Tuesday, December 14, 2010

Anarchy, Terrorism, and Piracy in Somalia: Revisited


Alemayehu Fentaw†

Somalia has long been anarchic, hitting rock-bottom claiming #1 in The Fund for Peace´s most recent Failed States Index. It had no functioning central government in the past two decades, albeit 14 attempts to reconstitute the state had been made since the ouster of the Cold War dictator Mohammad Siad Barre in 1991 after 22 years in power. All such efforts had been doomed to fail and whether or not the latest initiative shall succeed only remains to be seen. One thing is crystal clear at this point in time, nonetheless, that Somalia's ongoing state-building project has to be supported, rather than fought, by the international community in general and to be more specific, by the US, EU, AU, and countries of the Horn of Africa sub-region lest it should continue to be a hotbed of terrorism and piracy. 

Despite the hitherto neglect, the Somalia issue managed to come into the limelight of international affairs as a result of the sudden surge in piracy in the waters of the coast of Somalia. As Ahmedou Ould-Abdallah, the UN special envoy for Somalia, put it, "the problem of piracy has opened the eyes of those who have forgotten Somalia." The waters off the Somali coast are the most dangerous in the world - accounting for a third of the world's pirate attacks. The coast of Somalia has become the world´s worst piracy area only since 2007; though foreign fishing trawlers have been aggressively exploiting Somalia´s rich and unpatrolled waters since 1991 at the expense of coastal fishing villages. Illegal fishing has undoubtedly decreased due to the effectiveness of Somali pirates. In 2008, 40 out of 111 attacks succeeded; Somali pirates carried out a record number of attacks and hijackings in 2009, despite the deployment of international warships to thwart them and a United Nations Security Council resolution to bring the fight against them to shore. According to the Piracy Reporting Center of the International Maritime Bureau, pirates operating across the Gulf of Aden and along the coast of Somalia had attacked 214 vessels in 2009, resulting in 47 hijackings. In November 2010, the pirates held more than 25 foreign ships and 500 people hostage, according to Ecoterra International, an organization with offices in East Africa that keeps track of Somali piracy. Expert estimates has it that the Somali pirates netted more than $100 million, an astronomical sum for a war-racked country whose economy is in tatters.

It is worth noting that the international community launched a large naval operation in response to the widespread pirate attacks in the waters off the coast of Somalia. Naval powers from around the globe have dispatched a fleet of warships to the Gulf of Aden to fight piracy including, (i) "NATO Counter Piracy Operations" (Ocean Shield) off the Horn of Africa, (ii) the "African Partnership Station" (APS), designed by U.S. Naval Forces Europe/Africa to foster enhanced maritime safety and security in Africa, and (iii) the European Union Naval Force (NAVFOR) Somalia – "Operation ATALANTA". The presence of this huge naval fleet has managed to thwart attacks on merchant ships in the Gulf of Aden. The fact that NATO's Operation Ocean Shield and EU NAVFOR's Operation Atlanta have both been extended until December 2012 shows that the military option will continue to be the predominant mode of containing piracy off the coast of Somalia by the Western powers for some years to come. The United Nations Security Council on 27 April 2010 unanimously adopted the Russian sponsored Resolution 1918 (2010), which called on all states to criminalize piracy under their domestic laws. The Resolution also requires the UN Secretary‐General to report to the Security Council within three months on "possible options to further the aim of prosecuting and imprisoning persons responsible for acts of piracy." This indicates that all efforts are geared towards prosecution.

Besides, at a recent conference in Brussels attended by the leadership from the UN, the EU, the AU, the Arab League, and the Organization of the Islamic Conference (OIC), the international community pledged $213 million toward strengthening Somali security forces. However, the question here is whether these measures are enough to address the piracy epidemic. The bone of contention is that the so-called antipiracy military measures are myopic and what the international community needs is a far-sighted long-term state-building agenda onshore in Somalia, promoting traditional peacemaking processes among the diverse conflicting Somali clans and sub-clans. In this regard, moderate Islam no doubt can provide a common ground for building consensus thereby easing the daunting task of entrenching a well-functioning and all-inclusive government.

