Introduction
Ethiopia is one of the fastest-growing countries on the African continent, registering a double-digit economic growth for more than a decade. The growth numbers have been contested by many, but a large number of studies and reports confirm that the degree of growth has been startling (see for example ADB 2017). In the context of rapid growth, the regime in power entrusted the military with an unprecedented mission to play a central role in its development endeavours. In a continent where the role of the military in society and economy has at best been dubious, Ethiopia has created a giant business conglomerate named Metals and Engineering Corporation (METEC) under the leadership of the military to lead the ‘metal industry revolution’. The role of the military in African economies and polities has in recent years led to considerable academic engagement clarifying the nuances of military firms and business engagement (see for example Verweijen 2013; Behuria 2016; Pinaud 2016). This article is an attempt to analyse METEC and the economic role of the military, especially in the context of the economic strategies of elite bargain employed in post-1991 Ethiopia.1 The political elites’ attempts to engage the military in business openly began especially after the establishment of METEC, which inevitably strengthened the military’s economic and political positions (see Behuria 2016 for the case of Rwandan military investment groups).
Ideologically, the country has been led by a regime that believed that the ‘Washington Consensus’ is a ‘dead end’ and thus advocated for state-led development (Clapham 2018). The current ideological position of the regime, i.e. ‘democratic developmental state’, advanced voracious state-led development in areas of infrastructure such as building road networks and hydroelectricity (see also Ibid. , 1154–1157). It is within this ideological orientation of the party-state2 that the military was brought in to be one of the leading actors in the political economy of Ethiopia’s development. The second most populous African state, Ethiopia aspires to become ‘a middle-income economy as of 2020/23’ (MOFED 2010). The national plan that sets this goal, dubbed the Growth and Transformation Plan (GTP I, 2009/10–2014/15), placed unprecedented emphasis on industrialisation. The GTP has set an ambitious target of ‘increasing the capacity utilization of the [metal] industry to 95%’ and ‘improv[ing] annual per capita metal consumption to 34.72 kgs’ ( Ibid. , 59).
This article argues that the generous offer to the military by the political elite not only shows the problematic nature of the involvement of the military in the Ethiopian economy, but it has also worked against the very ideological stance of the party-state. In the end, the military corporation in general, and its project adventures in particular, seem to have pushed the party-state against its state-centric development agenda, as shown by a recent decision of the Ethiopian People’s Revolutionary Democratic Front (EPRDF) Central Committee to privatise ongoing development projects that are run by the corporation along with other significant enterprises such as Ethiopian Airlines.3 Military companies are often discussed in relation to Western military–industrial complexes (Epstein 2013) and in many other countries in relation to political power and corruption (Behuria 2016). The collected works of Brömmelhörster and Paes (2003a) emphasise that military businesses are special not only because of their unique control of revenues, but also because they limit state control over the military. This article shows that entrusting the fundamental mission of industrialising a nation to the military, particularly when the inextricable link to the political elite is evident, may have devastating economic and political outcomes.
Organisationally, the conglomerate METEC was created in 2010 out of pre-existing military industries as well as newly created civilian companies. According to news articles in Fortune (2014b, 2018b), the corporation consolidated 98 state-owned enterprises under the newly reconfigured 15 semi-independent and integrated companies, all under one umbrella state enterprise and run by ‘high brass officers of the military’. From a policy perspective, the amalgamation of the two industrial branches (i.e. basic metal industries and engineering industries) into a single Basic Metals and Engineering Industry (BMEI) is a very bold attempt at economic concentration.4 According to JICA (2011, 240), ‘it is hard to find a BMEI or equivalent sector master plan in other countries.’ It is in this context that the magnitude of METEC should be viewed. A possible explanation could be that the regime is trying to take advantage of the natural vertical integration of the BMEI to develop an entire value chain in a unified framework. Yet, the creation of a giant economic actor should be assessed on the basis of the changes that this would make to the nature of the Ethiopian army and the nature of civil–military relations. Seen in this light, the study of the emergence of METEC in Ethiopia contributes to the literature on ‘military business’ in African economies and beyond.
