetite for Ethiopian assets. More than 200 state-owned businesses have been privatized since the late 1990s, with international heavyweights like KKR & Co. investing in horticulture, and Turkish, Chinese and U.S. companies creating thousands of jobs in textiles and shoe manufacturing. In 2011, all three state breweries were sold to Diageo PLC and Heineken International BV fetching in total nearly half a billion dollars, while last year Japan Tobacco Inc. paid $510 million for 40% of the state tobacco monopoly.

Mr. Daselegn said the government would continue to bar foreign investors from financial services, telecommunications and retail, sectors international players like South African and Middle Eastern banks and retailers have been eager to tap.

The prime minister said the government uses profit from these industries to cross-subsidize railways and other infrastructure, and insisted the 20 commercial Ethiopian banks would be swallowed if the market opened to foreign banks. “Until they flex their muscle, we shouldn’t open up.”

Keeping these industries closed for too long could backfire, said Ahmed Salim of Teneo Intelligence, a London-based research firm. “The biggest social and economic risk facing Ethiopia remains the simple fact that it is a country of nearly 100 million, and the public sector cannot absorb and employ everyone.”

But Mr. Daselegn said state-backed infrastructure development would continue to be at the center of Ethiopia’s growth strategy.

Addis Ababa’s Chinese-built light railway—opened last year—is the first in Africa. The $4.2 billion Grand Ethiopian Renaissance Dam, a Nile project that will generate 6,000 megawatts of power, is due to be operational next year “depending on rainfall,” he said.

Write to Matina Stevis at matina.stevis@wsj.com

Corrections & Amplifications
The Financial Times interviewed Ethiopian Prime Minister Hailemariam Desalegn in 2013. An earlier version of this article incorrectly stated that The Wall Street Journal was the first Western publication to interview Mr. Desalegn since he took office in 2012. (2/2/17)

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