Ethiopia has dismissed Egyptian talk of military action against a giant dam it is building on the Nile as "psychological warfare".
Dina Mufti, Ethiopia's foreign ministry spokesman, said on Tuesday that his country was "not intimidated by Egypt's psychological warfare and won't halt the dam's construction, even for seconds."
Responding to a speech a day earlier by Egypt's President Mohamed Morsi, in which he said Egypt did not want "war" but would keep "all options open" to avoid losing any water, Mufti said the project would not be distracted by their neighbours.
Asked if Addis Ababa was looking at measures to defend the Ethiopian Grand Renaissance Dam, Dina said: "No country operates without precautions, let alone Ethiopia, which has a track record of defending its independence from all forces of evil."
Some politicians were caught on camera last week talking of air strikes or backing Ethiopian rebels after the start of major new work on the project took Cairo by surprise late last month.
Egypt's foreign minister, who has said he will give up "not a single drop of water", is to visit Addis Ababa.
Morsi hoped for a political solution with Ethiopia, a "friendly state", whose demands for economic development he said he understood.
One bone of contention is a technical analysis of the impact of the $4.7bn dam being built by an Italian firm on the
Blue Nile near the border with Sudan, which supports the plan.
Ethiopia says a joint report, still kept under wraps by both governments, supports its assurances it will do "no appreciable harm" to Sudan and Egypt downstream.
"Ethiopia cannot remain poor ... it must utilise its resources to
lift its people out of poverty."
It has no plan to use water for irrigation and says that once the reservoir is filled, all the river's water will be free to flow through its turbines.
Morsi, however, said Egypt had carried out studies that showed "negative consequences".
Less water would flow while the reservoir is filling. Once full, more water may evaporate.
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Ethiopia and other upstream neighbours say those claims are outdated.
"Ethiopia cannot remain poor," Foreign Minister Tedros Adhanom said in a statement. "It must utilise its resources to lift its people out of poverty."
Despite its lack of means, Ethiopia insists it can fund the project itself without help from international lenders wary of the diplomatic dispute.
It has been aided by a $1bn loan from China to build power transmission lines.
It says the project, on which work to divert the river temporarily began in May, is 21 percent complete.
With a target generating capacity of 6,000 megawatts, it is part of a plan to make Ethiopia the biggest electricity exporter in Africa.