Furthermore, the study of the emergence of METEC is an important subject from a political economy perspective due to the peculiar characteristics of the post-1991 military. First, the national defence force is made up of soldiers and high-ranking officials of the civil war period (1975–91) whose leadership is indistinguishable from the political leadership. As Berhe (2017, 168) indicated, ‘the leadership of the insurgent army was a politico-military hybrid; commanders in the army were also members of the political leadership of the party.’ Moreover, he adds that ‘this historical association is important, as it makes a palace coup most unlikely, but also poses a challenge to the transformation of the insurgent army into a non-partisan professional army' ( Ibid. ). Second, though it is increasingly changing especially after the last promotion of 61 generals in 2018, the military leadership has mainly been constituted by officers belonging to the Tigray ethnic group. It should be noted that, in post-1991 Ethiopia, the Tigray People’s Liberation Front (TPLF), the core of the EPRDF, demobilised one of the largest national armies on the African continent (which numbered about half a million soldiers), replaced them with its own guerrilla fighters and fundamentally reshaped the nature of the national defence force. For Colonel Wade, a military specialist with over a decade of working relations with the Ethiopian military, the ethnic composition of the force is changing, especially from Captain downwards, which increasingly reflects Ethiopia’s ethnic diversity (interview, October 2018).
Soldiers in business:5 a theoretical note
To state the obvious, ‘the central purpose of the military is to defend society either in defensive or offensive wars’ (Feaver 1996, 172); the rest of the activities are secondary. According to Barany (2012, 25), theorists in military politics should be aware of the cultural, historical and environmental factors in order to understand the nuances of civil–military relations. The debate on the civil–military problematic took root after Huntington’s (1957) publication of The soldier and the state: the theory and politics of civil–military relations and his critique from the sociological school led by Morris Janowitz’s The professional soldier (Feaver 1996, 149). In his extensive work, Barany sketches the changes affecting the state–military nexus across centuries and claims that ‘civilian control of the armed forces is the most fundamental principle of military politics in democracies; without it, democratization cannot succeed’ (Barany 2012, 26).
Some argue that the civil–military problematic is a very simple paradox: ‘because we fear others we create an institution of violence to protect us, but then we fear the very institution we created for protection’ (Feaver 1996, 150). Once created, however, the military institution can be a vehicle for advancing any number of other societal goals. For example, it has ‘the ability to execute manpower-intensive state programs, notably construction and disaster relief’ ( Ibid. , 156). For Huntington, ‘the military must remain isolated from both society and politics and retain and guard its professional autonomy’ (Barany 2012, 22). Huntington (1957) came up with two approaches which he labelled objective and subjective civilian control over the military. In the objective civilian control, the military is highly professional and accepts civilian supremacy in military and foreign policy decisions, while the state in return views soldiers as the guardians of society and endows them with significant autonomy. Yet, this connection of military professionalism to non-intervention in domestic politics has been criticised and cases such as the Pakistan and Egyptian military are presented as examples to substantiate the criticism. Subjective civilian control is appropriate for more undemocratic regimes (or in political systems that do not exhibit trust between the state and the military). In this context, ‘the State closely supervises the military … to ensure that soldiers are not engaged in independent activities that might run counter to the state policy’ and the purpose of this control is to ‘prevent the military’s gaze from the barracks to the state house’ (Barany 2012, 27–28). Civil–military relations could be complicated when the military and the political elites are inextricably linked, as in the case of post-1991 Ethiopia. As discussed earlier, the party and military elites emerged from the civil war period in Ethiopia and share various commonalities such as similar ethnic background and comradeship.
Furthermore, it is claimed that ‘in virtually all authoritarian systems military officers enjoy numerous political and/or socioeconomic prerogatives’ and it is suggested that democratisers should ‘roll back’ the army’s privileged status and make them ‘accountable before the law, obedient to and supportive of the democratic polity’ (Ibid., 33). Barany’s suggestion is one among many (Western-model) prescriptions. As Giustozzi (2011, 5–6) puts it, the path taken by Western democracies such as professionalism, institutionalisation, bureaucratisation and civilian oversight were historically successful but ‘the same path might not be attractive or feasible for ruling elites in every circumstance.’ The effective implementation of these techniques and processes occurs rarely, and their outcomes ‘have to do with the more general political environment, internal and external’ ( Ibid. , 3–11).
In contrast to the orthodox liberal view (see Bland 2001) that suggests that the military should be subjected to civilian control, Giustozzi (2011) discusses ‘strategies of elite bargain’ in terms of incorporating the military into the elite bargain through mechanisms such as (i) sharing power with the generals by giving them ministerial and other positions, and (ii) economic strategies such as feudalisation of the army and the devolution of taxation rights, corporate and private benefits, or allowing the military to have their own economic enterprise. Similar to the economic strategies of elite bargain and sharing economic powers with generals, the literature on military business adds empirical examples of military involvement in business ventures (see Springborg 2011 for examples of military business in the Middle East). According to Brömmelhörster and Paes (2003a), the emergence of military business has been related to access to resources, weak state and civilian control, budgetary reasons, changing the strategic environment, and the organisation and structure of the armed forces.
