President Mohamed Mursi said on Monday he would keep "all options" open to defend Egypt's water supply from being affected by a giant new dam Ethiopia is building on the Nile but he added that Cairo did not want war.
"Egypt's water security cannot be violated at all," he said in a televised speech to Islamist supporters. "As president of the state, I confirm to you that all options are open.".
He later added: "We are not calling for war, but we will never permit our water security ... to be threatened."
Using emotive language to underline the importance of the Nile to Egypt, he quoted a popular song about the river and said: "If it diminishes by one drop then our blood is the alternative."
Mursi, who faces strong domestic opposition after his first year in office, said Egypt recognised Ethiopia's desire to develop its economy, but would defend its own interests from a hydro electric project announced by Ethiopia two years ago but which moved forward significantly late last month.
Cairo had no objection to "development projects in the Nile Basin states", Mursi said, referring to Ethiopia as well as Uganda, Kenya, Tanzania, Burundi, Rwanda, Democratic Republic of Congo and Sudan, "but on conditions that those projects do not affect or damage Egypt's legal and historical rights".
Egypt, whose fast-growing population of 84 million uses 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 to defend its position. Ethiopia, the second most populous state in Africa, says those claims are outdated.
It says the Grand Renaissance Dam an Italian firm is building for it on the Blue Nile near the Sudanese border will generate electricity that it can export and will not reduce the long-term flow of the Nile, once its huge reservoir is filled.
Egypt expressed surprise and alarm when engineers began major work late last month to divert the Blue Nile in order to start key work on the dam.
Sudan has given its support to Ethiopia's project, saying it would benefit from electricity it generated. But Egypt, which has its own major barrages on the Nile including the Aswan Dam, has raised concerns about its safety and effect on water flow.
Mursi said Egypt had carried out studies that showed "negative consequences" from building the Renaissance Dam.
Bellicose rhetoric between Egypt and Ethiopia, which share a millennial history of friction over the Nile and its resources, has raised concerns in the region about conflict. Analysts have noted that Mursi could be tempted to use the dispute to divert domestic attention away from economic and political troubles.
Mursi called on his political opponents to forget their differences. He said he was ready to "go to everyone" in a new effort to reach out to his non-Islamist opponents who have snubbed his previous calls for national reconciliation talks.
Egypt's previous military rulers, notably in the 1970s, but also later made occasional warnings of military action against Ethiopia if it threatened water resources.
Last week, Ethiopia summoned the Egyptian ambassador after politicians in Cairo were shown on television suggesting military action or supporting Ethiopian rebels.
The possible downstream effects of the $4.7-billion dam have been disputed and full details are unclear.
While letting water through such dams - of which Egypt, Sudan and Ethiopia already have several - may not reduce its flow greatly, the filling of the reservoir behind any new dam means cutting the river's flow for a time. Evaporation from reservoirs can also permanently reduce water flowing downstream.