Enough's recent strategy paper, entitled 'Beyond Piracy: Next Steps in Somalia', authored by Ken Menkhaus, John Prendergast, and Colin Thomas-Jensen emphasizes the aforementioned point. It analyzes the current situation in Somalia and provides recommendations for how the international community in general and the United States in particular can help Somalis address multiple security threats that put their country, the region, and even far-flung countries at risk. It argues that while short-term measures to curb pirate attacks are certainly necessary, the Obama administration must not allow the piracy problem to distract it from putting in place a long-term strategy to help Somalis overcome their political predicament, i.e anarchy by enabling them to form a viable body politic which, with measured external support, can combat the twin problems of piracy and terrorism as well as promote peace and reconciliation. It describes the irony of the problem of piracy as: "The lowest order of threat to the TFG, the Somali people, the region, and the United States is actually the security item enjoying the greatest attention right now." It goes on to say that "Even so, the continued epidemic of piracy off the Somali coast is a problem and a test of the capacity of the TFG to extend its authority." The only viable and legitimate option would be for the TFG to prosecute piracy onshore, while leaving no room for the external actors, apart from helping in building the capacity of its security apparatus as well as in the ongoing peacemaking and peace-building initiatives.

The piracy epidemic in the Gulf of Aden waters is merely a reflection of the anarchy onshore. Piracy, like terrorism, is reflected by a deeper malaise. The root causes behind the mushrooming piracy off the coast of Somalia are state collapse, humanitarian crisis, abject poverty, and the ongoing exploitation of the waters by global factory fishing vessels that left very few viable livelihoods for anyone in Somalia these days. In order to capture the essence of this problem, let´s try to consider the Somali narrative on the ongoing piracy as told by Ken Menkhaus. The narrative "sees it is justifiable protection of Somali shores from illegal fishing, and … sees the piracy as a minor problem we are overreacting to. For instance -- they say at present there is a massive humanitarian crisis in Somalia, 3.5 million people at risk, and the UN is calling for $950 million in aid. We have only provided a fraction of that aid. Yet we're willing to mobilize the world's navies at considerable cost to stop a $20-40 million piracy problem. That's how Somalis see it." Such being the nature of the piracy problem, it calls for a truly holistic approach covering the political, security and humanitarian dimensions. Efforts to prosecute cases of piracy should also include the issue of illegal fishing and toxic dumping. Perpetrators of these crimes are no less guilty than pirates. In this regard, a practical proposal would be for the UN to enjoin governments whose national are engaged in fishing off the coast of Somalia to pay license fees to the TFG. 

Downplaying the piracy problem, Menkhaus contends that "the United States and the international community have overstated the threat of Somali piracy. Somali hijackers earned between $30 and $40 million in ransom in 2008, a handsome sum of cash in one of the world´s most impoverished countries, but a paltry sum for international shipping -- not even enough to appreciably raise insurance premiums for ships passing through the Gulf of Aden." Explaining away naval military operation as the dominant normative mode of engagement in Somalia, as he logically should, Menkhaus argues "Most shipping companies prefer to live with the current piracy modus vivendi. The risk of any one ship being pirated is still low; their crews, ships, and cargo are returned safely; and the ransom fees are manageable. A military rescue, by comparison, is much riskier to the crew and will raise insurance costs considerably, as insurance companies will have to factor in the possibility of injuries and loss of life to crew and ensuing lawsuits." For him, reasons that continued to justify the military response to the piracy problem are fear of copycat piracy elsewhere, fear of al Qaeda adopting the practice, and commitment to the principle of open seas, rather than the ransom amounts by themselves. Another reason, he pointed out, why the military response remained unwarranted is the practical impossibility to patrol a zone of 2.5 million square miles. Granted, piracy has over time grown in scope to include larger criminal networks, thereby posing a threat to efforts to bring an end to conflict in Somalia. As such, the situation calls for a comprehensive approach to addressing the root causes of the Somali predicament, namely state failure, abject poverty and humanitarian crisis, including strategies for effective environmental conservation and fisheries management.