The literature to date shows that military businesses, unlike other kinds of state-owned enterprises, are known for ‘lack of budgetary transparency’ as well as for their ‘dubious net effect on economic development’, and for a number of advantages such as:
(1) free or subsidized access to inputs (manpower, raw materials, electricity); (2) preferential and often subsidized access to transportation infrastructure; (3) special tax privileges; and (4) political protection through their special relationship with government. (Brömmelhörster and Paes 2003b, 193)
It is not only the easy access to resources and political protection that would make ‘the net effect of military business to development dubious’, but also corruption and lack of military professionalism contribute to tolerating military businesses in different countries ( Ibid. ). This article draws three implications from the foregoing theoretical discussion. First, based on Giustozzi (2011), it is crucial to unravelling the specific ‘economic strategies of elite bargain’ in the context of the post-1991 party-state that exhibits an explicit mix of political and military elites. Second, the literature on ‘military business’ is useful to situate the research on METEC and its peculiar characteristics. Third, the civil–military relations literature is analytically useful to investigate the nexus between political and military leadership to untangle its implication in the political economy of today’s Ethiopia.
The inception of METEC
According to Major General Kinfe Dagnew, long-time General Director of the corporation, the mission of METEC is to lead the industrialisation of the country and stabilise the market (Kinfe 2015). The official reason given for the establishment of a separate corporate entity was that METEC would serve to ‘rationalize the existing factories via undertaking fundamental reorganization as well as a change of attitude and focus’ (METEC 2015). Such a measure, according to the official document, ‘was made possible by the visionary and able leadership of the great leader Meles Zenawi’ ( Ibid. , my translation). Some experts also subscribe to the idea that the emergence of METEC should be viewed from the ‘developmental state’ thinking of the political leadership, in which the military was viewed as a trusted institution that was at the same time producing technically able graduates from its military engineering and technical colleges in large numbers (Colonel Wade, interview, October 2018). The role of the political leadership, especially that of the late premier Meles Zenawi, was instrumental in the creation of the corporation.
Officially, METEC was established by the Council of Ministers Regulation No. 183/2010, merging the defence industries that were previously under the Ministry of National Defense with added civilian and military purposes, with a capital of 10 billion Ethiopian birr (more than 300 million euros) (Negarit Gazeta 2010). The purpose of the corporation, as stipulated in the regulation, includes:
(1) to design, manufacture, erect, and commission manufacturing industries;
(2) to engage in maintenance and overhauling of manufacturing industries;
(3) to manufacture industrial machineries, capital goods and industrial spare parts;
(4) to expand and enhance engineering and technological capabilities through creating partnership for the integration and interfacing industrial resources;
(5) to undertake production, manufacturing, maintenance, overhauling and upgrading of weapons, equipment and parts useful to defence and security forces for combat and war operations;
(6) to sell its products of weapons, equipment and parts to domestic and overseas buyers in conformity with the law;
(7) to build technological capabilities of the countries defence forces by identifying existing and potential needs and through research and development. ( Ibid. , 5297)
As specified by Regulation No. 183/2010, METEC managed to merge the enterprises which were already under the Ethiopian national defence forces with some new ones (Negarit Gazeta 2010). The ex-general director of METEC emphasises the organic link between the military and the corporation and goes on to argue that:
First of all, when METEC was established, its core capabilities and investments were defence industry. This is an institution that follows military discipline – to abide by an objective, to a duty and give priority to people and country. Military discipline is not only its work etiquette but the law obliges the institution to do so. This is vital to the country’s industrial development. Secondly, the defence force holds a strong capacity due to its human and financial resources. The military capacity relates to the services that METEC provides to the national defence in the provision of arms, ammunition, vehicles etc. Therefore, METEC is partially a defence industry. It has the character of the military because it has to observe a military discipline to pursue its missions. (Kinfe 2015, television interview, my translation)
Even though it has its roots in the military and is still run by high-ranking officials with a clear link to national defence, METEC is legally a state enterprise that should be governed by public enterprises proclamation no 25/1992, as stated in the three-page regulation that established the corporation (Negarit Gazeta 2010). According to its strategic plan, the corporation has structured itself into 15 industries of a commercial and military nature, with a total number of 90 factories across the country (METEC 2015). Table 1 presents the name of the industries, their leadership and products.6
