A treaty signed in 1929 gave 90 per cent of the Nile's water to the downstream countries, Egypt and Sudan, even though all the water in the river starts as rain in the upstream countries: Ethiopia, Uganda, Kenya and Tanzania. It seemed fair at the time: the 20 million people in the downstream countries depended heavily on irrigation, while the 27 million in the upstream countries had plenty of rain-fed land and hardly irrigated at all.
Things have changed since then. According to the International Data Base of the US Census Bureau, there are now six times as many people in the Arabic-speaking countries downstream, and eight times as many people in the African countries upstream.
Egypt is using all of its share of the water - and the upstream countries are starting to use the water for irrigation, too.
This dam is just the start. Ethiopia plans to spend $12 billion on dams on the Blue Nile for electricity and irrigation, and Uganda is negotiating with China for financing for a 600Mw dam on the White Nile.
More dams and irrigation projects will follow - and the upstream states are in no mood to let Egypt exercise its veto under the 1929 treaty.
That treaty was imposed when all the countries involved except Ethiopia were under British rule, and it reflected Britain's big investment in Egypt. In 2010 six upstream countries (including Burundi and Rwanda) signed a Co-operative Framework Agreement to seek more water from the Nile, effectively rejecting the colonial-era treaty and demanding that Egypt relinquish its veto and accept a lower water quota.
That's not going to happen. Mohammed Allam, Egypt's Minister of Water Resources under President Hosni Mubarak when the upstream states signed their agreement three years ago, warned that "Egypt reserves the right to take whatever course it sees suitable to safeguard its share".
The issue will probably be kicked down the road for a couple of years, because the Great Ethiopian Renaissance Dam will not be completed until 2015 at the earliest. But there is big trouble for Egypt (and Sudan) further down the road.
By 2025, a dozen years from now, Egypt will be trying to feed 96 million people, which would be very hard even with its existing giant's share of the Nile's water and all its current food imports. The countries that signed the Co-operative Framework Agreement will have 300 million people, so by then they will also be extracting very large amounts of water from the Nile Basin for irrigation.
Without that water, Egypt's only options are beggaring itself with massive food imports (until the foreign exchange runs out altogether), or famine.
Unless, of course, it decides on war - but its options are not very good on that front either.
Not only are the upstream countries a very long way from Egypt (the Nile is the world's longest river), but they will have strong support from China, which is financing most of the dams they are now building or planning.
Egypt, by contrast, has repudiated its former American ally, and may find that the US is reluctant to re-engage even if the government in Cairo can overcome its own distaste for Washington. Why would the United States want a confrontation with China over Egypt?
So there probably won't be a war. And Egypt will probably face an apocalyptic food shortage in 10 or 15 years.
Gwynne Dyer is an independent journalist whose articles are published in 45 countries.