Turning to the problem of terrorism, the military option equally failed to bring about lasting solution in Somalia. All military adventures, from the American Black Hawk Down in the 1990s to the December 2006 Ethiopian blitz, were doomed to fail. Although I beg to differ with all analysts who, worth their salt, claim that Ethiopia fought in Somalia as proxy for the US, I agree with David Axe's claim that "Ethiopia had received significant help — even urging — for its invasion." However, it still remains to be seen if further wiki leaked cables can provide us with details of the suspected American support and urging, if any. Both Ethiopia and the US have had their own, albeit concurrent, legitimate national security interests in Somalia. As Terrence Lyons aptly put it, "it's important to note that Ethiopia moved into Somalia not as the puppet or proxy for the United States. Ethiopia had its own very specific national security interest relating to Somalia. Ethiopia saw stepped-up attacks on Ethiopia as originating in Somalia, aided by Eritrea. Ethiopia saw this as a real threat to the Ethiopian state and region. That´s why Ethiopia invaded, I believe, rather than just because the United States said ´Go get al-Qaeda.´" But the crux of the matter is whether they had to pursue their security interests the way they did, that is: through war. The Ethiopian invasion, instead of improving aggravated the status quo, turned out to be disastrous as long as it eventually emboldened the threat emanating from the very Islamists Ethiopia had hoped to neutralize. It rallied Somalis of all clannish allegiance and political persuasion against the invaders, ultimately boosting support for extremist Islamic groups that now had a clear enemy in the invaders and their American allies. Violence reigned throughout the two years of Ethiopian occupation. In what seems an admission of guilt, Donald Yamamoto, the former US ambassador to Ethiopia reportedly said in March "We've made a lot of mistakes and Ethiopia's entry in 2006 was not a really good idea."

For instance, Johan Galtung- who is widely deservedly considered to be the Father of Peace Studies- claims, in a recent piece, that Ethiopia received payment from the US in exchange for its incursion in to Somalia. I dismiss Galtung's allegation that Ethiopia was paid by the US to attack Somalia as unsubstantiated, if not credulous. Galtung was not alone in entertaining the idea that Ethiopia obtained a pecuniary gain from the US for its incursion in to Somalia. A certain Eric Margolis also wrote in the Huffington Post that "Ethiopia received generous cash rewards from Washington for its invasion." The issue of American support aside, one has to be stupid enough to believe that Ethiopia invaded Somalia just because it was paid by the US or to believe that Ethiopia did what it did in Somalia in a bid to fight an American war on the Somali soil before engaging itself in a 'securitization calculus'. This, by no means, is meant to be a defense of the Ethiopian invasion, nonetheless. As to the merit of Ethiopia's decision to invade Somalia, it was nothing short of foolhardy and shall always remain to be its biggest foreign policy blunder, though I don´t gainsay its legitimate national security interests, given that there were other ways and means of safeguarding its interests short of use of force, not to mention the issue of whether the requirements of just war were fulfilled. Ethiopia could have adapted a defensive, rather than an offensive, military posture insofar as it affords her a no-less effective aggression neutralization mechanism.

Moreover, Galtung´s simpleminded characterization of Ethiopia and Somalia as Christian and Islamic respectively lends itself easily to a fallacious interpretation of the nature and causes of the conflict as it gives the impression that the major factor that plays itself out in the Ethio-Somalia conflict is religious difference, which is an outright reductio ad absurdum. First, FDR Ethiopia, unlike Imperial Ethiopia, is not a Christian state, as secularism is one of the pillars on which its new politico-legal order has been founded. Second, Ethiopia, in terms of its religious composition, is a country where almost half of its populace is Muslim. In the words of Terrence Lyons: "While many portray Ethiopia as a Christian nation, the country in fact has roughly equal numbers of Christians and Muslims. Ethnic and national identity rather than religion has proven to be the most important social cleavage. It is possible, of course, that religious divisions will grow as an additional spillover from Ethiopia´s incursion into Somalia. This is another reason why settling this conflict is imperative." 