| Industry | General managers | Products |
|---|---|---|
| Ethiopian Power Engineering Industry (EPEI) | Major | Production and assembly of transformers, solar panels, wire and cable, power factor correctors, generators and turbines. |
| Hibret Manufacturing Building Industry (HMMBI) | Major | Industrial machinery, spare parts, engraving & pressings products, bolts & nuts. |
| Bishoftu Automotive Industry (BAI) | Colonel | Assembly of city buses, tractors, dump trucks, low-bed trucks and high-bed trucks, manufacture of different construction machineries; assembly of pick-ups, cross-country buses, mid-size buses. |
| Dejen Aviation Industry (DAVI) | Colonel | Manufacturing various aircraft bodies, parts accessories, military and filament pipes, manufacturing of fibre products used for fixed and rotary winged aircraft parts, manufacturing and integration of different unmanned aircraft and hovercrafts. |
| Metals and Fabrication Industry (MFI) | Major | Fabrication, manufacturing and assembly of various metal-based products such as construction machinery, bus body frames, boats, tower cranes, construction lifters, transmission towers, dismountable houses and forging and pressing products. |
| Ethio Plastics Industry (EPI) | Major | Manufacturing of pipe and poly, injection and blow moulding products, PVC profile, polyethylene products, military plastic products. |
| Hi-Tech Industry (HTI) | Colonel | Manufacture of electronic and electromechanical technology products, and provision of services. |
| Gafat Armament Industry (GAI) | Lieutenant Colonel | Launchers, machine guns, various types of spare parts used for heavy industries. |
| Homicho Ammunition Engineering Industry (HAEI) | Colonel | Small, medium and heavy ammunition; gun and tank shell, long-range rockets, bombs, various sizes and types of spare parts. |
| Adama Agricultural Machinery Industry (AAMI) | Major | Assembly of tractors; manufacturing of various construction equipment such as trailers, loaders, water tankers etc.; assembly of water pumps. |
| Akaki Basic Metals Industry (ABMI) | Major | A wide variety of high- and low-precision assembled and manufactured spare parts and capital items such as sugar mill rollers, sugar boiler spare parts, steel ball & armour plates, manhole covers and frames, suspensions and cross-arms. |
|
Sub-industries
Construction Machinery Engineering | Major | Earth-moving machines; asphalt-making equipment; plant for e.g. stone-crushing and concrete-batching. |
| Locomotive Engineering Industry | Major | Light rail transit; electric multiple units; locomotives, trolley buses, wagons. |
| Special Equipment | Major | (Unavailable) |
The industries set out in Table 1, led by military officers, are answerable to the METEC headquarters, led by a general director of the corporation.7 The general director is answerable to the board. The board is made up of military and ruling party officials. As noted in Table 1, the core activities of the corporation range from building manufacturing and power plants to producing capital goods and defence equipment. Each of the industries listed in Table 1 hosts a number of factories. To illustrate this, EPEI, one of the industries mentioned in the table, hosts seven factories.8 These factories provide services and products for both civilian and military uses in the manufacturing, construction and energy sectors. In its endeavours, EPEI partners with various international companies based in India, Turkey, China, the Czech Republic, Italy and Germany.
As noted elsewhere, METEC has taken over military and civilian assets and emerged as a corporation that easily dwarfed others in the sector. In addition to leading the ‘metal industry revolution’, the corporation was mandated with the mission to transform the agricultural sector through providing products and services to Ethiopian ‘agri-businesses’ (MOFED 2010, TV interview, Major General Kinfe). According to Fortune,
Not only is the administration generous in making the nation’s resources available to the high military brass that runs the show at METEC, but [too] they are granted carte blanche in their dealings with the state bureaucracy. This creates some uneasiness among some in the administration, gossip9 disclosed. (Fortune 2014a)
From barracks to market: the pitfalls of METEC’s engagement
METEC is an enormous economic player in the Ethiopian economy owing to its coverage of various economic sectors, its human resources including a disciplined army and the geographic spread of its industries. These features are echoed in the literature which identifies that military businesses are special kinds of enterprises due primarily to their access to large and disciplined human resources, the military’s corporate interest and its significance in shaping the relation between political and military elites, among others (Brömmelhörster and Paes 2003a; Giustozzi 2011; Behuria 2016; Nassif 2017). More importantly, the business engagement of the military could be an elite bargain that gives the military the muscle to intervene in non-military affairs (Giustozzi 2011). As will be illustrated in the Ethiopian context, the emergence of military business changes not only the nature and character of the Ethiopian army but also the nature of the Ethiopian state itself.
