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Ethiopia Says It Will Compensate U.S. Companies for Nationalized Property

December 20, 1985

NAIROBI, Kenya (AP) _ Ethiopia’s Marxist government will pay $7 million in compensation to American companies for property nationalized after the 1974 revolution, the U.S. Embassy in Ethiopia said Friday.

An embassy official said the compensation agreement was signed Thursday in Addis Ababa by acting U.S. Charge d’Affaires Joseph O’Neill and Ethiopia’s commissioner of compensation, Getahon Terrefe.

The official, who requested anonymity, said in a telephone interview that Ethiopia would pay $7 million in installments over the next five years. He said the payments would be allocated to the American companies by a federal claims settlement service.

The long-running dispute over compensation had been one of several obstacles blocking potential U.S. development aid to Ethiopia, one of the world’s poorest countries.

In Washington, State Department deputy spokesman Charles Redman said Friday: ″There are a number of other issues which must be resolved before the United States would consider resuming development assistance to Ethiopia.″

One is the Brooke-Alexander Amendment, which applies to U.S. government claims against foreign governments. Redman said such claims are outstanding concerning Ethiopia but were not discussed during the recent negotiations.

Redman said, ″The U.S. welcomes this agreement, as it removes one longstanding issue between our two governments. We hope it might signal a readiness by the Ethiopian government to address other important issues in a similarly appropriate manner.″

U.S. officials previously said they were seeking about $20 million in compensation for American companies, though the actual value of the nationalized property was said to be far higher.

Since the 1974 revolution, which toppled pro-Western Emperor Haile Selassie, the American companies kept the compensation issue alive by filing lawsuits against Ethiopia. The embassy official said the agreement settles all these claims, as well as counterclaims filed by Ethiopia.

Under a law known as the Hickenlooper Amendment, the United States is prohibited from providing development aid to countries which refuse to compensate American companie for expropriated property.

One of the companies mentioned in the agreement is Kalsec Inc. of Kalamazoo, Mich., formerly known as the Kalamazoo Spice Extraction Co.

Company officials in Michigan said the agreement allocated no money in its case, but it dismissed rival lawsuits filed by Kalsec and the Ethiopian government.

The spice company had filed suit in the United States against Ethiopia and had been seeking $11 million in compensation. Ethiopia claimed Kalsec owed it between $2 million and $5 million for spice products shipped to the company from Ethiopia after the seizure.

The company opened a plant near Addis Ababa in 1970 and processed paprika, tumeric and red and black pepper.

″We’re perfectly satisfied, in light of the problems in Ethiopia,″ Kalsec President Paul Todd said of the settlement.

At one point in 1981, there were reported to be 35 American compensation claims pending against Ethiopia by a variety of businesses, but it was not immediately known how many of them were addressed in Thursday’s agreement.

The U.S. State Department declined to disclose the names off all the companies involved, citing their right to privacy.

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