A water crisis brewing between Egypt, Ethiopia and Sudan could escalate into a conflict with "severe humanitarian consequences," a think tank said yesterday, reflecting the ongoing standoff over a multibillion-dollar dam project on the Nile river.

Trilateral talks on the issues have been deadlocked for months. Egypt fears the Grand Ethiopian Renaissance Dam (GERD) will cut into its share of the river, which provides virtually all the freshwater for the arid country of 100 million people. Ethiopia, which has the same sized population, says the dam is essential for its economic development. "The case for cooperation among Egypt, Ethiopia and Sudan in resolving the Nile water dispute is unambiguous," the International Crisis Group think tank said. "All stand to benefit. Dangers of failing to work together are just as stark. The parties could blunder into conflict, with severe humanitarian consequences," it warned.

The report recommended a two-step approach, beginning with confidence-building measures "by agreeing upon terms for filling the dam's reservoirs that do not harm downstream countries" and "a new, trans-boundary framework for resource sharing to avert future conflicts."

The dam project, launched by Ethiopia in 2012, is designed to feed a hydroelectric project to produce 6,000 megawatts of power, equal to six nuclear-powered plants. The construction of GERD, the largest hydroelectric dam project in Africa, has poisoned relations between Egypt, Ethiopia and Sudan. The dispute centers on the right to control a section of the Nile that stretches 6,695 kilometers from Lake Victoria to the Mediterranean and is the economic lifeblood of all three countries.