Under Mengistu, Ethiopia maintained a strong military alliance with the USSR, which provided the country with arms. When this alliance ended in December 1990, a casualty of the end of the Cold War, military assistance came to a halt. Before and after the flight of Mengistu, the U.S. government played a key role in supporting the EPRDF's effort to enter the capital city of Addis Ababa. Although a U.S. official attended the conference held in Addis Ababa only as an observer, Washington officials appeared to be involved in the preconference proceedings. Now that Meles has embraced democracy, the U.S. government expects the foreign policy to be less ideological and more pragmatic. In return, the Ethiopian government will expect substantial economic and humanitarian aid from the United States to relieve the food crisis and lead the country toward economic recovery. Ethiopia has since made considerable progress on the economic reform front and is considered a showcase for the World Bank and IMF.
Since July 1991, the government of Ethiopia has effectively embraced peace with its neighbors as a beacon of its foreign policy. It played the role of peaceful mediator in the civil war in Somalia, in Rwanda, and in the conflicts between Eritrea and Yemen. Meles is the architect of this policy and has often emphasized the promotion of fraternal ties with Ethiopia's neighbors. The peace mission is strikingly consistent with the Organization of African Unity (OAU) mission of promoting and protecting peace in the continent of Africa. Meles was elected chairman of the OAU in June 1995, the headquarters and secretariat of which are located in Addis Ababa.
In 1997, diplomatic relations between Ethiopia and Sudan were at their lowest ebb since the attempted assassination of Egyptian president Hosni Mubarak in June 1995. Ethiopia accused Sudan of harboring some of the fundamentalists who tried to kill Mubarak as he arrived for the annual summit of the OAU on 26 June 1995. The relations were further strained amid Sudan's claims that Ethiopia was helping an alliance of Sudanese rebels who seized several towns. Despite massive war rhetoric and threats from Sudan, Meles exercised great restraint and refused to go to war with Sudan. Relations have since improved somewhat. A territorial dispute with Somalia over Ogaden remains unresolved. Most of the southern half of the boundary with Somalia is a Provisional Administrative line.
In 2002, a ruling on a border dispute ostensibly brought an end to a long running war with Eritrea. The border dispute started with the invasion and occupation of territory within northeastern Ethiopia by Eritrean soldiers in the first week of May 1998, and is estimated to have claimed over 100,000 lives on both sides. International intervention in a search for peace had generally failed as each country accused the other of making impossible preconditions to implementing framework agreements, while saying they accepted them. Somewhat of a breakthrough came in December 2000. Officials of Ethiopia and Eritrea, with the intense mediation efforts of the OAU, the United States, and the United Nations (UN), met in Algiers and signed a peace agreement which allowed that the International Boundary Commission (of The Hague) would "delimit and demarcate the colonial treaty border based on pertinent colonial treaties (1900, 1902, and 1908) and applicable international law." Their ruling was issued on 13 April 2002, giving Ethiopia the disputed border villages and towns that it had claimed. The ruling was hailed as a final legal settlement, and an important milestone in the peace process. In the meantime, the UN Security Council has continued to urge both sides to refrain from any military actions. In March 2002, UN delegations for Ethiopia and Eritrea met for the first time in Addis Ababa to consider future humanitarian and development assistance that would support peace and reconciliation. The UN is now supervising the demining of the militarized zone, and Meles says that as far as Ethiopia is concerned, the war is over.