Mogadishu recalled its ambassador from Ethiopia on Tuesday to hold “deliberations” on the issue, stating that the port agreement signed a day earlier would increase tensions and endanger stability in the wider Horn of Africa region.

Feelings about the port agreement are already running high. Somalis took to the streets of Mogadishu to protest against the deal on Wednesday.

What’s the deal about?

Signed in Addis Ababa by Ethiopian Prime Minister Abiy Ahmed and Somaliland’s leader Muse Bihi Abdi, the agreement grants Ethiopia a 50-year lease on a naval base with access to Somaliland’s Berbera port for commercial marine operations.

In return, Ethiopia says it will provide an “in-depth assessment” of Somaliland’s quest for official recognition as an independent nation – the first time any other country has offered to do this. Somaliland will also receive a stake in state-owned Ethiopian Airlines, an Ethiopian government statement revealed, although details about this part of the agreement, especially regarding any additional monetary payment, are scant.

In a separate statement posted on X, Abiy’s office called the deal an “historic” one that would allow Addis Ababa to “diversify its access to seaports”. It added that it would also enable both parties to deepen ties across economic and political sectors.

Prime Minister @AbiyAhmedAli and the President of Somaliland Muse Bihe Abdi have signed a historic Memorandum of Understanding in Addis Ababa.#PMOEthiopia pic.twitter.com/6lPlCoepGr

— Office of the Prime Minister – Ethiopia (@PMEthiopia) January 1, 2024

The agreement has been long-awaited. In 2019, Ethiopia bought a 19 percent stake in the Port of Berbera with Somaliland retaining 30 percent and Dubai firm and port manager DP World holding 51 percent. In exchange for financing a continuing upgrade of the port with about $442m, DP World will manage the port for 30 years. The United Arab Emirates group’s investment in Berbera has previously sparked controversy in Somalia with parliament voting in 2018 for the deal to be declared null and void. That action had little effect on stopping the project.

The port will open Ethiopia up to the Red Sea and the Suez Canal, giving it access to Europe. Details of when, precisely, the lease will take effect are unclear.

Why is Somalia angry about this deal?

Somalia and Somaliland have a long and bitter history as Mogadishu considers the self-governing region of four million people to be a part of its own territory.

Ruled by the British as a protectorate until 1960, Somaliland became independent briefly before it merged with Somalia to form a republic.

The region broke away from Somalia in 1991 after it fought a war of independence along largely ethnic lines. Those wounds still have yet to heal among Somali families on either side of the border.

Somaliland has since operated autonomously although with little revenue and with no access to international trade or financing. Somaliland’s capital, Hargeisa, prints its own passports, issues the Somaliland shilling and holds elections. Some experts regard the region as being one of the “most stable” de facto states in the world.

But Mogadishu regards any international recognition of Somaliland as an attack on Somalia’s sovereignty. The Somali government called the port deal with Addis Ababa “outrageous” and “unauthorised”.

“The Federal Government of Somalia views this as a hostile move that … constitutes a blatant transgression and intrusion into the independence, sovereignty and territorial independence of the Federal Republic of Somalia,” a government statement issued on Tuesday read.

We vehemently condemn and strongly reject the outrageous actions of the Ethiopian FG in signing an unauthroized Memorandum of Understanding with Somaliland (the Northern Regions of Somalia) on January 1, 2024, in Addis Ababa. pic.twitter.com/84ngjhxvK9

— Permanent Secretary Office for Foreign Affairs🇸🇴 (@PSMOFA) January 3, 2024

“We will not stand idly by and watch our sovereignty being compromised,” President Hassan Sheikh Mohamud told parliament on Tuesday.

The deal between Somaliland and Ethiopia came just days after Mogadishu and Hargeisa agreed to restart Djibouti-led mediations aimed at getting both parties to resolve their deep-seated issues. Several such rounds of talks have not yielded fruit in the past.

With this latest development, those conversations might be stalled once again, Moustafa Ahmad, an independent researcher speaking from Hargeisa, told Al Jazeera. “Both sides shared different interpretations of what the talks entailed,” Ahmad said. “Mogadishu said it was a talk of reunion, and Somaliland said it was to decide its fate as an independent state. It was bound to fail, but this current crisis just catalysed its collapse.”

Why does Ethiopia want access to the sea?

Ethiopia is one of Africa’s most populous countries with 120 million people, but its economy is restricted by a lack of access to the sea.

The East African country was cut off from the Gulf of Aden after a three-decades-long war saw Eritrea secede in 1993, taking all of the country’s former coastline with it.

