http://www.npr.org/templates/story/story.php?storyId=130050352
Ethiopia is seeking more access to water within Ethiopia that eventually flows into the Nile, causing concern to Egypt. Most people think of Egypt when they think of the Nile River, but many of the sources of the Nile river begin in other countries, and flow together to form the Nile that runs through Egypt. Any tampering with the headwaters of the Nile, such as in Ethiopia has consequences for the Egyptians down river.
Ethiopian Christians believe that the headwaters of the Blue Nile in their country are sacred and have healing powers. In addition, the Ethiopian government seeks to dam the Blue Nile for hydroelectric power and use more of the water for their own people, leaving less for the Egyptians.
Egypt claims that if Ethiopia could use its rainwater and groundwater more effectively it wouldn't need to use more of the Nile waters Egypt claims are theirs. Ethiopia retorts that if Egypt could use its Nile waters more effectively, the Egyptians wouldn't need to worry about the headwaters Ethiopia is using for its own development.
Currently Egypt claims rights to many of the Nile headwaters as part of a treaty organized by the British in the colonial era. Britain was partial to Egypt, a valued part of their empire, and did not consult the other territories such as Ethiopia in the creation of the treaty, something Ethiopia says voids the current arrangement Egypt stands by.
--Ray Treonis
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