Economically, the products manufactured by the numerous factories of METEC flood the market in addition to supplying METEC’s own projects. These products include vehicles (civilian and military), agro-industry products, conventional machines, construction machinery, electronic and electrical products, plastic products, defence products and more (METEC 2015). It is evident that METEC is among the leading producers of marketable products in the country. According to Fortune, a 2011 study by GIZ, the German development cooperation agency, pointed out that they produce solar panels targeted at both on-grid and off-grid markets across the country (and the off-grid areas constitute 80% of the country). Moreover, Fortune (2017a) indicated that the cabin manufacturing plant that was set up at Bishoftu Automotive Industry for the design and manufacture of cabins for trucks and pickups had produced more than 7000 vehicles by 2013, of which 1957 were buses; these have become the hallmark of bus transport in Addis Ababa.
Researchers have shown that military intervention in different economies such as Pakistan, Egypt, Vietnam and Indonesia have resulted in dubious outcomes as far as their developmental role is concerned (McCulloch 2003; Siddiqa-Agha 2003; Thayer 2003; Hashim 2011). In Egypt, the geographically closest, civil–military relations did not lead to a success story either militarily or economically (Nassif 2017, 170). The military ‘suffered a series [of] military setbacks since they seized power in 1952, and Egypt has been anything but an economic success, especially in the last three decades’ ( Ibid. ). The analysis of military business in Ethiopia, especially the investigation of the projects of METEC, entails a similar story and at the same time helps us grasp the impacts of civil–military relations.
The mega-projects have been the pinnacle of METEC’s economic role, and at the same time have faced the greatest backlash. First, the very idea of engaging the military in civilian projects drew suspicion from the media and society at large, as the military’s economic engagement is unprecedented in Ethiopia’s modern military. Second, the corporation’s engagement in the state’s mega-projects, with often unquestionable political and administrative back-up from the party-state, was believed to have facilitated the arrogance of the military and possible embezzlement. The Ethiopian constitution specifies in Article 87 the principles of national defence, and it does not entrust the military with an economic role. Third, the control of business ventures seems to impact the nature of the military because economic interests rather than constitutionally sanctioned principles influence their engagements in the country’s political system. The following paragraphs concisely chronicle these projects.
Dam project
The Ethiopian Grand Renaissance Dam is a large dam project on the Blue Nile. METEC was given the electromechanical and hydraulic steel structure works of the project, which is basically ‘almost half of the entire project’ (Reporter 2017). The commissioning of the project to the military corporation, according to Debretsion (the then deputy prime minister), was a political decision. The deputy prime minister goes on to argue that:
Had we decided to put a foreign company in charge of this project, the challenges we could have faced would be unimaginable. For one, given the nature of the project, the level of diplomatic pressure we could have been subjected to, would be quite considerable. We had no guarantee that foreign contractors would carry out the work in the face of intense diplomatic pressure from their governments and other countries. Worst case scenario, they could have abandoned the project midway. ( Ibid. )
Sugar projects
The GTP identified ‘sugar and related industries’ as one of the targets that would ‘support the supply of energy/power and other key economic activities’ and set a target ‘to raise annual production of sugar and ethanol to 2.25 million tons and 304,000 metre cubed respectively’ (MOFED 2010, 59). The expected increase in production is an ‘almost eightfold increase from 2013 to 2015’ and the expected cost for all the 10 sugar plants and their respective plantations is ‘about 80 billion Birr (4.6 billion USD)’ (Horn Affairs 2013). METEC was given the project to build all the 10 sugar factories. These sugar projects are found in different regions – the Tana Beles project in Amhara region, Welkayt in Tigray, Kesem and Tendaho in Afar, and the Kuraz projects in Southern Nations Nationalities and Peoples’ Regional State. Each sugar project involves the building of factories, development of plantations, construction of dams and of irrigation and other related infrastructure.
Among these projects, the largest is the Kuraz Sugar Development Project (KSDP), which consists of five sugar factories, as well as sugar plantations sprawling over 175,000 hectares of land, housing units and road construction (Fortune 2011; Kamski 2016). The project has a threefold objective, namely ‘agro-economic (i.e. increased sugar revenues), macroeconomic (i.e. employment creation) and developmental (i.e. modernisation and improvement of agro-pastoralist livelihoods)’ (Kamski 2016, 568). The project has been significantly scaled down in terms of size and processing capacity, due to finance and planning problems which ‘cast reasonable doubts on the economic returns and the developmental effectiveness of the KSDP’ ( Ibid. , 569). It is not only the economic feasibility of the projects that has been questioned but also the unprecedented intervention of the party-state and its agents in the livelihoods and cultural-ecological practices of the mainly agro-pastoralist communities in the valley (Abbink 2018).
