Looking out across the vastness of Lake Tana, the source of the Blue Nile, it is difficult to see why Ethiopia is known as a land plagued by horrific droughts. – BBC, “Nile restrictions anger Ethiopia,” February 3, 2005 Any action that would endanger the waters of the Blue Nile will be faced with a firm reaction on the part of Egypt, even if that action should lead to war. – Egyptian president Anwar Sadat – cited in “The Waters Of Life,” Time, April 23, 2006.While Egypt is taking the Nile water to transform the Sahara into something green, we in Ethiopia – which is the source of 85 percent of that water – are denied the possibility of using it to feed ourselves... and forced to beg for food every year. – Ethiopia’s late prime minister Meles Zenawi, February 3, 2005. The Greek historian Herodotus (c.484- 425 BCE) is credited with designating Egypt “The Gift of the Nile.” Today, tens of millions of Egyptians might consider the epithet “gift” singularly misplaced.Writing on the wall? The recent unrest that has raged across Egypt has once again thrust the country into the center of international attention. Indeed, there is a growing realization that the gap between the challenges facing the country and its ability to meet them – in even a minimally adequate fashion – is widening, perhaps irretrievably, making a humanitarian catastrophe of staggering proportions evermore likely.Of course, Egypt has been teetering on the brink of political and societal collapse for a quite some time now – well before the advent of the “Arab Spring” – another curiously inapt misnomer. For example, in a remarkably prescient essay, “Is Egypt stable?,” in the Middle East Quarterly (Vol. 14, 3, 2009), Prof. Aladdin Elaasar diagnosed virtually all the socioeconomic ills and political dysfunctionalities that were to lead to the ousting of the Mubarak regime, the ascent of the Muslim Brotherhood, and its inimical posture toward Israel, almost two years before their occurrence.Point of inflection? As desperate as the situation was in pre-revolution Egypt, January 2011 still comprises a downward “point of inflection,” marking a dramatic acceleration in the degradation of the parameters of Egypt’s society and in the performance of its economy.For example, just before the ousting of Hosni Mubarak, the country’s foreign reserves stood at $36 billion. According to figures released this week by Egypt’s central bank, the foreign currency reserves fell this January to $13.61b., from $15.01b. in December, dropping by 10% in a month.These figures signify a decline of a total of $23b. in reserves over the past two years, wiping out well over half of the nation’s reserves.Already late last year the central bank warned that levels hovering around $15b. constituted a “critical minimum,” barely enough to cover three months’ worth of imports.This recent decline has been accompanied by weeks of political violence, which have driven off foreign investors and tourists, both key foreign currency earners for Egypt.Around 12% of Egyptians are normally employed in the tourist industry. According to The Washington Post (December 22, 2012), Egypt’s revolution and ensuing unrest have caused a decline in the number of visitors to the country of about 37%, while revenues have fallen by 30% compared to 2010.Impossible impasse The figures cast further doubt on Egypt’s ability to qualify for a badly needed $4.8b. loan from the IMF that would shore up investor confidence and enable loans requested from other lenders.The political turmoil has also made it considerably more difficult for President Mohamed Morsi to institute unpopular austerity measures such as raising taxes and cutting subsidies which are prerequisites for obtaining the IMF loan. It is doubtful whether his government will carry out such measures before parliamentary elections, due to be held in the coming months.Egypt has long been plagued by dire poverty and dramatic income disparities. Nearly half the population lives at or below the $2- a-day poverty line, and is dependent on government subsidies for basic commodities.Accordingly, Morsi is thought to be shying away from undertaking any steps that may inflame further violence and risk losing even more support for his Muslim Brotherhood-dominated government.To make matters worse, Egypt recently had its international credit rating cut to “junk” level (Bloomberg, December 24), with even further downgrades looming ahead, making the possibility of raising further desperately needed funds even more remote–and more expensive. In addition, the value of the Egyptian pound has fallen rapidly, raising the price on imports for an increasingly impoverished public.Precarious hydrological predicament As precarious as Egypt’s political and socioeconomic position is, there lurk, arguably, even greater threats to its future.These pertain partly to nature and partly to the developmental ambitions – and imperatives – of its upstream co-riparian states that comprise the Nile basin and through whose territory the river flows.Eleven co-riparians share the Nile, which in addition to Egypt are Rwanda, Burundi, Democratic Republic of Congo, Tanzania, Kenya, Uganda, Ethiopia, Eritrea, Sudan and South Sudan – with combined populations of almost 450 million.A glance at a satellite photograph will illustrate how dependent life in Egypt is on the river. It will reveal that the country is made up of yellow, uninhabited desert cut by a thin line of green along the course of the Nile as virtually the only place that can sustain human existence. As one involved UN representative remarked, “All of Egyptian life is based on the Nile. Without it there is nothing.”The Nile provides around 85% of Egypt’s water today, and according to some estimates, demand will outstrip all current sources of supply within several years.Any reduction in availability of the Nile waters would have catastrophic consequences for the country.Increasingly untenable monopoly Before reaching Egypt, the Nile is fed by the relatively constant-flowing White Nile which originates in Central Africa; and the highly volatile and seasonal Blue Nile and Atbarah rivers, which arise in the Ethiopian highlands.The White Nile contributes roughly 15 to 20% of the annual flow of the river, while approximately 75 to 85% is provided by the Blue Nile (60 to 70%) and the Atbarah (around 15%), mainly in the rainy season (January to June).Up to now, Cairo has invoked the 1929 Nile Waters Agreement signed by it with Great Britain (as the colonial power of the time representing the upstream riparians Uganda, Kenya and Tanganyika (now Tanzania).According to this agreement, the Nile waters were to be allotted between Egypt (48 billion cubic meters annually) and Sudan (4 billion cu.m). The agreement also stipulated that no work would be undertaken on the Nile, or its tributaries, that would reduce the volume of water reaching Egypt. Likewise, it gave Egypt the right to inspect, investigate and monitor the flow of Nile water into and out of upstream riparian countries along the entire length of the river.Ethiopia, which was not under colonial rule and thus not party to the agreement, also gave an undertaking not to impede the flow of rivers in its territory without the agreement of Great Britain and Sudan.With Sudanese independence in 1956, and the commencement of construction of the Aswan Dam, the division of the estimated 84 billion cu.m. flow of the Nile was renegotiated bilaterally between Egypt and Sudan, resulting in the 1959 Nile Waters Agreement.The agreement reset Egypt’s annual share at 55.5, and Sudan’s at 18.5 billion cu.m., allowing 10 billion cu.m. for evaporation. It did not, however, relate to the needs of the other co-riparians. Indeed, Egypt’s position was that all previous prohibitions stipulated in the 1929 agreement continued to apply.Growing upstream discontent Until now, it has backed up this position with coercive diplomacy and bellicose declarations, including overt threats of military action.The effects of Egypt’s conduct have been devastating for Ethiopia in terms of drought and famine – despite its abundance of water.The perversity of the situation in which Ethiopia is the source of 85% of the Nile’s flow, but is virtually prohibited from its use by a country that contributes nothing, is reflected in the introductory excerpts above.It is, thus, not surprising that growing discontent is brewing upstream. As the Los Angeles Times reported recently (November 11), in a piece titled “The Nile, Egypt’s lifeline... comes under threat”: “Lately upstream counties, notably Ethiopia, no longer feel bound by colonial-era agreements on water rights and are moving to siphon away larger shares of water for electricity, irrigation and business to meet demands of burgeoning populations.”It is in this context that the ongoing socioeconomic and political strife must be viewed – for it is eminently plausible to surmise that a visibly weakened Egypt and its domestically distracted government will be significantly less able to deter “recalcitrant” riparians from new and previously prohibited hydrological initiatives.An ascendant Ethiopia In many ways, the Ethiopian economy is the diametric converse of the Egyptian one.With a population larger that Egypt’s – approaching 90 million – the country has been undergoing an impressive boom.In a glowing report on the country’s economic achievements, the Word Bank reported: “Over the past decade, the Ethiopian economy has been growing at twice the rate of the Africa region, averaging, 10.6% GDP growth per year between 2004 and 2011.”In its newly launched Ethiopia Economic Update, the bank “attributes this impressive economic growth mainly to agricultural modernization, the development of new export sectors, strong global commodity demand, and government-led development investments.”It is against the backdrop of a burgeoning Ethiopian vitality and a sagging, decaying Egypt that an emerging conflict over the water resources of Nile should be seen.A strategic game-changer? In what could be one the most far-reaching strategic game-changers in the region, Ethiopia has, in defiance Egyptian protests, undertaken a massive hydroelectric project on the Blue Nile, near the Sudanese border.The centerpiece of the project has been named the Grand Ethiopian Renaissance Dam, which on completion will be the one of the largest dams in the world and Africa’s largest hydroelectric project.Ethiopians have been reticent in providing details as to the downstream impact of the dam, but have repeatedly reassured the Egyptians that they will not be adversely affected. As the dam is planned for hydroelectric generation only and not large-scale irrigation, they claim that the flow to downstream Sudan and Egypt will be largely undiminished.This has done little to allay Egyptian concerns, and there are persistent rumors, denied by Cairo, that it has converted an airfield near the Sudanese-Ethiopian border for military use. Of particular concern is the effect on the flow during the extended period needed to fill the dam.Indeed, it is difficult to believe that the dam will have no impact on the river flow.Other large dams, such as Turkey’s Ataturk Dam on the Euphrates and Egypt’s own Aswan Dam, have resulted in considerable constriction of downstream flows.Admittedly, these dams were intended for large-scale irrigation and not limited to hydroelectric power generation.But given the exigencies of maintaining its rapidly growing population, estimated to outstrip Egypt’s by almost 30 million in 2025, one would have to be more than naïve to believe that any government in Addis Ababa could long resist making use of such a massive available supply of water to enhance the welfare and nutrition of its people.Putting Palestinian problem in proportion While the Ethiopian Renaissance Dam is a major reason for concern, Egypt has many other water-related worries. For if the Blue Nile project goes ahead, this may embolden other upstream riparians, notably Kenya, that are champing at the bit to discard the fetters of colonial era prohibitions and undertake their own projects.As one Kenyan MP once put it: “Kenyans are today importing agricultural produce from Egypt as a result of their use of the Nile water. Why shouldn’t we use the same water to grow fruits in our country?” Why, indeed! Then, of course, there is the problem of the entire Nile Delta subsiding, and the emerging need to evacuate and relocate millions. But that requires another essay.Still, it does help put the Palestinian issue in perspective, doesn’t it? Martin Sherman (www.martinsherman.net) is the founder and executive director of the Israel Institute for Strategic Studies.