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Country Commercial Guides for FY 2000: Ethiopia Report prepared by U.S. Embassy Addis Ababa, released July, 1999 Note*

CHAPTER III. POLITICAL ENVIRONMENT

A. Relations with the United States

U.S.-Ethiopian relations are very good, despite recent strains regarding the deportation of presumed Eritrean nationals and implementation of its reform program. The U.S. Government has a favorable view of events in Ethiopia since the fall of the communist Derg dictatorship. While encouraging Ethiopia to improve protection of human rights, the U.S. is generally supportive of the Federal Democratic Republic of Ethiopia and wants Ethiopia to prosper both economically and democratically. The U.S. has played an important role in supporting the peaceful resolution of the Ethiopian-Eritrean conflict.

The United States has had long and cordial relations with the Ethiopian people, even during periods when official relations between the governments was minimal. The U.S. provided massive humanitarian assistance to Ethiopia throughout the years of the Derg regime. Until the mid-1970's, the U.S. Peace Corps maintained one of its largest programs in Ethiopia. Although the Peace Corps returned to Ethiopia in 1996 with a group of volunteers to work in the education field, the program was suspended following the outbreak of hostilities with Eritrea in 1998.

Ethiopia is the largest recipient of U.S. economic assistance in sub-Saharan Africa. Although most U.S. assistance is in the form of emergency food aid, development assistance totaled about $45 million in FY 1998. Promoting a market economy, developing democratic institutions, and building understanding of the rule of law and respect for human rights are primary objectives of U.S. policy in Ethiopia. Ethiopia has made significant progress in each of these key areas, although additional work remains to be done.

B. MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE

The main political issue affecting the business climate is the conflict between Ethiopia and Eritrea that began in May 1998. Even if the war ends soon, it has been a major strain on the Ethiopian economy, diverting resources that might otherwise go into infrastructure and discouraging potential investment.

C. BRIEF SYNOPSIS OF THE POLITICAL SYSTEM

Ethiopia has a parliamentary system of government. Nationwide elections were held in 1995 and are scheduled for the year 2000. The Ethiopian People's Revolutionary Democratic Front (EPRDF), a coalition of parties led by the Tigray People's Liberation Front (TPLF--the guerrilla movement that led the fight against the Derg), won the elections by a landslide and now controls all but a handful of legislative seats and government positions. Meles Zenawi, a Tigrayan who is chairman of the EPRDF, is Prime Minister. The EPRDF officially favors democracy and private enterprise, but has residual control-oriented tendencies developed during the TPLF's past as a Marxist guerrilla movement.