Since then, Ethiopia has relied mainly on the smaller Djibouti for its port operations. The Port of Djibouti handles more than 95 percent of inbound and outbound Ethiopian cargo. Addis Ababa has even managed to operate a shipping line from the Djibouti port.

On October 13, Abiy told parliament that the sea was crucial to Ethiopia’s survival.

“Ethiopia is an island surrounded by water but a country that is thirsty,” he said. “The Red Sea and the Nile will determine Ethiopia. They are interlinked with Ethiopia and will be the fundamentals that will either bring in Ethiopia’s development or bring about its demise.”

His statement sparked concern across East Africa. Analysts wondered if he was referring to a possible military invasion of Ethiopia’s neighbours in a region already going through multiple political crises and climate change-related events like drought. But Addis Ababa later clarified that the prime minister was not referring to any sort of military action against its neighbours.

Still, regional ripples may be unavoidable as countries gauge which side to back in this latest row, Ahmad, the researcher, said. Ethiopia contributes to a United Nations peacekeeping mission in Somalia, and that agreement could be threatened. Internally, however, the dispute may score points for Ethiopia’s troubled government, Ahmad said.

“It will give Abiy the opportunity to rehabilitate his unpopular image in the country caused by his wars in the Tigray region, the violent insurgencies in Amhara and Oromo regions as well as the economic regression the country faced for the last few years. Access to the sea has been presented as an existential issue for Ethiopian leaders over the years, and with this new deal, it will give Abiy domestic political gains.”

Is there a risk of armed conflict?

With the tense and provocative rhetoric, there are fears of a prolonged diplomatic rift between Ethiopia and Somalia. But there have been no talks of an armed conflict on either side.

There is a history of territorial conflict between the two. In 1977, Somalia invaded Ogaden, a disputed border territory now in Ethiopia. Backed by the Soviet Union and Cuba, which were seeking a cross-continent socialist alliance, Ethiopia responded and eventually won the war. The decimation and defeat of the Somali army and the eventual rebellion that it prompted internally are linked to Somaliland breaking away from Somalia.

At the moment, Somalia is no match for Ethiopia. Somalia has a 20,000-strong army while Ethiopia has more than 130,000 soldiers.

Both countries already face a great deal of instability domestically. Mogadishu is waging a long war with the armed group al-Shabab. Ethiopia is dealing with the aftermath of the Tigray war as well as a new conflict in the Amhara region.

An all-out war could also greatly hamper the operations of the African Union transition mission in Somalia, which includes thousands of Ethiopian soldiers, who would likely be withdrawn.

How has the world responded?

Several countries and international organisations have waded into the dispute, most of them backing Somalia. The African Union, Egypt, Qatar, Turkey and the United States issued statements this week that urged Ethiopia to respect Mogadishu’s sovereignty.

So have the European Union, the Organisation for Islamic Cooperation and the Arab League. In a statement on X, the league, of which Somalia is a member, advised Ethiopia to “adhere to the rules and principles of good neighborliness”.

The Intergovernmental Authority on Development, or IGAD, an East African trading bloc, refused to take sides on Wednesday, calling instead on all parties to resolve the issue amicably. Mogadishu has criticised this response, saying it fell short of a proper condemnation.

What next?

Despite the controversy and concerns about rising tensions, Somalilanders celebrated in the streets on Monday after the announcement of the port deal. On the whole, they are excited about the prospect of their region being recognised by other countries and the economic opportunities that they believe are waiting for them beyond Mogadishu’s influence.

“Feeling now in Somaliland is cautious optimism,” analyst Ahmad said. “People are happy that, finally, Somaliland’s quest for international recognition is a reality while at the same time cautious about the uncertainties that lie ahead, including how regional and global powers will support or oppose the recognition.”

All eyes are now on Somalia to see how it will contest this deal. So far, Mogadishu has not set out any clear legal procedures it plans to take, other than stating that the leasing of the port in Somaliland is illegal.

Instead, it has severed diplomatic ties with Ethiopia and pressured countries on official phone calls to make statements against the port deal. It is also pushing regional bodies like IGAD to denounce the deal.

Ethiopia, meanwhile, doubled down on Wednesday with a long statement that asserted no laws had been broken in signing the port agreement. The statement sounded a sympathetic tone about Somaliland’s plight, noting that the region has not been recognised as a nation despite Addis Ababa and other countries having consular relations with Hargeisa.

The deal enables “Somaliland to acquire the type of assistance and partnership they cannot get from any other country and also responds to their long-standing demands”, the statement read.