<p>In the rapidly expanding urban frontiers of Ethiopia, informal housing is often treated as a technical failure of planning. However, this study argues that informality is a deliberate "logic of governance" mediated by power and capital. The research addresses a significant gap in political economy analysis regarding how demolition and upgrading are weaponized within urban power structures, hypothesizing that informal housing is a structural necessity born of asymmetric power dynamics and land speculation. Central to this analysis is the "Tripartite Alliance" of brokers, farmers, and Technocratic Agents who mediate the "negotiated legality" of settlements. The objective is to investigate the political economy of administrative responses in the newly established Sheger City, Oromia. Adopting a pragmatist philosophy, the study utilized an exploratory sequential mixed-methods design, triangulating quantitative data (n = 384) with 40 in-depth interviews and 5 focus group discussions. Inferential analyses reveal that administrative responses are not neutral; residents with "Brokering Experience" were 3.2 times more likely to avoid demolition (OR = 3.2, p &lt; .01), while lower-income households were disproportionately targeted for eradication (chi² = 14.32, p &lt; .005). Discriminatory demolition (M = 4.56) was found to be more prevalent than neutral enforcement. Qualitative findings uncover a "Tripartite Alliance" of land brokers, displaced farmers, and municipal agents facilitating a "bargaining cycle" that commodifies tenure security. The study concludes that current reactive measures serve as tools for "accumulation by dispossession." These findings contribute to the literature by uncovering how urban governance weaponizes land policy, suggesting that a shift toward inclusive, technology-based land management is essential to disrupt speculative informal networks and enhance community resilience.</p>