Since the establishment of its federal form of government, Ethiopia has believed that the implementation of policies, strategies and laws to encourage rapid economic development, democratization and peace are a matter of survival. The government has promulgated various policies and strategies, notably in its Foreign Affairs and National Security Policy and Strategy. This makes it clear that Ethiopia's foreign relations with the rest of the world should be directed towards creating an atmosphere to encourage market opportunities, investment and technical support as well as soliciting grants and loans to finance the countrys development endeavors; eliminating, or at least, reducing external security threats; minimizing the negative effects of globalization; and resisting external threats and reducing vulnerability, with democratization being a key element. Following these basic objectives, Ethiopias foreign relations with the rest of the world including Europe have grown rapidly. It was only after putting in place the necessary mechanisms and by shifting the main focus of its relationships towards trade, investment and technology transfer that Ethiopia began to enjoy the opportunities for assistance and development available from European countries, such as Italy.
Ethiopia and Italy, of course, have overcome the problems arising from the eras of colonialism and fascism that affected their relations from time to time. The relationship between the two countries today, following the introduction of the current Foreign Policy Strategy, has seen a steadily strengthening trend in all areas. In fact, a longstanding historical relationship has been consolidated by various cooperation agreements and by a whole series of high level visits. Recent visits to Italy by Ethiopian officials have included Prime Minister Meles (2004) and former Foreign Minister Seyoum (February and April 2009). Visits by Italian officials have included visits by Prime Minister, Mr. Romano Prodi, (January 2007), and by Foreign Minister Franco Frattini (January 2010). The visit of Prime Minister Meles to Italy in 2004 was a particular landmark. Ethiopia and Italy signed agreements for a soft loan of 220 million Euros for the Gilgel Gibe II hydropower project, for the cancellation of US $432 million of debts and for the return of the Axum Obelisk. There was also the agreement for a series of regular political consultation between the two Foreign Ministries marking the opening of a new chapter in bilateral cooperation between Italy and Ethiopia.
Ethiopia views Italy as one of its most valuable partners for economic cooperation. Ethio-Italian Development Cooperation was originally guided by an agreement signed between the two countries in 1999. Under this, Italy allocated 108.5 million Euros mainly focusing on health, education, and rural development. The agreement was replaced by a new development cooperation framework agreement in April 2009 providing for an outlay of 46.4 million Euros for the period of 2009-2011. This allows for various projects focusing on Rural Water and Sanitation (WASH) and Agricultural Value Chains in the Oromiya, SNNP, Amhara and Tigray Regional States for 9.6 million Euros. Under a bilateral accord signed in November another 8.2 million Euros has been provided for Ethiopia's 2010-2012 healthcare sector development projects. Italy, of course, provided substantial support for the Gilgel Gibe 11 dam which was built by the Salini Construction Company; and during his visit in January 2011, Italian Foreign Minister Frattini attended the formal inauguration of the dam by Prime Minister Meles.
Ethiopia and Italy signed a bilateral Investment Promotion and Protection Agreement in 1994; and Italian businessmen discussed over two hundred direct investment projects in Ethiopia between July 1992 and July 2008 with possible capital involvement of 3.7 billion birr. Of these 54 projects with a total outlay of over 700 million birr are operational, while the rest are in implementation and pre-implementation phases. Given the growing investment and market opportunities of Ethiopia, and the traditional relationship that existed for so long time between the two countries in the business area, Ethiopia believes that this relationship could be far more extensive. It will continue to work hard to encourage greater Italian investment in Ethiopia. It has made it clear it would like to see Italy consider the establishment of a specific Italian industrial zone in Ethiopia, something that both China and Turkey have agreed to.
Trade relations between Ethiopia and Italy have continued to expand rapidly especially since 1997. The overall volume of trade grew more than fivefold between 1997 and 2009. Just over 1 billion birr in 1997, it reached 5.54 billion birr in 2008 before falling back to 3.8 billion birr in 2009. The trade balance, however, remains firmly in favor of Italy with Ethiopian exports amounting to 561 million birr in 2010 and imports from Italy reaching 3.21 billion birr. The main commodities that Ethiopia exports to Italy are coffee, hides and skin. Its imports from Italy include manufacturing goods and construction equipment.
Italy has, of course, a long interest in the Horn of Africa going back well over a hundred years, , and it attaches great importance to the stability of the sub-region. It has an especial concern with regional security issues including piracy and terrorism, and in security and stability in Somalia, all elements in which Ethiopia continues to have a strong stake. Its to be recalled that Italy recently took the commendable step of allocating 40 million Euros for the African Union's operations in Somalia. Ethiopia strongly believes Italy will continue to be interested in the Horn of Africa. It hopes Italy will continue to take the lead in soliciting backing from the international community for the support of the TFG in Somalia, and continue to take the lead on the issue of Somalia at European Union level.
I) Diplomatic Relation;