An audit report on the Ethiopian Sugar Corporation by the Federal Auditor General details the unprecedented delay and negligence in these projects, which include extreme delays in implementation, the absence of feasibility studies and project implementation manuals, and breaches in procurement procedures (OFAG 2013). It took a change of leadership in the regime to stand up to the failures of the soldiers in the sugar projects. Very recently, the regime concluded that the soldiers cannot finalise all the projects and ‘decided to take seven of the projects away from them, awarding five projects to three Chinese companies and discarding two sugar factories’ (Fortune 2018a).
Fertiliser projects
Yayu Fertilizer Complex, located in Elu Ababora zone of Oromia Regional State, is one of the projects stipulated in the GTP and being undertaken by METEC. Yayu is a multi-complex project consisting of two fertiliser industries, a coal mine and a chemical manufacturing plant (Fortune 2015). The corporation has been undertaking the design, civil works and related activities but could not finalise it as per the plan. The delay of the project, according to METEC, relates to payment delays, unexpected and repeated rainfall in the region, and internal weakness of METEC to solve the problems observed in the project process (METEC 2015, 11). Yet, METEC underlines that there are some successes registered in the project, which, among others, include creating a domestic capacity for building an integrated chemical industry and design of equipment technology.
Financial misuse and environmental concerns surround the implementation of the Yayu project. A government body that oversees such projects (the Public Enterprises Standing Committee of the Houses of People’s Representatives of Ethiopia) found out that ‘the money spent on the construction of Yayu Fertilizer Complex project is not worthy of its implementation status’, adding that ‘the budget does not fit to the progress the company had’ (Walta 2017). The project, which is worth 9.6 billion birr, was set to be finalised by 2013 but only 46% has been completed so far while 60% of the budget has been spent. Worse, the budget will jump from 9.6 to 14 billion birr according to METEC’s own estimates ( Ibid. ). The other criticism comes from environmental groups. The project complex affects the biodiversity of a UNESCO-designated biosphere reserve, as the project area is found within the Yayu Forest Biosphere Reserve (see for example Suleman 2017). Environment and Coffee Forest Forum, a local NGO (which merged with another NGO in 2017 and formed Environment, Climate Change and Coffee Forest Forum), expressed its grave concern for the environmental dangers of the project to the biosphere reserve. According to Suleman ( Ibid. , 3) the biosphere reserve is ‘part of the Eastern Afromontane Biodiversity Hotspot and Important Bird Areas of international significance’ and contains ‘the last remaining montane rainforest fragments with wild Coffea arabica populations in the world’.
Thermal energy
METEC has also embarked on the thermal energy sector. According to the corporation, this alternative electricity supply is an important project that it has envisaged to integrate with its sugar mills projects (METEC 2015). The corporation is undertaking a thermal power generation project in the vicinity of Awash-Arba. According to the Ethiopian Herald (21 March 2018), the Melka Sedi Thermal Power Project is a biomass power plant project with the capacity of 137.5 MW. Although METEC signed the agreement with the Ethiopian Electric Power in June 2014, by 2018 the project was only 27% complete.
Flexible manufacturing workshop projects
This is an attempt to engage METEC to build the so-called ‘workshops and their systems’ and hand them over to customer enterprises such as small and medium enterprises in different regions of Ethiopia. METEC is currently constructing 21 workshops. Some of the workshops have begun production, while some are at very early stages. According to METEC (2015), building these ‘workshops of flexible manufacturing’ has been a daunting task, as it involves training the required personnel, equipping them with the right technology and so on.
The multifaceted projects discussed above show the emergence of the unprecedented role of the military in modern Ethiopian history. To date, METEC has presided over the establishment and running of the 15 industries and five mega-projects discussed above. The products and projects have been severely criticised on a number of grounds such as resource misuse, mismanagement of time and environmental concerns. The soldiers have remained defiant in the face of the criticism. Auditors reveal that the leadership of the corporation has not been open to auditing, though the ex-General Director of METEC claims the opposite. There is no external audit report of the finances of the corporation so far. According to a recently released study report of the Ministry of Public Enterprises of Ethiopia, the only time external auditors undertook auditing activity was in 2011 and 2012 (MPE 2016, 60, author’s translation). Even then, ‘the auditors put a disclaimer that pointed out they did not get sufficient and convincing information/data for a proper auditing’ ( Ibid. ). The ascendancy of Abiy Ahmed to the premiership in April 2018 in Ethiopia and his critical reflections on the failures of the mega-projects, as well as a follow-up EPRDF Central Committee decision to fully and/or partially privatise the ongoing projects such as sugar projects and manufacturing enterprises, have signalled an unprecedented revision of the business interests of the military (EPRDF 2018).