Commenting on the futility of military intervention in Somalia by drawing a parallel with the war in Iraq, Sadia Ali Aden said, "Like the Iraq war, the military solution is a failed solution. The military solution will only discredit if not altogether alienate the moderate elements, radicalize insurgents, and perpetuate bloodshed and chaos. Therefore, it seems that the only way toward a win-win solution is through diplomacy and by adopting an alternative, constructive policy toward Somalia." Writing in the same vein, Donald Levine also suggested "Ethiopia's incursion into Somalia, with US concurrence, if not active backing, is likely to have a similar effect. Our goal should be to strengthen the moderate Somalis there, not undermine them through arousing anti-Ethiopia and anti-US hysteria."

At any rate, the international community in general and Ethiopia and the US in particular should bear in mind the need to have a full grasp of the inner logic that governs and perpetuates anarchy in Somalia and its workings. The twin problems of piracy and terrorism are symptoms of the deeper and broader problem in Somalia, namely anarchy or state failure. Any effort to address piracy or terrorism in isolation from its wider context would not produce the desired results. If a genuinely viable solution to the twin problems of piracy and terrorism is to be found, the international community must primarily focus on helping the Somalis address their deeper malaise themselves. Commenting on the piracy problem, Ken Menkhaus writes "the Somali piracy epidemic is unquestionably an on-shore crisis demanding an on-shore solution. Naval operations to interdict and apprehend pirates will help, but cannot possibly halt the daily quest of over a thousand gunmen in such vast waters when the risks are so low, rewards so high and alternatives so bleak in desolate Somalia." Menkhaus argues that "The solution will ultimately have to be on-shore, with more effective government in Somalia." In keeping with Menkhaus's proposal, Michael Shank argues that if we can find stability on land first, and then order will return to the seas. 

What transpires from the foregoing is the fact that the key to solving the twin problems of piracy and terrorism on- and off-shore is to promote a negative peace agenda on-shore and off-shore buttressed by a positive peace agenda on-shore capitalizing on the gains of the Transitional Federal Government while ensuring its inclusiveness. On the former, the West must rally as long as it has all the resources if it has the requisite political will. Countries of the Horn of Africa must build consensus as to the necessity of getting over the prevalent anarchy in Somalia if their effort geared towards realizing a robust and effective regional integration, be it economic or political, is to bear fruit as long as it is in the best interest of the sub-region as a whole and its members as individual states. After all, the Somalis are such a widely dispersed population throughout much of the sub-region, and hence, the stability and prosperity of Somalia is a precondition for the enjoyment of stability and prosperity in the sub-region in general and to be more specific, in Ethiopia, Djibouti, and Kenya.

 The writer, Alemayehu Fentaw (LLB, MA summa cum laude), is an academic lawyer and public policy analyst based in Addis Ababa, Ethiopia. He can be reached at alemayehufentaw@yahoo.com.

Ethiopia: Reflections on the Crusade against Real Estate

Alemayehu Fentaw


What motivated me to write this piece is the recent measures taken by the Addis Ababa City Administration against real estate developers to expropriate their lease holdings. One thing that strikes me as odd is that actions took on the form of a campaign at best and a crusade at worst, pursued with the enthusiasm of a zealot. As a word of caveat, I don't gainsay the government's desire to combat against wasteful rent-seeking and unproductive activities on part of the real estate developers. Again, I don't deny that there remains a class that pillages, seizes and exploits in broad day in Ethiopia today. Nevertheless, in waging the campaign, the role the government played in creating and sustaining this squalid state of affairs has been reckoned without. Undoubtedly, lack of transparency in public affairs encouraged lease-offs of urban land to the well-connected leading to a speculative accumulation of large non-productive land holdings. The recently launched campaign against real estate therefore leaves much to be desired. Above all, the City Administration should remind itself of the fact that this is a country of rule of law and not of rule of zeal.


