The Biden administration has prepared economic sanctions against Ethiopia that could halt financing from the U.S. and loans by international financial institutions, according to two people familiar with the matter.
The action, if confirmed, would set back relations between two longtime allies in the fight against Islamist extremism in the Horn of Africa. They’d add pressure to Ethiopia’s state finances as the government works to offset the impact of the coronavirus pandemic and conflict in its northern Tigray region, which are forcing Prime Minister Abiy Ahmed to restructure the nation’s debt.
The U.S. sanctions being considered will mainly affect financing to support Ethiopia’s budget, and will include a request that the World Bank and the International Monetary Fund withhold funding, said the people who declined to be identified because the information isn’t public yet. Ethiopia is the biggest recipient in Africa of U.S. foreign aid, receiving about $1 billion last year.
The U.S. State Department and the U.S. Embassy in Addis Ababa, Ethiopia’s capital, didn’t immediately respond to emailed requests for comment. Abiy’s spokeswoman, Billene Seyoum, didn’t respond to requests for comment sent by text message.
The penalties are being considered over Nobel-laureate Abiy’s handling of the war in the Tigray and the involvement of troops from neighboring Eritrea. Last week, U.S. Secretary of State Antony Blinken expressed concern about increasing obstacles to humanitarian aid in Tigray and criticized both the Ethiopian and Eritrean authorities for failing to honor pledges to withdraw their forces.
Violence engulfed Tigray in November, when federal troops attacked soldiers loyal to the state’s dissident ruling party. The unrest has left thousands of people dead and displaced hundreds of thousands more.
The U.S. measures, if fully implemented, would follow a decision in March by the European Union to impose sanctions on Eritrea’s National Security Agency, citing alleged human-rights violations. A further list of more targeted sanctions aimed at Ethiopia is also being considered in Brussels, two diplomats with knowledge of the matter said.
The U.S. financial sanctions are expected to be preceded by visa restrictions on perpetrators of human-rights abuses in Tigray, including high-ranking Ethiopian military officials, the people said. Similar penalties may be imposed on Eritrean officials, they said.
Ethiopia signed a $907 million funding agreement with the World Bank last month. In February, the government and the IMF reached a staff level agreement for the first and second review of extended credit facilities.
The IMF’s board is awaiting “financing assurances from creditors for a debt treatment” that is required before the reviews are presented to the fund’s executive board for approval, an IMF official said in an emailed response to questions.
The World Bank didn’t immediately respond to an emailed request for comment.
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