BRIEF ON ETHIOPIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP63-00314R000200160030-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 33
• Document Creation Date: December 12, 2016
• Document Release Date: October 23, 1998
• Sequence Number: 30
• Publication Date: September 1, 1960
• Content Type: REPORT

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Copy No.
GEOGRAPHIC SUPPORT PROJECT
CIA/TAR GP 6o-10',:L
September 19603
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
k " )
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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GEOGR1U IC SUPPOI PROJECT
BRIEF ON ETHIOPIA
CTA/RR GP 60-105:L
September 1960
Office of Research and Reports
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CONTENTS
Page
I. Background . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Strategic Significance . . . . . . . . . . . . . . . . ? . 2
III. Population . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. Recent Bloc Aid and Western Air Programs . . . . . . . . . $
V. Economy . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. General Character . . . . . . . . . . . . . . . . 13
B. Foreign Trade . . . . . . . . . . . . . . . . . . . . 16
C. Internal Trade . . . . . . . . . . . . . . . . . . . 20
D. Plans for Economic Development . . . . . . . . . . . . 26
VI. Strengths and Weaknesses in the Econonr . . . . . . . . . 26
NAP IN POCUT
Ethiopia, Eritrea, and the Somalilands (21709)
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' al`t ETHIOP A
I. Background
The Empire of Ethiopia consists of the 12 provinces of Ethiopia
proper plus the former Italian colony of Eritrea, which was federated
with Ethiopia on 15 September. 1952. In practice Eritrea is treated
merely as another province and., therefore, in this paper the en:.ire
area is called Ethiopia, Federation gave the high plateau of former
Ethiopia direct access to the Red Sea ports of Massaua and Assab, thus
supplementing the access roue via the French Somaliland port of
Djibouti on the Gulf of Aden (see map). The port of Djibouti has the
advantage of a rail connection to the Interior and remains the principal
outlet, although truck transportation to the port of Assab is becoming
increasingly important.
Most of Ethiopia consists of a high dissected plateau, which is
surrounded on all but the extreme northeast and east by plains or
rolling foothills. A great rift valley cuts across the middle off` the
plateau. The plateau is also cut by deep ravines, leaving many so-
lated flat-topped blocks of land with nearly- vertical sides. Mountains
rise above the plateau iv some places. Coffee, the principal export,
is grown on the plateau, rhic~4 :. has a -temperate climate with siffi el.ent
rainfall for growing coffee ar?d other crops, Whereas natural vegetation
on the plateau is principally woodland, the lowland -- where the .rainfal"-
is much lower -- is either ss1aand or desert.
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Ethiopia has a number of problems, among which may be mentioned
(i) the latent separatist tendencies of Eritrea, (2) the boundary prob-
lem with the Somali Republic, (3) the encroachment of Islam upon a
Christain-dominated nation, (4) the spillover of Somali tribes into
eastern Ethiopia, and, finally, (5) the problem of attempting to
modernize a quasi-feudal. state.
Against such a background this report sets forth only the salient
facts about Ethiopia?s strategic significance, population, acceptance
of Soviet and Free World aid programs, and economy. The report is not
intended to be a complete analysis of the cultural and physical factors
that rake up the Ethiopian scene but is intended solely for use in
formulating economic action programs.
II. Strategic Sificance
Ethiopia only recently has attempted to break out of its shell of
almost medieval isolation; and its social, political, and economic
institutions have barely begun to take modern forms. Aside from coffee,
the country has practically no products or natural resources that are
wanted by the outside world. At present, therefore, Ethiopia has
little strategic value except for its position at the southern end of
the Red Sea. Although locations such as this are possibly becoming
less and less critical In a missile age, it is worth noting that, with
very little modern military equipment and trained mpower, Ethiopia
-- or any power using Ethiopian territory -- could restrict the movement
of ships along one of tIe major oil routes of the world. The position
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of Ethiopia athwart air routes that link the Middle East and northeastern
Africa with eastern and central Africa is of potential importance
strategically.
Among all of the Sub-Saharan nations, Ethiopia Is unique as far as
United States military posture is concerned. The only United States
base in Sub-Saheran Africa is in Ethiopia, where a major radio com-
munications facility at Kagrnew Station in Asmara is used by the United
States Armor and the United States Navy. Ethiopia al,.ao is the recipient
of benefits from the only sub-Saharan United States )-in.litary aid pro-
gram, which was inaugurated in 1954.
