Ethiopia has committed to fully implement a peace deal signed in 2000 and meant to end a two-year war with neighbouring Eritrea.
Prime Minister Abiy Ahmed said that ending war and expanding economic ties with Eritrea is critical for stability and development in the impoverished Horn of Africa region.
The two-year war has devolved into a stalemate resulting in huge military build-up by both countries.
The pledge would entail ceding a disputed town to Eritrea.
There was no sign on Wednesday that Ethiopia had begun withdrawing its troops from the town of Badme.
It is one of many policy shifts announced since the 41-year-old took office in early April, moves that could reshape Ethiopia’s relations with its neighbours and have equally dramatic impacts inside the country of 100 million people.
The new stance, including liberalisation of the state-controlled economy, end up addressing critical challenges from high youth unemployment to rising government debt remain to be seen.
“All that we have achieved from the situation of the last 20 years is tension,” Abiy said.
“Neither Ethiopia nor Eritrea benefit from a stalemate. We need to expend all our efforts towards peace and reconciliation and extricate ourselves from petty conflicts and divisions and focus on eliminating poverty.”
Ethiopia’s move is a “drastic departure” from its longstanding —and failed — policy, said Ahmed Soliman, Ethiopia analyst at Chatham House, a London-based thinktank.
“To see some movement is extremely positive. This is the most important latent conflict within the Horn and its resolution is important for peace and security in the region.”
No comment from Eritrea, a country which used to be a part of Ethiopia and waged a 30-year struggle for independence.
The war on their shared border between 1998 and 2000 killed tens of thousands of people, caused significant displacement and the splintering of families.
Eritrea’s government has not responded publicly to Addis Ababa’s offer of an olive branch late on Tuesday. The two nations cut ties during the war.
Asmara’s Information Minister told Reuters on Tuesday evening he had not seen the Ethiopian government’s statement so could not immediately comment. He did not respond to phone calls on Wednesday.