Ethiopia expects Egypt talks over Nile dam, says won't back down 

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  Reuters/Reuters - Egyptians youth dances and enjoy a Nile River cruise in Cairo June 6, 2013. REUTERS/Amr Abdallah Dalsh

 Egyptian Foreign Minister Mohamed Kamel Amr is expected to travel toAddis Ababa on Sunday for talks on a giant dam Ethiopia is building on the Nile, as the countries seek a diplomatic solution to an increasingly heated dispute.

But Ethiopia's foreign ministry said on Wednesday the country had no intention of suspending construction of what would be the biggest hydro electric plant on the continent, a project Egypt says could cost it vital water supplies.

Tensions have risen this week between two of Africa's most populous nations, after President Mohamed Mursi said Egypt did not want "war" but would keep "all options open" to avoid losing any water.

Some Egyptian politicians were also caught on camera last week talking of air strikes or backing Ethiopian rebels after the start of major new work on the $4.7 billion Grand Renaissance Dam took Cairo by surprise.

Ethiopia has dismissed talk of military action as "psychological warfare".

"The minister of foreign affairs (of Egypt) probably will be arriving on the 16th of this month," Dina Mufti, spokesman at Ethiopia's foreign affairs ministry, told reporters.

"This is in the spirit of Ethiopian interest - Ethiopia has always been open and we've always been interested in discussions," he said, speaking in English.

Dina added "in the strongest possible terms" that Ethiopia would not accept any proposal to halt or delay construction.

The African Union urged both sides to hold talks to resolve the row.

"It would be important to just have discussions that are open, that look at how we can have a win-win situation in a new context, not in the context of the colonial powers, but in the context of pan-Africanism and African renaissance," the bloc's chairperson Nkosazana Dlamini-Zuma told a news conference.

Egypt's previous military rulers had contingency plans to attack Ethiopian dams that might disrupt the flow of the Nile.

Egypt, whose 84 million people use almost all of the Nile's supply that reaches them to meet their needs, cites colonial-era treaties guaranteeing it the lion's share of the water.

Ethiopia and other upstream neighbors, like Kenya, Uganda and Sudan, say those claims are outdated.

Officials in Addis Ababa say a technical analysis compiled by experts from Ethiopia, Sudan and Egypt assures downstream nations that the dam being built by an Italian firm will not have a negative impact on the river's water levels.