Constitutional and Statutory Guarantees against Expropriation in Ethiopia

The Constitution of the Federal Democratic Republic of Ethiopia, under its Article 40(6), provides that "… [the] government shall ensure the right of private investors to the use of land on the basis of payment arrangements established by law", subject to the proviso under sub-article (8) of same, which reads: "Without prejudice to the right to private property, the government may expropriate private property for public purposes subject to payment in advance of compensation commensurate to the value of the property." In keeping with the Constitutional rule, Article 21 of Proclamation 280/2002 provides for investment guarantees. Sub-article (1) of same stipulates that: "[n]o investment may be expropriated or nationalized except when required by the public interest and then, only in compliance with the requirements of the law" whilst sub-article (2) provides that: "[a]dequate compensation, corresponding to the Prevailing market value shall be paid in advance in case of expropriation or nationalization of an investment for public interest." Accordingly, the government may expropriate property for public interest, strictly according to the law and only after making advance payment of adequate compensation corresponding to the prevailing market value of the investment.


Article 3(1) of Expropriation of Landholdings for Public Purposes and Payment of Compensation Proclamation 455/2005 provides that "[a] woreda or an urban administration shall, upon payment in advance of compensation in accordance with this Proclamation, have the power to expropriate rural or urban landholdings for public purpose where it believes that it should be used for a better development project to be carried out by public entities, private investors, cooperative societies or other organs, or where' such expropriation has been decided by the appropriate higher regional or federal government organ for the same purpose." Sub-article (2) stipulates that "Notwithstanding the provisions of Sub-Article (I) of this Article, no land lease holding may be expropriated unless the lessee has failed to honor the obligations he assumed under the Lease Proclamation and Regulations or the land is required for development works to be undertaken by government." Pursuant to Article 2(5) of same, 'public purpose' denotes "the use of land defined as such by the decision of the appropriate body in conformity with urban structure plan or development plan in order to ensure the interest of the peoples to acquire direct or indirect benefits from the use of the land and to consolidate sustainable socio-economic development."


In addition, the Re-enactment of Urban Lands Lease Holding Proclamation 272/2002, under its Article 15(1), spells out three distinct grounds for termination of lease-hold. It stipulates that the lease-hold of urban land shall be terminated: (a) where the lease-hold possessor has failed to use the land in accordance with Sub-Article (1) of Article 12; (b) where it is decided to use the land for a public interest; or (c) where the period of lease is not renewed in accordance with Sub-Article (1) of Article 7. Firstly, a lease-hold can be terminated in situations where the holder violates Article 12 (1), which stipulates that "Any person, to whom lease-hold of urban land is permitted, must begin to use the land for the prescribed activity or service within the period of time set by Regulations to be issued by Region or City Government." Thus, a lease-holder cannot put his lease-hold to any use, activity or service other than the authorized. However, if a lease-holder wishes to put his lease-hold to a different use than for which he has had authorization, he must obtain permission for conversion pursuant to Sub-Article (2) of same.


Secondly, a lease-hold can be terminated on account of a decision by the concerned administration to use the land for development works to be undertaken by the government in pursuit of public interest. 'Public interest' is defined, under Article 2(7), in the same manner as in the Expropriation Proclamation, as "that which an appropriate body determines as a public interest in conformity with Master Plan or development plan in order to continuously ensure the direct or indirect usability of land by peoples, and to progressively enhance urban development." It follows that expropriation of urban land is permissible as long as it is for the implementation of the master plan or urban development plan, on condition that the expropriated land turns out to be beneficial, be it directly or indirectly, to the public. Finally, a lease-hold is terminated automatically upon expiry of the lease term unless it is renewed for another term.


With respect to the consequences of termination of lease-hold on the ground that
the lease-holder failed to use the land in accordance with Article 12 (1), Sub-Article (2) of same provides that "The lease payment shall be returned, subject to the reduction of costs incurred and penalty fee, where the lease-hold of urban land is terminated in accordance with Sub-Article (1) (a) of this Article. Penalty may not, however, be due where the land fell short of use because of force majeure set forth under Article 1793 of the Civil Code." Therefore, in cases of termination on account of failure to honor obligations on part of the lease-holder, refund of an amount equal to the lease payment less costs and penalty must be made to the lessee by the concerned administration, provided that the lessee could not make use of the land for any reason short of force majeure.