In one sense, the weakness and apparent lack of -3trategic importance
of Ethiopia could enhance its value or, at least, its significcince to
world powers. The primitive state of the political, economic, and
social development of the country make it a relatively attractive target
for any modern power desiring to control or influence the government
This is particularly true because of the unusual concentration of power
in the hands of one aged man, Emperor Haile Selassie.
III. Population
Ethiopia has about 18 million people, according to official estimates.
A more realistic figure probably would be 15 to 16 million. The popu-
lation is divided into more than a dozen major group3 with diverse lan-
guages and religions. The -amharaa number about 2 million, the Tigreans
between 3 and 4 million and the Callas more than 7 million. The re-
mainder of the population consists of smaller ethnic groups sub as
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the Danikils, Somalis, Sidamis, Agaus, Bejas, Nilotic tribes of negro
and mixed descent, and small groups of Arabs and Europeans. In the
total population, Christian and Muslim elements are approximately equal
-- the Ambaras, Tigreans, and Europeans are Christians; and the Arabs
and most of the Gallas are Muslims, as are the Danikils and Somalis.
The Nilotic tribes are mainly pagan.
Through the cexaturies, the Shoa Amhara group (from Shoa Province)
has come to occupy the dominant position. One plausible estimate of
the ethnic affiliations of high-ranking personnel in the government
indicates that the major tribal groups are represented as follows: Shoa
Amhara, 64 percent; Tigre and Galls, 14 percent each,, and those whose
origin has not been ascertained, 8 percent. The overwhelming influence
of the Amhara group is reflected also in everyday life. Non-Amharas
are discriminated against in private employment as well as in govern-
ment, where they have e, relatively ineffective voice? Inasmuch as
kinship is by far the xxzost important basis for loyalty among Ethiopians,
the accepted and expected. mode of behavior is for relatives to assist
one another.
The most important factiaas within the Shoa Amhara group are the
Moja and Addisge clAns, who have a common ancestor. The Moja bave
inherited considerable amounts of land and perhaps are the wealthiest
and most influential people 1i. the country. The practice of giving
land to loyal military chiefs throughout a long victorious past has
continued into the preE.ent reign and has been generally constriled as
a mandate to loot the provinces.
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During the early part of 1960 the Moja clan counted among its
members the Vice President of the Senate, Governors General of Gojjam
and Begemdir Provinces, Commander of the Imperial Bodyguard, Director
General of the Ministry of Foreign Affairs, Minister of Commerce and
Industry, Minister of Education, and Secretary of the Coffee Board.
Although in the past a certain amount of enmity has existed between
the Moja and Addisge clans, mutual resentment now is lessening, even to
the point of recent marriages between members of the two clans. The
Emperor is 68 years old, and some Ethiopians reason that it may be to
the advantage of the two Shea Amhara clans to work together in a bid
for power should the Emperor die. They have a common cause to fight
for, being the wealthiest landowners, the political elite, and the
masters of the Ethiopian Eimire. They are already well represented in
the government, and they have no trouble in securing important positions
for their children.
The Tigre are the closest challengers of the Amhara and have been
given token representation in the government because of the royal
family of Tigre, which has a distant claim on the throne. The Tigre
group in Tigre Province and - ritrea has latent separatist sentiments
that provide an additional reason for the Emperor to give them -woken
representation in the goveri inent . As a result of being denied more
opportunity in governnment, however, an increasing number of the Tigre
are becoming aerchauts. When a Tigre obtains an important position in
business he tends to hire only Tigre people, regardless of their ability:
This practice causes hard feelings among other groups of people
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Apart from the fact that they hold many governmental posts the I4ojas
are influential because, as large landowners, they are financially in-
dependent and owe no special fealty to the present Emperor, Haile
Selassie. They can afford to decline governmental appointments and
often have dome so. A number of Mojas are private businessmen whose
financial position enables theta to criticize the Emperor openly. When
he retaliates by taking land away from some of them, others of the clan
give part of their land to. the victims. The Mojas a7e too many and, at
present, too powerful to be dispossessed entirely; and many Ethiopians
believe that the ? eror needs the Moja more than the I4oJa need the
Emperor. That they do not always approve of the E eror?s decisions
can be judged by what one Mo ja repcartedly said to hill: "We can do
nothing to you because you are in power. But by your selfish and
shortsighted actions you are digging a grave for your son."
