Just a few miles downriver from the point where the Blue Nile crosses over from Ethiopia into Sudan, a massive construction project is taking place. While electricity-starved Ethiopians will no doubt gain much from the resulting power produced, the Grand Ethiopian Renaissance Dam — compared to the Hoover Dam in America — has upriver states Sudan and Egypt worried.

The dam is intended to be the crown jewel in Ethiopia’s plan to significantly increase its control over the source waters of the mighty Nile River. The dam, which the Ethiopian government has deemed of vital national interest, will eventually have the capacity to produce 6,000 megawatts of electricity when it is completed in 2018 – nearly four times Ethiopia’s present hydroelectric production capacity today.

The Grand Renaissance Dam, however, is merely one project out of many already in the planning and construction stages. Since 2004, the Ethiopian government has either brought online or inked the contracts for eleven dam and hydroelectric projects. Altogether, this building boom is expected to increase hydroelectric production in Ethiopia to a total of 11 to 15 gigawatts of installed capacity – increasing by nearly an order of magnitude the amount of power available to Ethiopians.

That additional power is needed. In 2009, for instance, it was estimated that less than 10 percent of Ethiopians had access to a steady source of electricity. Frequent  power outages are a reminder that so long as its power needs remain unmet, Ethiopia’s booming economy – which has been growing by nearly 9 percent per year – will be unnecessarily constrained. With the country possessing such rich hydroelectric potential, it was only a matter of time before the Ethiopian government reached out to tap this underutilized resource.

While Ethiopia’s dam projects are good news for those of its citizens sitting in the dark, they are also good news for many surrounding nations. Power grid upgrades that go along with dam construction will not only allow power to be transmitted from Ethiopia’s new riparian power plants to its electricity-starved cities and countryside; they will also allow Ethiopia to export electricity to its power-hungry neighbors. This will improve Ethiopia’s balance of payments, diversify its export base — and by bringing power to its neighbors — improve the economic performance and demand for Ethiopian goods.

Such benefits would seem to be win-win, but Ethiopia’s upstream neighbors, especially Egypt, are concerned that Ethiopian dam building could greatly restrict the flow of water north. For Egypt, a country that is extremely reliant on the Nile for the vast majority of its water, any disruption in flow could be disastrous. As a result, Cairo has engaged in a serious bout of diplomacy to try and stop construction of the Grand Renaissance Dam – and has even guardedly suggested that if diplomacy fails, “all options” are on the table to ensure Egypt’s consumption of the Nile is not restricted.

 At present, Egypt’s right to the Nile’s water is guaranteed by a colonial-era agreement that guaranteed both Egypt and Sudan a lion’s share of the Nile’s flow. Ethiopia and several other upriver states that feel cheated by the present division of the Nile’s waters have championed an alternative arrangement known as the Nile River Cooperative Framework Agreement. This treaty would adjust water rights in favor of the upriver states but also establish an international commission to oversee river-related development projects, ensuring downriver users go unaffected. So far, Rwanda, Tanzania, Uganda, Kenya, and Burundi have signed the agreement. Egypt and Sudan, unsurprisingly, are not expected to sign.

Still, despite Egyptian saber rattling, it is unlikely Egypt, or anyone else, will seriously attempt military action to disrupt construction. Egypt has economic and political problems at home and can ill afford the costs of using force to stop the Grand Renaissance Dam. There are too many vested in seeing Ethiopia’s dam-building project go forward successfully, including the Ethiopians themselves.

Egypt may have to accept that its once-unrestricted access to the life-giving Nile may now have to be adjusted to accomodate interests of upriver states.