ASMARA, 29 December 2004 — A huge sculpture of a pair of sandals, the type favored by fighters in Eritrea’s 30-year independence struggle, dominates Liberation Avenue, the main boulevard in the capital Asmara.
The monument is a constant reminder of war in a country whose peasant economy remains burdened by its mobilization against Ethiopia, on alert for renewed conflict with the neighbor it fought so long to break free from.
Once allies, the current governments of Ethiopia and Eritrea blasted their way to power in 1991 after fighting rebellions to oust Ethiopian dictator Mengistu Haile Mariam.
Eritrea won independence two years later to become Africa’s youngest sovereign state.
Efforts to rebuild the Horn of Africa country were frustrated when a scrap with Ethiopia over the border town of Badme escalated into full war between 1998-2000, forcing hundreds of thousands of people to flee the fighting.
Despite the end of the war that killed 70,000 people, the border row continues to fester with a peace process deadlocked over an independent commission’s ruling on where the 1,000 km (620 miles) frontier should be demarcated.
Many in Ethiopia still oppose the loss of Eritrea and its strategic Red Sea ports, and Addis Ababa has rejected the ruling that awarded the prized town of Badme to its former province.
The stalemate is taking its toll on Eritrea’s economy, already crippled by four successive years of drought.
“The stalling of the peace process is absorbing our human resources and financial resources because we are in a defensive position. It’s a critical juncture,” said Teclemichael Woldegeorgis, deputy commissioner of the government-funded Eritrean Relief and Refugee Commission.
“Until 1998, we were on the path to speedy growth. In 1997, we even stopped asking for food assistance,” he added.
Economic prosperity is now a long-forgotten dream for many Eritreans. With a per capita gross domestic product (GDP) of about $130, it is one of the world’s poorest countries, scraping a human development index ranking of 156 out of 177 countries.
“I borrow food from friends and neighbors. There’s no option because everything is getting expensive,” said Tebreh Berhe, a 58-year-old widow trying to make a bit of money selling grilled corn cobs on the side of the road.
The government has fixed the exchange rate at 13.5 Eritrean nakfa/dollar, but on the black market a dollar easily fetches more than 22 nakfa.
“Life is getting worse and worse. All we can do is pray that things will get better,” Berhe said.
Starved of rich agricultural land, Eritrea used to rely on trade through the ports of Assab and Massawa for its main source of revenue. Hostile relations with giant neighbors Ethiopia and Sudan have strangled cross-border trade.
An International Monetary Fund report on Eritrea says annual exports have plummeted by more than half over five years to $80 million in 2003 from $200 million in 1997.
Foreign exchange reserves needed to pay for imports are at critical lows, the IMF says. It blames, in part, high levels of spending on defense, emergency reconstruction and aid programs for Eritrea’s stretched finances.
Money from Eritreans living abroad helps keep the economy afloat, and has averaged 45 percent of GDP since independence.