Members of the Addisge clan are generally conservative aristocrats
who own much land in Shea and the other provinces. At present the most
important positions held by members of the Addisge are the Head of the
Senate and the Acting Governor of Shoa Province (the E peror is the
official Governor 0=? Shea Province).
The Gallas ;have been represented in the government because they
constitute the largest group in the country. Perhaps the foremost Galls
is l' jor? General m ul.ugueta Br lli,. the most capable military ,mn in
Ethiopia He has inspired admiration among officers in the am but
has alienated many influential people outside the ar. r. Currently.,
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he is the Minister of N vtianal Community Development, and conweciuentiy
has considerable influence over the Land Reform Program.
Arabs, estimated to nuber more than 50,000, form the largest for-
eign group in Ethiopia. Although some of the Arabs probably can trace
their residence in. Ethiopi4, through several generations, most of them
actually immigrated from. ti-,,e Yemen and the Somalilands during the past
30 years. Some Arabs have even inter i arried with the indigenous popu-
lation, thus becoming firm y established in many cor;munities.
Arab merchants are wil:i. ir.g to accept a small margin of profit, well
below that of European con etitors . Because of Arab clannishness and
business practices, smill lluropeari firms that have attempted to estab
lish distribution organizai dons in the provinces have found it virtuallys.~
impossible to compete 1'.n w.rkets controlled by the Arabs. Arab trader.-s
in isolated communitie.= :arc linker; to Arab wholesalers and agents at
Addis Ababa and other -centers. Orders fo- goods, as well as market
information, are passed wit :i startii:ig rapidity from Arab to k?sb
through messages rF layod by truckers and Arab travel.~!rs. This iuformt l
method of coed acting buS.sine,ts is fir--her facilitated by the fatziiy
relationships that o: ton exist between Arabs in widely separated parts
of the country. :Partly as a result of the Arab pre:f -r?ence for doing
business with other Mr-1 ' '?+ wsn#:, eso8? YF' era the ! :rco:` .tearn.id of t ,e
limitatio a i of the !_'3S,-' specifically? that it reprea+tnted
t dolt re are tts , by a
tribal unit or -- most rarely W- by hixr e1fr he farms pri arily or., a
subsistence basis. This a ry aas that he has little or no money and -suet
resort to barter or related. 3$21 e_ trade transactions.
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Three types of transaction can be distinguished in the trading
process. One is a straight barter transaction, such as trading a
chicken for a piece of beeswax. A second type is barter using money as
a common denominator to facilitate the transaction but not exchanging
it. The third is the sale of goods for money, but the seller has already
determined the prices of thcr items he plans to buy and so completes both
his sale and his purchases hefore leaving the market. The third type
requires a long time. A not uncomtmon, sight, even in the major urban
markets, is an elderly woman vbo has obviously reached agreement on a
sale in terms of money, but who refuses to complete the sale until she
can bring together both the ;purchaser of her goods and the seller of
what she wants, penn1tt pxtg bath transactions to be accomplished at the
same time .
Recently, important ct n ;es have been modifying the common type of
trading. The most sigai.ficaut change has been the increasing use of
currency, not only near the trading centers, but in many outlying areas.
Even so, many people are. still reluctant to risk traveling with a sum
of money on. they person for fear of being robbed
2. The pieta ibution of mpor. to and the Collect,ion of Exports
About 15 large import and export concerns are promiient in the formal
internal trade of Ethiopia. They are, for the most part, owned and man-
aged by Europeans. The iargrst of these firms, A. Besse and Conxpany,
Ethiopia Ltd., is capita.:LL;;ed at $2 million and is a subsidiary of an
Aden firm. Other large -M -ms smaller but substanti-al working
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capitals. Most are equally active in imports and exports. American
and European manufacturing concerns represented in Ethiopia usually
have placed exclusive agencies with one or another of these firms,
which are in a position to maintain sizeable inventories.