With regard to the legal effect of termination of lease-hold on the ground that
the lease-hold is needed for development projects in the pursuit of public interest, Sub-Article (3) stipulates that "Where the lease-hold of urban land is terminated in accordance with Sub-Article (1) (b) of this Article the lease-hold possessor shall be paid commensurate compensation in conformity with the pleadings institution procedure set forth in Article 17. With respect to the consequence of termination of lease-hold on account of failure to have it renewed, Sub-article (4) provides: "Where the lease-hold of urban land is terminated in accordance with Sub-Article (1) (c) of this Article, the lease-hold possessor must hand over the land to the body which gave it by removing within one year the property he has on the ground." And Sub-article (5) confers on the body, which handed the urban land over to the lease-hold possessor, the power to take over the land, together with the property thereon without any payment, where the latter has failed to remove the property on the ground within the period of time set forth in Sub-Article (4) of this Article. It can also order the Police where it finds it necessary for the execution thereof.


Before winding up my sketchy elucidation of the law governing urban landholdings in Ethiopia, I should like to draw particular attention to an important right that the law entitles the lease-holder to, despite the gross neglect and disregard it suffered recently. Any lease-holder is entitled to transfer, or charge an encumbrance on, his lease right. Article 13 (1) stipulates: "Without prejudice to Article 6 and Sub-Article(1) of Article 10, any lease-hold possessor may transfer, or undertake a surety on, his right of lease-hold; and he may also use it as a capital contribution to the amount of the lease payment he has made." This right is not limited to the lease-holder, nonetheless. It also extends to the transferee or mortgagee. Sub-Article (3) stipulates that "A person, who has the right of surety, may make use thereof by transferring the right, the building on the land and facilities accessory to it according to law or by using it on his own where the person undertaking the surety has failed to perform his obligation in the contract of suretyship, or where he is declared by court that he has proved to be bankrupt." So much for the law.


The Crusade against Real Estate Developers

Citing a statement from the Addis Ababa City Administration, New Business Ethiopia reported that a total of 923,380 square meters of land in different sub-cities was grabbed unlawfully by about 23 real estate developers. In response, the administration launched an all-out campaign against real estate developers for the reclamation of such unlawfully held land to the hitherto-unheard-of land bank in the first week of November 2010. The real estate developers targeted by the administration include, among others, Sunshine Real Estate (sister company of Sunshine Construction Company), Ayat Real Estate, Gad Real Estate, Michael Real Estate, Satcon Construction Company, Berta Construction, and Gift Real Estate.  

Reportedly, Bole, Yeka, Nefas Silk Lafto, Kolfe Keranyo are among the major sub-cities of Addis Ababa where significant number of illegal land gabbing took place. According to news reports, in Bole Sub-city alone, Sunshine Real Estate has taken 35,000 square meters of land illegally. In the same sub-city, Gad Real Estate has allegedly grabbed 14,000, whilst Michael Real Estate and Satcon Construction have taken 13,000 and 12,000 square meters of land illegally. In Yeka Sub-city, Berta Construction has allegedly grabbed 33,100 square meters of land unlawfully, followed by Sunshine and Gift Real Estate Company, which took 21,000 and 10,048 square meters of land respectively.

According to Gubae Gundarta, Haile and Alem Real Estate Company, owned by the world-renowned athlete Haile Gebreselassie and his wife, has also been a subject of the expropriation measure taken by the city administration recently. Haile and Alem Real Estate Company acquired 40,000 square meters of land from the city administration on a basis of lease agreement on the 7th day of October 2005. The blue-print of 38 villas and 224 condos to be constructed on the property located in Bole Sub-city's Kebele 18, has already been taken care of by Gerrita Consultancy. It was when Haile and Alem Real Estate Company was gearing up for construction that a dispute arose between the former and Addis Real Estate over boundaries between their respective adjacent landholdings. Gundarta quoted Haile: "We got the plots of land demarcated only this week, October 26, 2010. It means four years after the land was actually leased out to us. And then, they confiscated the land and all documentation pertaining thereto saying we haven't undertaken the business soon enough. This is not legal."