METEC and civil–military relations
The reasons for the emergence of METEC and the tangible economic outcomes of ‘the soldiers in business’, as well as the implications for civil–military relations, are crucial themes that informed this analysis. As discussed elsewhere, in the experience of other countries, military business had a debateable outcome as far as its contribution to economic development is concerned (Brömmelhörster and Paes 2003a). In addition to a dubious economic outcome, the impact and implications for civil–military relations could be complicated at best. It is already suggested that military businesses are special not only because of their unique control of revenue but also because they undermine state control over the military ( Ibid. ). For close on a decade, it is clear that the most relevant state institutions such as the parliament and the Auditor General could not do anything about the reckless nature of METEC’s undertakings in TPLF’s Ethiopia. The creation of a state enterprise under military control is an economic good that the political elite offered to the military to further strengthen the TPLF rule. The TPLF has so far been dependent in its military and security apparatus. In this, ethnicity has played an important role in winning the loyalty of a significant section of the military. Therefore, the link between coercive power and ethnicity, for the obvious historical reason of ethnic mobilisation during the civil war of 1975–91, is clearly evident. The Clingendael report (van Veen 2016, 1) also claims that while the use of METEC by the party-state ‘seems sensible from the perspective of strengthening party rule and enhancing implementation capacity for development strategies, it also increases the risk of corruption, nepotism and inefficient resource allocation’. The direction in which this went is now quite visible in the troubled history of the military corporation.
The creation of METEC exemplifies the long-term strategies of incorporating the army into the elite bargain. As Giustozzi (2011, 17) argues, ‘in the orthodox liberal view, armies should not be part of the elite bargain but be completely subjected to civilian control.’ Since the Western model is a long and expensive path with uncertain outcomes, countries choose strategies that could be quickly implemented with guaranteed short-term results (Giustozzi 2011). That is why, Giustozzi ( Ibid. , 17) argues, the military is given ‘the permission to become active in the economy of the country, usually with some monopoly privilege and forms of semi-tolerated corruption’. The permission (or better, the bold move) to establish a military corporation seems a clear employment of ‘economic strategies’ to incorporate the military into the elite bargain. Such strategies could be better than ‘offering corporate and private benefits such as high salaries to military offices', as the literature suggests ( Ibid. ). In post-1991 Ethiopia, the political elite who were by and large engaged in the management and shared ownership of business enterprises in the country may have found it high time to do so. There have indeed been examples where a ‘traditional corporate benefit’ was given to high-ranking military officials, such as the promotion of an ex-defence minister to the head of EFFORT (the business arm of the party), and other benefits to high-ranking officers. The political elites, and specifically the late prime minister Meles Zenawi, have crafted the corporation and assigned his loyal officer General Kinfe to lead it. As a consequence, the birth and ascendancy of the corporation will have implications for the civil–military relations in the country. Two points could be made in this regard.
First, METEC is a special kind of state enterprise, as the literature suggests. It is argued that ‘a number of factors differentiate military-owned businesses from other public enterprises’ (Brömmelhörster and Paes 2003b, 191). One among many reasons that could make METEC special is the fact that the corporation remained undeterred for so long, despite a huge level of impunity, as the 2013 audit report on the Sugar Corporation shows. Two examples can be cited from the report:
A turnkey agreement was signed between METEC and the Ethiopian Sugar Corporation to build and hand over 10 sugar factories within 18 months between 2010 and 2014 but the report confirms that the job has not begun on time and has not yet been finalised.
METEC signed an agreement to develop 10,000 hectares of sugarcane plantation and was given 30% advance payment but what it managed to develop was only 2000 hectares (OFAG 2013).
There are similar stories in which the corporation signs for a provision of service and does not provide, such as in the case of the supply of ‘smart’ digital meters to the EEPCO (Ethiopian Electric Power Corporation) in which METEC failed to deliver and EEPCO ‘had to make an urgent and alternative deal with an Indian company’ (Ethiopian Review 2013). These are clear strands of evidence that the state bureaucracy was not able to make the corporation accountable or take any measure against the military.
