By AFP

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The African Union on Thursday joined the United States in appealing for calm in the Horn of Africa after regional tensions soared following a contested deal between Ethiopia and the breakaway region of Somaliland.

Somalia has vowed to defend its territory after Monday's agreement, which it described as an "aggression" and a "blatant assault" on its sovereignty by neighbouring Ethiopia.

Read: Somalia fumes, recalls envoy to Addis

The memorandum of understanding (MoU) gives landlocked Ethiopia, Africa's second-most populous country, long-desired access to the Red Sea through Somaliland.

AU Commission chair Moussa Faki Mahamat issued a statement appealing for "calm and mutual respect to de-escalate the simmering tension" between Ethiopia and Somalia.

He called on the two nations to engage in a negotiation process "without delay" to settle their differences.

Faki also urged them to "refrain from any action that unintentionally may lead to a deterioration of the good relations between the two neighbouring Eastern African countries".

"He stresses the imperative to respect unity, territorial integrity and full sovereignty of all African Union member states," the statement said.

Somaliland, a former British protectorate of about 4.5 million people, declared independence from Somalia in 1991, a move not recognised internationally and staunchly opposed by Mogadishu.

Read: Somalia, breakaway Somaliland to resume talks

The United States on Wednesday rejected international recognition for the separatist region and also called for talks to resolve the crisis.

"The United States recognises the sovereignty and territorial integrity of the Federal Republic of Somalia within its 1960 borders," State Department spokesman Matthew Miller told reporters.

"We join other partners in expressing our serious concern," he said, "about the resulting spike in tensions in the Horn of Africa."

"We urge all stakeholders to engage in diplomatic dialogue."

The wide-ranging deal signed in Addis Ababa gives Ethiopia access to commercial maritime services and a military base, with Somaliland leasing it 20 kilometres (12 miles) of coastline for 50 years.

Somaliland's leader Muse Bihi Abdi has said that in exchange, Ethiopia would "fully recognise" Somaliland but this has not been confirmed by Addis Ababa.