A land deal heightens tensions in the Red Sea –

A land deal heightens tensions in the Red Sea – Bloomberg

The ad could read as follows: Inland is looking for a stretch of coast; Payment for lease or purchase is negotiable, but cash is not an option; A motivated buyer is willing to sweeten any deal with some freebies.

Sovereign real estate deals may sound like ancient history – but they're still a thing. Even in 2024, a nation's territory can be a commodity that can be sold or rented at the right price. The practice may sound like looting, but it is a better alternative to military coercion.

On January 1, Ethiopia, the world's most populous landlocked country, signed a preliminary agreement to lease a 20-kilometer stretch of coastline from its neighbor for half a century. Further negotiations, including on prices and payment terms, are expected and a final agreement could come as early as this year.

The problem? Well, there are many. First of all, the seller is a breakaway country called Somaliland that lacks international standing. The country's United Nations-recognized owner, Somalia, says the deal is illegal. And then there's the question of money: Ethiopia, embroiled in a simmering civil war, is an impoverished nation that defaulted on its international sovereign debt on Christmas Day; Instead of cash, it is offering part of its state-owned airline.

Ethiopia is also throwing in a diplomatic gift: It would accept Somaliland as an independent state, further escalating tensions in the Horn of Africa. The region is already experiencing several armed conflicts and increasing piracy in the Red Sea and the Gulf of Aden, including across the sea from Yemen. So far, only Taiwan recognizes Somaliland as a nation, even though the African region declared independence in 1991.