The latest round of talks that ended this week failed to reach an agreement.
Ethiopian Minister of Water, Irrigation and Energy Seleshi Bekele said on Wednesday that his country would continue filling the dam's massive reservoir during the upcoming rainy season, which normally begins in June or July.
"As construction progresses, filling takes place," Bekele said. "We don't deviate from that at all."
That sparked an angry response from neighboring Sudan, whose irrigation minister warned that his country is ready to harden its position in the dispute.
"For Sudan, all options are possible, including returning [the matter] to the United Nations Security Council and hardening policy ... (if) Ethiopia embarks on a second filling (of the dam) without agreement," Yasser Abbas told reporters.
Sudanese independent journalist Mohamed Mustafa told The Media Line that the failure of the three countries to reach an agreement was because all parties are suspicious of one other.
"The main points of contention are the binding legal agreement. Ethiopia fears that the agreement will restrict its future water projects; while Sudan and Egypt insist on signing an ‘agreement,’” Mustafa said, adding that another sticking point is "the period of filling the dam and how to operate during periods of drought."
Egyptian apprehension that the dam will jeopardize its share of the river’s water led President Abdel Fattah al-Sisi to make a stern warning to Ethiopia last week, saying his country's portion of the Nile is "untouchable."
William Davison, senior Ethiopia analyst at International Crisis Group, told The Media Line that an Egyptian and Sudanese “early agreement on how to cooperate over the second filling would have averted the increase in diplomatic tensions we are seeing now and lessened the chances of damage in Sudan as a result of the process."
Sisi's rhetoric has raised speculation that a military confrontation is imminent.
Cameron Hudson, senior fellow, at the Atlantic Council’s Africa Center, told The Media Line that the heightened rhetoric is intended for domestic consumption.
"Much of the rhetoric we are seeing around the dam from all sides is directed more to internal audiences than to the other parties. For Ethiopia and Egypt especially, these issues have stirred up deep nationalist sentiment and both leaders are using this issue to bolster their own political positions," he said.
Hudson adds that Ethiopian Prime Minister Abiy Ahmed is under tremendous internal pressure, including revolts from several regions within the country as well as national elections in June, and this has played a role in his stance.
Davison says a military confrontation will not yield the best results for the downstream countries, Egypt and Sudan.
"The best way for Egypt and Sudan to sustainably secure their required water supplies is by formalizing cooperation with Ethiopia. An airstrike may delay the Grand Ethiopian Renaissance Dam’s completion, but it would be hugely damaging and risky, and it would not alter the hydrological situation. Moreover, subsequently Ethiopia would not be willing to cooperate with Egypt, so it is not at all clear how it would be in Egypt’s interest,” he said.
Martin Plaut, visiting senior fellow at King's College Department of War Studies in London, told The Media Line that for now "it’s a political issue." But Plaut cautions about where these countries are headed, saying that "I'm afraid at the end, a military issue."
Plaut, who for decades reported on the Horn of Africa and southern Africa as a journalist, says that Sisi’s repeated talk of a possible military strike may have put himself in a predicament.
"He is now in a situation where he didn’t do anything other than give lots of threats and, frankly, we now have to see if he will follow through. Somebody has got to act; something has to happen. If you make threats and they are empty, you seem to be weak," he said.
Ethiopia began construction of the $4.6 billion Grand Ethiopian Renaissance Dam (GERD) in 2011. When complete, it will be the largest hydroelectric power plant in Africa, as well as the 7th largest dam in the world. The mega-dam has a capacity of 74 billion cubic meters.
In his strongest statements to date, Sisi cautioned that if Ethiopia begins its second filling of the reservoir this summer, the region will face "instability that no one can imagine."
"No one can take a single drop of water from Egypt, and whoever wants to try it, let him try," Sisi also said. "No one imagines that it will be far from our capabilities."
Mustafa believes that Sisi's recent talk of war are intended as a "threatening message to Ethiopia."
"The option of war isn’t on the table yet and entails many risks. Perhaps the next step will be resorting to the UN Security Council," said Mustafa.
Egypt and Sudan have called for the US, UN and EU to mediate in addition to the African Union (AU), which sponsored this week’s talks, but Ethiopia strongly opposes international intervention and says the AU mediation is sufficient.
"They believe that they have a stronger negotiating position with the AU in the lead. As the host for the AU headquarters, Ethiopia has substantial influence with the AU and believes they will likely get more fair treatment under AU mediation," said Hudson, who noted that domestic conflicts in Ethiopia influenced its decision.
"Because of the government’s actions in Tigray, we have seen the US, EU, and UN take a very tough position on Abiy, going so far as to threaten him with sanctions," he said.
The government in Addis Ababa has branded the Tigray People’s Liberation Front (TPLF), long the dominant party in Tigray, a “criminal clique." It began a military crackdown on the group last November that some have called an ethnic cleansing.
With news of atrocities committed by Addis Ababa’s federal troops, Hudson says Abiy suspects the international community may have "difficulty separating these issues," forcing him to agree to a compromise on the dam that will hurt his chances in the June elections.
Egypt is concerned that once the dam is fully operational, it will cut off Cairo's supply of the Nile's waters, which meets around 97% of its water needs. Last year, Sudan said the filling process caused water shortages including in the capital Khartoum.
Ethiopia says power produced by the GERD will be vital to meet the development needs of its 110 million residents.
But, Sudan's Foreign Minister Mariam al-Sadiq al-Mahdi told reporters Tuesday that Addis Ababa "threatens the people of the Nile basin, and Sudan directly."
Khartoum and Cairo claim that the massive water reservoir poses an existential threat.
"We are talking about taking into account all 250 million souls who live in the three countries and their interests," said al-Mahdi.
Davison warns that if the countries don’t reach an agreement that puts everyone's concerns at ease, the results will be catastrophic.
"The dam carries risks for downstream countries if there's no cooperation, but if there is then there is no reason why the dam should cause significant harm. Therefore, a failure by all parties to make the concessions needed to achieve a compromise increases the risk from the project," he said.
More talks are scheduled for later this month.