With deteriorating economic conditions, Ethiopia's central bank has stopped all money transfers, loans, and insurance for imports. However, this led to a crisis in foreign markets and a dwindling foreign exchange reserves.
      As a result, the local birr currency exchange rate and the black market exchange rate have decreased significantly. Where the USD-birr exchange rate fell to 45, after the local currency traded at 35 against the dollar in 2020. The parallel market exchange rate rose to 75 against the dollar, especially after the Ethiopian government announced a public mobilization to fight the TPLF.Â
Not only that, this conflict has also caused an increase in the inflation rate which was previously at 18% to 34.2% in the Tigray region. As well as keeping investors away from the Ethiopian market.
      Then, this conflict has a direct impact on the country's foreign trade. Ethiopia lost approximately $20 million in export revenue after industrial facilities in the Tigray region were closed. And Ethiopia has also lost some of the support offered by Western partners. One of them is the European Union, which suspended 88 million euros ($107 million) worth of budget support during the ongoing conflict. The suspension has caused huge losses for Ethiopia which relies on foreign aid to fund various development projects across the country.
ActorÂ
      In this conflict, there are several actors involved. First, the Tigray People's Liberation Front (TPLF) is a paramilitary group of political parties and former Ethiopian nationalist government parties founded on February 18, 1975 in Dedeuter, northwest of Tigray (Wijayanti &Aini, 2023).Â
The TPLF emerged as a formidable challenger to the Marxist military dictatorship in Ethiopia and was instrumental in overthrowing the regime in 1991 through an alliance with other organizations within the Ethiopian People's Revolutionary Democratic Front (EPRDF) (Ghaedi, 2021).Â
Before the conflict, the TPLF was the dominant political force in Ethiopia (Global Conflict Tracker, n.d). In this conflict, the TPLF refused to join the newly formed ruling party formed by Abiy. As well as considering the political reforms carried out by Abiy as an effort to counter Ethiopian ethnic federalism (Pichon, 2022).
      Second, the Ethiopian government under the leadership of Prime Minister Abiy Ahmed has a desire to break the power of the TPLF, a rebel movement that has dominated Ethiopian politics for almost three decades and establish a new political party (Walsh & Dahir, 2022). In addition, abiy also made improvements to the rule of law. Where each region has a special police, as well as a regional police (United States Department of State, 2023). Thus, in this conflict, the Ethiopian government has a position to maintain the stability of its country's security in the midst of the escalating conflict.
      Third, the African Union has a role as a third party or mediator to resolve ongoing conflicts. Where the African Union brought together the two parties involved in the conflict in South Africa on October 30, 2022 (Ghaedi, 2021).Â
In this case, the African Union explained that its involvement in these negotiations is the only feasible and effective approach to get a solution to this conflict (Abebe, 2022). Apart from being a mediator, the African Union also provides humanitarian assistance in collaboration with the European Union, the United Nations, and other organizations (Oliviani, 2024).