The restriction of dernd for most of the manufactured goods to the
cities and large towns has made it unnecessary for the Importers to
operate large distribution organizations. In the provinces, few mmme-i2u.-
factured articles are sold widely other than cotton textiles, soap,
salt, sugar, needles, razor blades, knives, kerosene lamps, kerosene,
candles, flashlights, mirrors,, and combs. The importer also often acts
as .a retailer, there being to necessity, to introduce another factor into
the distributive process.
Another link in the distributive process is dominated by Arebs, who
forma the largest group of middlemen. The center of Arab business oper-
ations at Addis Ababa is the Mercatc, reputedly the largest open-air
market in Africa, sprawling over several square miles not far from the
European business center of the capital. The Mercato encommmpasse3 exten>
sine warehouses and truck depots or campos, and hundreds of small retail
and wholesale shops and sts.l1.a, and offices. On a Saturday market day
the Mercato teem with peaianf.s who have come by foot, mmmuule, or bus
over long distances to by or sell At the core of the business oper-
ations of the colorful market,. however,, is the sizeable group of :Arab
wholesalers and commmmmmissiozi agents who supply goods to Arab traders in
the provinces. Among the Arab wholesalers of the Mercato there is some
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specialization in coanmodities. The provincial trader usually directs
his orders to known specialists, although he my rely on a single
wholesaler to supply all needs. Few of the Arab wholesalers import
directly. Rather, they deal with European commission agents or impor?:;
firms, showing a preference for the former. Six European commission
agents cater to the Arab trade. For purchases of textiles, however'
the Arab wholesaler is likely to deal with one of the numerous Indian
importers at the Mercer o. Cash is commonly employed in conducting
day-to-day business transactions of all magnitudes, although many of
the Arabs enjoy satisfactory reputations in the business cozmmuraity anc
are able to obtain substantial credit Prom the State rank of Ethiopia.
Retail distribution in the provinces is conducted largely by Arab
traders and Ethiopians who either operate small shop or participate n
the open-air markets convened on a regular basis in nearly every vill?.ge
of more than a few hundred people. Arab shops may be found in almost
every town and most of the 'Larger villages. The retail outlets in the
smaller villages, however, are most often operated by Ethiopian Muslin+s
who are supplied with goods by Arab traders. The stock of the small
village shop often consists only of a #'ew candles, razor blades and
combs, several pounds each of salt and sugar, and some cotton cloth.
The largest group of Eth1cip::Lans involved in retail trade appear to be
members of the Gu ragie tribe. The (k=aghes, an enterprising group of
the Sidamis people have traditionally filled occupations as artisans
and laborers at the ],.a r erd of the social order. Their entry into
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trade during the past few years has been a notable development,, espe-
cially to Ethiopians who have been concerned about the domination of
provincial trade by Arabs.
Agricultural produce for export passes from the peasant to one or
more middlemen and thence to the exporters at the major business centers,
largely through the same channels employed in the distribution of imports.
The Arab traders in the interior are very active as middlemen. At the
provincial level, however, Europeans tend to have a more important pol:i-
tion in the collection of expott3 than in the distribution of imports
and may absorb much of the middleman function. Although it is not a
monopoly, the export trade, particularly in coffee, is dominated by a
handful of large firms with headquarters at Addis Ababa.
In general, produce to be marketed is brought by peasants to the
markets in the small towns, where it is sold to traders who are usually
Arabs, although a fear Europeans are engaged in coffee trading in the
countryside. Once accumulated, the load of produce is taken by truck
or mule to the nearest large market center. There it may be sold to
the agent of an export firm, who arranges for its transfer to an export
center, or it may be shipped by the trader to the export center for
sale.
A close, though not mutually beneficial, business relationship often
exists between the middies. -z-trader and the peasant. For example, in
many areas the annual date for the payment of the government land tax
does not coincide w&tt the harvest season. In order to obtain cash to
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meet payments, the peasant frequently is forced to sell his crop to the
trader prior to harvest at a price below that which is normal during
the harvest season. During the year the peasant may also buy imported
goods on credit from the trader, to whom he remains in debt until he
is able to turn over his produce in settlement. By this means, a
trader may be able to corner the production in his area of operations
and pay only a small percentage of the price he will later receive for
the commodity. An exporter at Addis Ababa has estimated that 90 percent
of all peasants who produce for export are involved in future selling
on this basis -- probably a high estimate but indicative of the extent
of the practice.