Groum Abate, a staff writer at Capital,
in his piece entitled 'Real estates swindle banks hundreds of millions', contends that banks will not be able to recover loans they disbursed to real estate developers as a result of the city administration's reclamation of the over 200,000 square meters of land holdings, which had served as collaterals. At the minimum, several private banks will lose more than four hundred million birr in loans to only four real estate developers after the Addis Ababa City Administration reclaimed their holdings. The real estate developers allegedly used their holdings illegally as collateral to secure bank loans, albeit there is nothing in the law that prohibits lease-holders from furnishing their right of lease as collateral to financiers.

According to the City Administration, only 18 percent of a total of 5.9 million square meter of land distributed to 125 real estate developers since 1997 is used properly, whilst the rest of the plots are transferred to third parties without any construction being built or used as collateral for loans in contravention of the land law.
Over two million square meters of plot from different real estate developers has already been taken back. This accounts for over 33 percent of the total amount of land given for real estate development. The administration claims to have expropriated over 1.5 million square meters from real estate developers that allegedly failed or refused to start construction within eighteen months. Besides, the city reclaimed more than 500,000 square meters of plot that has allegedly been held illegally by real estate developers. In the administration's estimation, the city would have raised over 6 billion birr had it leased the 2 million square meters at an average rate of 3,000 ETB per square meter.

Concluding Remarks

In the course of the crusade, due care has to be taken to respect the principle of fairness. First and foremost, the city administration has to see to it that the measure is taken in accordance with the law. Second, the accused real estate developers must be given fair hearings, prior to the city administration taking the measure of expropriating their landholdings and demolishing constructions, where the alleged unlawful urban land lease-holders show to its satisfaction that they possess duly signed and sealed lease-hold title-deeds thereof and have not yet failed to honor the obligations they assumed under the lease proclamations and regulations. Nevertheless, a blanket measure to expropriate lease holdings without a showing that such holdings are unlawful amounts to not only a violation of the relevant statutes but also of the Constitution of the Federal Democratic Republic of Ethiopia.


To that end, the city administration has to make decisions on a case-by-case basis. Hence, it has to distinguish between the two category of cases of termination of lease-hold that are likely to arise, namely: cases of termination on account of failure to honor obligations on part of the lease-holder, on the one hand, and cases of termination on account of a decision to use the land for development works in the interest of the public, on the other hand, on the bases of the abovementioned three legal grounds, excluding the third ground which is unlikely to give rise to a dispute in the short- and medium-term. Besides, the administration should be able to distinguish between compensable and non-compensable termination.


Moreover, judicious and level-headed decisions have to be reached lest it should create a sense of insecurity of investment in the minds of our investors, whether actual and potential, already engaged or wishing to engage in real estate development in the country. Furthermore, the administration should not lose sight of the interests of third parties, including banks and buyers that will be adversely affected as a result of such measures and the grave implication they will have on the financial sector. For instance, one can reasonably expect the expropriation measures to result in a proliferation of lawsuits, adding an extra burden to courts that are already congested with backlogs, not to mention the ensuing immense litigation costs, as long as aggrieved parties, whether developers or their clients, are likely to file suits any time soon. It is also not clear enough if our private commercial banks can survive the huge financial losses they sustained as a result of the expropriation measures taken against the real estate developers who borrowed funds by undertaking surety on their rights of lease-hold and consequent civil suits and if their probable failure might not affect the growth rate, if not the macroeconomic stability, of our economy. After all, as Access Capital Research 2010 Sector Report on Real Estate put it, "had it not been for the expansion of this sector and the closely affiliated construction sector, Ethiopia would not have registered double-digit economic growth in the past five years."