Rising tensions between Ethiopia and Somalia have stoked fears of greater instability in the Horn of Africa. Somalia said on Thursday it was expelling Ethiopia’s ambassador, closing two Ethiopian consulates (in Hargeisa, the largest city and capital of Somaliland, and Garowe, the capital city of the semi-autonomous region of Puntland) and recalling its own ambassador to Addis Ababa amid a dispute over Ethiopia’s plan to build a naval base in the breakaway region of Somaliland.

“This follows … the actions of the Federal Democratic Republic of Ethiopia which infringe upon Somalia’s sovereignty and internal affairs,” Somalia’s foreign ministry said in a statement. Senior officials from Somaliland and Puntland, which is engaged in another constitutional dispute with Mogadishu, said the edicts would not apply in their territories, reports Reuters.

The diplomatic tensions have risen after landlocked Ethiopia agreed on a memorandum of understanding with the breakaway region of Somaliland on January 1 to lease 20 kilometres (12 miles) of coastline in Somaliland for a port and a naval base. Under the deal, the coastland around the port of Berbera, on the Gulf of Aden, will be used by Ethiopia for 50 years for military and commercial purposes, reports Reuters.

Somaliland broke away from Somalia in 1991 and held elections. Somalia considers Somaliland as its sovereign territory which Ethiopia wants to annex. Somaliland is not recognised as a country internationally or by African Union.

The deal will give Ethiopia, a landlocked country of over 128 million people, the second largest in Africa after Nigeria, much-needed access to the ocean. Ethiopia said it wanted to set up a naval base there and offered possible recognition of Somaliland in exchange, prompting defiance and anger from Somalia – which accused Ethiopia of trying to annex part of its territory – and fears the deal could further destabilise the Horn of Africa, reports AL Jazeera.

Tensions between Mogadishu and Puntland also rose over the weekend when Puntland’s state council said it had withdrawn from the country’s federal system and would govern itself independently in a dispute over constitutional changes.

Somalia’s move to expel the ambassador and shut down the consulates raises concerns over the fate of 3,000 Ethiopian soldiers stationed in Somalia as part of an African Union peacekeeping mission fighting militants from al Shabaab, an al Qaeda affiliate, reports Reuters.