Country Profile: ERITREA

East Africa

Monday, 23 November 2009 14:38

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

Eritrea views itself as a valuable buffer between two volatile regions: a drought- and war-ravaged East Africa and the oil-rich Middle East. But an oft-declared aspiration to be a stabilising influence in a hostile region has been undermined by a succession of violent clashes along its borders and frequent accusations that it arms foreign rebels. 

Eritrea Tension on the Djibouti border persists after battles in mid-2008 when Eritrean troops crossed into neighbouring territory. The lingering stand-off with Ethiopia – the product of a brutal 30-year struggle for independence and a subsequent 1998-2000 border war – still looms large in the Eritrean psyche. This was aggravated in August when an international claims commission decreed that Eritrea owed its neighbour millions of dollars in compensation for the border conflict. 

The two rivals now use anarchic Somalia as a battleground. Since late 2006, when Ethiopia invaded Somalia to overthrow the Union of Islamic Courts movement, Eritrea has been dogged by accusations – from the UN and US, among others – that it has been providing logistic support and munitions to Islamist rebels. Tensions came to a head when US Secretary of State Hillary Clinton warned in August that Washington might take action against Asmara over Somalia, which many interpreted as a threat of sanctions. Such threats do not frighten Eritrea, which forged its identity in the isolation of a 30-year independence struggle and still draws enormous pride from its self-reliance, shunning foreign aid and development. 

Eritrea’s first and current president, former rebel leader Issayas Afewerki, is accused by human rights groups of exploiting these conflicts to further ingrain a siege mentality, using them as an excuse to curb civil liberties. A 2009 report released by Reporters Without Borders ranked Eritrea last in the world – edging out North Korea – in an assessment of international press freedom. Once-promised multiparty elections, as well as the implementation of a constitution, have been put on indefinite hold by Issayas, who plans to stay in the top job for a long time yet. A new generation of young  Eritreans is forced into open-ended military service for the state, which Issayas says is essential given the constant threat from a land-locked Ethiopia  envious of its rival’s long Red Sea coastline.  

The stuttering economy relies heavily on money sent from Eritreans living abroad, but these remittances have slowed in recent years. In September, the IMF said the global recession and irregular rainfall had further weakened the agriculture-dependent economy. It called on the administration to restore financial balances through fiscal consolidation, to reduce banks’ roles in financing the budget deficit and to relax import and exchange controls to relaunch imports of basic and intermediary goods. 

According to the IMF, real GDP growth for 2009 is estimated at a sluggish 0.3%, with 1.4% projected for 2010. But for Eritrea’s longer-term economic outlook, there is some cause for cautious optimism, with recently improving rainfall helping the normally drought-prone nation.  

Its mineral wealth is beginning to be harnessed and hope is pinned on a number of mining projects, with more than a dozen licences recently granted to foreign companies. The flagship Bisha mine is run by Canada’s Nevsun Resources, with a 40% stake for the state.  

Bisha’s 27m tonnes of ore are believed to hold 1m ounces of gold, 700-800m pounds of copper and 1bn pounds of zinc. Production is expected to begin by the third quarter of 2010, boosting the regime’s foreign reserves. 