By Aaron Maasho
ADDIS ABABA (Reuters) - Ethiopia's Prime Minister Hailemariam Desalegn suddenly resigned on Thursday in what he described as a bid to smooth reforms, following years of violent unrest that threatened the ruling party's hold on Africa's second most populous nation.
The resignation - unprecedented in Ethiopia's history - followed a wave of strikes this week in towns near the capital and demonstrations successfully demanding the release of more opposition leaders.
More than 6,000 political prisoners have been freed since January as the government struggles to placate simmering anger among the two largest ethnic groups, the Oromo and Amharic, who complain they are under-represented in the country's corridors of power.
The prime minister leads the nation under Ethiopia's political system and Hailemariam's resignation underscores the depth of division within the ruling coalition over how fast to pursue political reform.
Ethiopia is the region's largest economy and a key Western ally in the fight against Islamist militancy but rights groups criticise its government for jailing journalists and political opponents.
It was not clear who would replace Hailemariam. He also resigned as chairman of the ruling coalition, which has governed since it defeated a military regime in 1991.
"Unrest and a political crisis have led to the loss of lives and displacement of many," Hailemariam said in a televised speech. "I see my resignation as vital in the bid to carry out reforms that would lead to sustainable peace and democracy."
Hundreds of people were killed by security forces in unrest in Ethiopia's two most populous regions - Oromiya and Amhara - in 2015 and 2016. Opposition to an urban development plan for the capital Addis Ababa sparked public demonstrations against political restrictions, land grabbing and human rights abuses.
"Much of the public anger stems from the fact that the Tigryan ethnic group, representing 6 percent of the population, control key business interests, hold senior level positions in government and the military, and own significant land at the expense of other ethnic groups," wrote Ahmed Salim, vice president at Teneo global advisory firm in a briefing note.
Some foreign-owned firms were attacked in the violence, damaging government efforts to attract investment and accelerate industrialisation. Ethiopia's largely state-driven economy is gradually opening to foreign investors, although sectors such as telecoms and construction remain tightly controlled.
Hailemariam, a 52-year-old former university dean, will stay on as prime minister in a caretaker capacity until the ruling Ethiopian People's Revolutionary Democratic Front (EPRDF) and parliament name a new premier.
Shiferaw Shigute, head of the EPRDF office, said the coalition would appoint a successor soon.
"Apart from the sporadic security issues ... it is business as usual. The government is stable," he said. "In our country's history, it is the first time that a sitting leader has stepped down from power voluntarily."
There is pressure for a member of the Oromo ethnic group to get the post, said a source close to a ruling party member. The foreign minister is the most senior Oromo in government.
VIOLENCE, THEN REFORMS
The resignation follows a ruling party reshuffle that began in November and sidelined a number of senior members, including the widow of the former prime minister.
In January, the government has speeded up reforms, releasing prisoners and closing a notorious prison where activists say torture was common.
"The political landscape is shifting quickly and they have to accommodate the people’s demands if they want to continue to govern," said Ahmed Soliman, an Africa research associate at London think tank Chatham House.
Most of the released prisoners, who included high level opposition figures and journalists, had been accused of involvement in the protests or terrorism.
The prime minister wanted even more prisoner releases, said a regional analyst familiar with Ethiopian politics. He asked not to be named in order not to jeopardise his relationship with the government.
"I think he wanted to empty the jails of all political prisoners," the analyst said. But, he said, "I don't think the resignation is a sign that the hardliners have won. They will probably continue on the path of reform, albeit not to the scale and speed that people want."
Former opposition lawmaker Girma Seifu warned that breaking the coalition's stranglehold on power would take more than the resignation of one man. The coalition has controlled every seat in Ethiopia's 547-strong parliament since 2015, when Seifu lost his post.
"This (resignation) is not something to cheer about. In my opinion, the whole parliament had to be disbanded and a transitional phase enacted," he said.
"Whoever replaces him (Hailemariam) has to have in mind a transition. Otherwise it will only be a false start."
(Writing by Katharine Houreld; Editing by Matthew Mpoke Bigg and Andrew Roche)