Some export firms report that they maintain not only agents in the
market centers but also agents who tour the countryside acting as
traders. This practice is not widespread, however, because it is ex-
pensive and, as an official of one export firm has stated, "there is
room for much dishonesty."
During the coffee-sells" season much trading is conducted at Adds:;
Ababa, where brokers and provincial traders daily visit one exporter
after another in an effort to secure the highest price, Sales are made
in an atmosphere of haggling., amid loud vocal claims as to the quality
of samples displayed. Once sale is concluded, the coffee is off-loaded
from the truck, which is usually standing by just outside the premises
of the exporting firm, and is then weighed and inspected. If the coffee
is not delivered :Lmntediateiy and prices rise in the interim between sale
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and delivery date set, the trader usually sells his goods elsewhere
-- apractice condemned by most exporters.
D. Plans for Economic Development
Ethiopia is currently operating under its Five Year Plan, 1957-61.
The total investment requirements of the Plan are estimated at ,72
million, 65 percent of which will be provided from domestic sources.
The remainder represents foreign exchange requirements. As a result
of the credits acquired from the USSR and Czechoslovakia, foreign
credits now available exceed the anticipated foreign exchange require-
ments of the Plan by more than $90 million. There are indications,
however, that the original plan for economic development is being ex-
panded in size and scope. -.
The allocation of investments among the various sectors of the
economy according to the Plan as it now is set up are: 36 percent for
transportation and cown~r!ications, 27 percent for agriculture and
forestry, 8 percent for manufacturing and industry, 7 percent for
electricity, 6 percent for mining, 4 percent for housing, 4 percent
for the community development program, 3 percent for education, 2 per-
cent for health, 1 percent for administration, and the remaining 2
percent for a variety of needs.
VI. Strengths and 1eakme: ses in the Economy
The greatest strength of the Ethiopian economy lies in the fact
that the majority of the pecpulation is not seriously affected by fore ..gra
trade. The predominantly agricultural and pastoral econoa>~r is based
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upon households that are largely self-sufficient. In addition to being
able to produce enough food to satisfy its present requirements, the
country has reserves of arable land which, if properly used, could
produce a far greater supply for both domestic and foreign markets.
Only, about 14 percent of its arable land is currently under cultivation.
The weaknesses of the"econour are mwW. Ethiopia is overdependent
upon coffee revenues for foreign exchange. In me-ny parts of the country,
an inadequate transportation system is a major obstacle to increased
production of both export and food crops. Furthermore, the people are
lacking 'in technical competence and are slow to accept changes. indus-
trial plants are small and are hampered by insufficient power and
trained personnel. Currently, neither the administrative competence
nor administrative apparatus is adequate for planning, coordinating,
and implementing an rxatlor&al economic-development program.
The presence of both Western and Bloc advisors and money in :e~thi
opia is accelerating the EmpcrorBs efforts to modernize the country
and will be largely responsihle for whatever changes are effected in
the economy. A considerable increase in trade with the Bloc is antic-
ipated for 1961 and later. The development of Ethiopia, however, is a
long-term affair ..w regardless of foreign aid programs. The country
can not be lifted out of the Dark Ages overnight. Several fie-year
plans, not merely one or a few, will be required to propel Ethiopia
into the twentieth century.
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 CONFIDENTIAL
Y E M E N
*s-"
DJIBOUTI
CONFIDENTIAL
Tha trpnsportotion shown on Ihis mop is gen.
and (pr oripn tplion purposes only.
Bpppdprra. pre nnr ne -dy the:e
e zed 6y the U S. Gpremmpnt.
Ethiopia
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ETHIOPIA, ERITREA, AND THE SOMALILANDS
HYPSOMETRY
Feet
Meters
13,120
4,000
3
000
9,840
,
6
560
000
2
,
,
4
920
1
500
,
,
3
280
1
000
,
,
1
640
500
,
656
200
Statute -1-
10 100 150 200 450
GUL F OF ADEN
DISTRIBUTION O LIGIOUS GROUPS
R. I boat i
Area with Chrleti,n Majority
Are, with M?l,n Majority
Are, with P,g,n Majority
BFMii9Ff SOMALI~
\ REPUQL lC
/SOMALI
REPUl3LI?