The image of a Nobel Peace laureatein military fatigues encapsulates the moment in which Ethiopia finds itself — on the verge of a transition to democracy, a descent into violence or, perhaps, a precarious combination of the two.

Driving the news: At least 166 people were killed after an iconic musician, Haacaaluu Hundeessaa, was murdered last Monday in Addis Ababa, the capital. Prime Minister Abiy Ahmed responded to the violence by sending in troops and shutting off the internet. High-profile opposition leaders were arrested, along with some 2,300 others.

• Abiy claimed that "external forces" were "pulling the strings" in an effort to destabilize Ethiopia at a critical moment — a reference to the standoff with Egypt over access to the Nile.
• Most of the deaths after Hundeessaa's killing came in intercommunal violence, however, some of it was reportedly carried out by militant wings of hardline political factions.
• "Considering who the dead and wounded are, there are clear indications that they were targeted for ethnic reasons," DW's Yoahannes Geberegziabeher reports from Addis Ababa.

Zoom in: The violence took place in Oromia state, also the site of the 2014–2017 uprising that swept Abiy, Ethiopia's first Oromo prime minister, to power.

• Hundeessaa, 34, "basically provided the soundtrack to the uprising," says Murithi Mutiga, project director for the Horn of Africa for the International Crisis Group.

The Oromo people are Ethiopia's largest ethnic group but have faced decades of oppression and exclusion from power.

• While Abiy's rise was initially viewed as a victory, some Oromo politicians have come to view him as another barrier to their demands, including greater autonomy for Oromia.
• Abiy espouses a broader Ethiopian nationalism, not defined by ethnicity.

The big picture: "This is a hideously complex transition in a context where elites are divided on the very definition of the Ethiopian state," Mutiga says.

• "Some want it to be much more decentralized. Others, like the prime minister, are very keen on a more centralized and coherent state."
• "It's not surprising that amid such bitter divisions, occasional shocks — as we've seen repeatedly over the past couple of months — have brought a swell of grievance to the surface and resulted in significant casualties."

Those grievances had been forcefully suppressed before Abiy came to power. He permitted greater freedoms for the press and civil society, freed political prisoners and allowed dissidents to return.

• "In a sense, it is a welcome step that he has opened up the political space, but on the other hand, this opening up has come with significant challenges," Mutiga says.
• The tensions have forced Abiy into a difficult balancing act. He now faces accusations of heavy-handedness and even of authoritarian behavior, in particular for repeatedly resorting to internet blackouts.
• His critics also contend his decision to move elections from August to next year was based not on the pandemic but a desire to maintain power.

Zoom out: Abiy was awarded the Nobel Prizeand global acclaim for his efforts in the first year of his premiership toward peace with neighboring Eritrea and democracy at home.

Why it matters: This is a hinge moment for the prime minister and for his country, Africa's second-largest by population, on at least three fronts:

1. The dam: Ethiopia says it will begin filling the reservoir of its massive Grand Renaissance Dam this month even absent a deal with Egypt and Sudan, which rely on the flow of the Nile.

• Some in Egypt have threatened war. Foreign Minister Sameh Shoukry appealed to the UN Security Council over what he called "a threat of potentially existential proportions."
• War is unlikely and a deal is possible (the main sticking point involves how Ethiopia will handle droughts). But proceeding this month could unleash geopolitical tensions before it unlocks the dam's significant economic potential.

2. The economy: Ethiopia has been a shining light of global development. But what had been the world's fastest-growing economy over the last decade has now collided with the global COVID downturn.

• The IMF expects growth to fall from 9% to 1.9%, the lowest rate since 2003, when the country saw severe famine.

3. The election: Abiy was selected by a committee in Norway, but he still hasn't been elected by the people of Ethiopia.

• The Nobel laureate may be best positioned to build a broad coalition in a country of 114 million people and 80 ethnic groups. But victory isn't guaranteed and, worryingly, neither is peace.