Ethiopia is a country of a cultural and linguistic mosaic. Paradoxically, the political and bureaucratic system of the country has failed to accommodate the ethnolinguistic and religious diversity of the society. The Ethiopian monarchical system and the military dictatorial government have had pursued a policy of national unity and territorial integrity of the state often at the expense of ethno-linguistic and religious diversity. In effect, the different ethnic and religious groups had suffered from domination and injustice. This has led to the birth of ethno-nationalist movements taking arms against the strong central government demanding selfadministration. In 1991 the ethno-nationalist forces led by the Tigray People’s Liberation Front (TPLF) have won the battle against the military government which led to the establishment of the Federal Democratic Republic of Ethiopia. However, since its inception, there has been a widespread disagreement among Ethiopian political groups, scholars and even the public at large about the origin, structure and function of the federal system and its constitution. This particular paper aims at critically analysing the risks associated with the Ethiopian federal system in light of Ronald Watts’s six principles of federalism: disposition to democratic procedures; non-centralization as a principle; checks and balances to limit the concentration of political power; open political bargaining for making collective decisions; genuine group power-sharing within central institutions, often consociational and respect for constitutionalism and the rule of law while using literature and document analysis as data collection procedure and research methodology. In effect, secondary data sources have been reviewed including various types of relevant books, journal articles, government and non-governmental reports, government implementation plans and progress reports and lastly they have been carefully scrutinized and analysed to secure their reliability, suitability and adequacy. Finally, even though the aforementioned principles are embedded in the Constitution, the paper has found out that the government has practically failed to implement them. Consequently, the federal system in Ethiopia is mainly regulated by the policies of the ruling party rather than by the merits of the Constitution. In effect, the country is facing a multifaceted crisis and the federal system and its constitution are under imminent threats. In the end, the paper recommends that under the present scenario, the situation necessitates the government to carry out a deep structural and system reform focusing on the political and economic imbalances that are observable in the coalition ruling party and among the different ethnic groups in the country. Furthermore, since there is a widespread disagreement about the origin and development of the federal system and its constitution among different groups in and outside the country, holding a national reconciliation and political referendum on the federal system and its constitution is fundamental to fix ethnic driven conflicts and political instability in the country.
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