The diplomatic dispute has also raised fears of further destabilization in the Horn of Africa.

So, why does Ethiopia want a port?

Ethiopia lost access to the sea in the early 1990s, with the secession of its then-province Eritrea following a three-decade war.

That's left the landlocked country today relying on ports in neighboring Djibouti for 90% of its trade - with fees of more than $1.5 billion a year.

Prime Minister Abiy Ahmed also wants a sea base for the navy.

It's been rebuilt in recent years but is currently limited to conducting training on an inland lake.

The details of the deal are as follows.

Under a memorandum of understanding signed on January 1, Ethiopia would lease 12 miles around Somaliland's port of Berbera for 50 years.

In exchange, Somaliland gets stakes in Ethiopian state-run companies, and possible recognition as an independent nation.

Here's Somaliland President Muse Bihi Abdi at the signing ceremony.

"They will become the first state to recognize Somaliland after the signing of this MOU."

And that is what has so incensed Somalia.

The government in Mogadishu considers Somaliland an integral part of Somalia even though it enjoys effective autonomy.

But if Ethiopia becomes the first country to recognize Somaliland's independence, that could set a precedent.

Somalia's President Hassan Sheikh Mohamud has signed a law that claimed to nullify the deal.

"No one has the power to give away a piece of Somalia."

So far, no country has publicly backed the port deal.

The Arab League, of which Somalia is a member, has reaffirmed its support for Somalia's sovereignty over Somaliland.

So too, the African Union, the European Union and the United States.

The UAE, which is a strong ally of Ethiopia and Somaliland and manages the Berbera port through state-run DP World, has not commented on the deal beyond the Arab League statement.

So, could the tensions increase?

Middle Eastern powers, including Saudi Arabia, the UAE, Turkey and Qatar, have been vying for influence in the region.

The Horn of Africa occupies a strategic location across the Red Sea from the Gulf.

There is also already chronic instability in Somalia, Ethiopia and Sudan.

And that's got some analysts fearing that outside actors could be drawn in if the dispute escalates.