Second, the corporation is susceptible to corruption. Open procurement procedures and minimising the risks of corruption (through for example wealth registration of the military elites as suggested by the Federal Anti-Corruption Commission) are necessary to gauge the success of the corporation in its developmental goals. Otherwise, opportunities for corruption both in procurement and subcontracting remain a clear danger to the developmental role. Some media outlets are already documenting corruption allegations on the corporation. According to ION,
The crowning glory of Ethiopian military industry, Metals & Engineering Corp (Metec), headed by a TPLF officer … was in the dock under the accusation [by Auditor General Gemechu Dubisso] of being spend-thrift. This company is the gatekeeper for contracts to supply equipment for the Grand Ethiopian Renaissance Dam. The French company Alstom was recently awarded a 250 million euros contract to supply eight turbines and generators through its intermediation. The Auditor General also singled out several items of expenditure that are worrying, such as 100,000 Birr that five TPLF generals spent … (ION 2013, bold type in the original)
The crux of the matter of engaging the military in Ethiopia’s development endeavours, therefore, lies in the political and economic justifications discussed so far. The problem, however, is with the merits of this economic strategy. The literature suggests that ‘quite often the existence of military enterprises, especially of the personnel-intensive and money-losing variety, is the result of bloated staffing levels within the military apparatus’ (Brömmelhörster and Paes 2003b, 195). METEC has been expanding its operations despite reports of project delays and financial mismanagement until a very recent call to shrink its project activities, the outcome of which is yet to be seen. It is fair to claim that the economic activity of the soldiers through METEC affects the nature of civil–military relations. The military is becoming economically powerful, and so far, the civilian/party elites especially the TPLF have a strategic interest (as they lack legitimacy) in keeping the economic engagement of the military. Therefore, the economic role given to METEC has so far been evidently unsuccessful, the by-product of which is the creation of military officers who attempted to indulge in an activity completely beyond their reach and expertise. The mega-projects that required sophisticated expertise have remained a challenge to the corporation. Some of the officers could be dedicated soldiers with military discipline but that is not enough to carry out jobs that require more than that.
Conclusion
Some sort of hope is dawning on Ethiopia’s political landscape following the emergence of a reformist group led by Abiy Ahmed from the wombs of the decaying EPRDF, which also shed some light with regard to the military and security apparatus in general and the affairs of METEC in particular. To begin with, the reformists rightly admitted the colossal failures of METEC’s project adventures and have proposed to downsize the corporation itself. The success of reforming the corporation and rectifying its project misdeeds is yet to be seen in the face of possible resistance from the old guard, which used to hold significant political and economic power. Yet, the damage has so far been self-evident. Second, a colonel himself, Premier Abiy Ahmed does not belong to the ethnic group of the civil war-era soldiers who have dominated the leadership of the corporation, but is very aware of the state of affairs of the soldiers in business. Thus, the nature of the emergent political leadership and some of the reforms already suggested seem to alter the enormous mission given to the current METEC.
For now, it is important to underline that the emergence of METEC in the political economy of post-1991 Ethiopia eminently relates to the concentration of economic means in the hands of the party-state and its elites – this time under the leadership of the military. In line with the growth and transformation plans of the country, the military is engaged in various mega-projects and the provision of products that range from strategic to basic needs. In an economy where the private sector is still in its infancy, the creation of a special kind of state enterprise run by generals has a multifaceted implication which among others includes the following characteristics: (i) it makes the military and its leadership advance an economic stake and possibly personal accumulation of wealth from the development efforts of the country; (ii) it makes business and project dealings quite forbidding for other actors in the economy;10 (iii) the morality of the military and its neutrality (especially judged by the standards of the country’s constitutional principles) is clearly in violation, as private economic gains could be exchanged for military discipline and valour.
One thing is certain, the military and political elites have been at the helm of business and the economy in the country. It is important to underline that the stronghold of the EPRDF and specifically the TPLF has been the coercive apparatus in general and the military in particular. This force, entrusted with the enormous task of leading the industrialisation process of the nation, seems to work in parallel with the political elites – during the civil war the political and military elite were united behind the goal to remove the military dictatorship, while now it is the mission to lift up the economy. The success of the military in its involvement in mega-projects and leading the industrialisation process of the country has so far mainly been a failure. The few successes it has registered have been marred by extreme delays in the implementation of projects, financial and procedural irregularities, corruption allegations and resistance of the military to auditing. To succeed in the developmental goals, the military should critically reflect on its achievements and failures, as well as human resources (ethnic composition in both the leadership and staff). Yet, most importantly, to win the hearts and minds of the populace, METEC needs to be transparent in its dealings. For now, it is evident that the soldiers have miserably failed in their project adventures and have cost the nation too much time and money. The civil–military relation that was being cemented by the creation of the mammoth corporation for the military is cracking in multiple ways. The outcomes of the cracks caused by the project failures and the political repercussions for the defence of the nation are yet to be seen.