Sunday 2 February 2014

Princeton Lyman: Previous attempts to ‘bring Eritrea in from the cold’ have proved difficult, but we should still try




LymanPrinceton Lyman is a diplomat and former United States Ambassador to Nigeria and South Africa. The below is a response to Hank Cohen’s blog for African Arguments ‘Time to Bring Eritrea in from the Cold’
See also Amb. David Shinn’s piece: ‘Time to Bring Eritrea in from the Cold (But It’s Harder than It Sounds)’
Ambassador Cohen is right that ending the conflict between Ethiopia and Eritrea is long overdue and would be of great benefit to both countries and the region. The same is true for better relations between Eritrea and the US. But Ambassador Cohen does not mention that the African Union was instrumental in calling for United Nations Security Council sanctions against Eritrea. Not a few Africa countries have been upset by perceived Eritrean actions either in Somalia or elsewhere in pursuing its conflict with Ethiopia. Eritrea has become somewhat of an outlier. And rapprochement has proved difficult.
In 2008, when I was at the Council on Foreign Relations I made a major effort to bring Eritrea and the US together. After months of discussion on how to do this, I suggested to the Eritrean ambassador the Council sponsor a meeting between Eritrean officials and a distinguished group of Americans no longer in government, but with strong backgrounds in the region, to discuss the whole range of issues between our two countries. The idea was that if the meeting were to go well, someone from the administration would join opening the way to more formal government-to-government meetings.
The Eritrean ambassador assured me his government had approved this proposal. I persuaded the outgoing Bush administration to hold off on a designation of Eritrea as a state sponsor of terrorism to give this meeting a chance. Though skeptical, the administration agreed. The list of Americans I had contacted and who had agreed to sit down with such a delegation for two days was impressive, including many former diplomats who had served in the region and others active in humanitarian program in Eritrea. What was still missing was the list of Eritrean participants. Shortly after the inauguration of President Obama, the Eritrean ambassador traveled home, promising me a list of Eritrean delegates when he returned. I did not hear back from him for months. When he finally contacted me, he told me that President Isaias had in fact killed the idea.
This is not to say that improvement in relations between the US and Eritrea does not remain desirable. Nor that any opening to settle the dispute between Eritrea and Ethiopia should not be seized. But it does reflect the reality that the government of Eritrea does not make it easy for such rapprochement. After all this time, and with so much suspicion and accusations, these processes cannot be solved by meetings that have strict preconditions, as Eritrea has often insisted upon, nor without a readiness to address the several issues at stake not just one. Perhaps another try at second track diplomacy might help to start the dialogue. I encourage Ambassador Cohen to pursue that and other ways to advance these worthy goals.

Time to Bring Eritrea in from the Cold – By Hank Cohen

Afwerki2
Eritrean President Isaias Afewerki has stated that ‘Eritrea cannot fulfill its destiny without Ethiopia.’
After being part of Ethiopia for forty years, the people of Eritrea held a referendum in April 1993 and decided to establish an independent state.  The referendum took place in the aftermath of a thirty-year insurgency against two successive Ethiopian regimes waged by the Eritrean Peoples Liberation Front (EPLF). At the same time, an allied insurgent group, the Tigrean Peoples Liberation Front (TPLF), took over power in the Ethiopian capital, Addis Ababa, after the military collapse of the Soviet-supported regime headed by President Mengistu Haile Mariam.
Between 1993 and 1998, the two “brother” governments of Eritrea and Ethiopia, headed by the EPLF and TPLF, enjoyed excellent relations.  They maintained a common economic system that allowed landlocked Ethiopia full access to the Eritrean Red Sea ports of Asab and Masawa, including control of their own handling facilities for the transit of cargo.
The relationship started to cool in 1997 when the Eritreans created their own currency, the Nakfa. They did this without arranging to establish a system of daily settlements for cross border trade between their currency and the Ethiopian Birrh.  This could have been done through a facility provided by the International Monetary Fund. Without such a facility in place, the Ethiopian Government announced that all cross border trade had to be settled in US Dollars.  This resulted in a financial setback for Eritrea because of its limited access to hard currencies.
In 1998, the Eritrean Government complained that Ethiopian government representatives, including police, were beginning to encroach on Eritrean territory near the border town of Badme in southwest Eritrea.  According to Eritrean sources, four of their police officers who went to Badme to investigate turned up dead.  Again, the Eritreans said that they had no choice but to retaliate with military force against the alleged Ethiopian encroachments and murder of their policemen.  The Ethiopian Government denied all of the Eritrean allegations about encroachments and the killing of Eritrean policemen, claiming that the Eritrean military attack was totally unjustified.
Instead of negotiations, the Eritrean action triggered a massive Ethiopian armed response, unleashing a major bilateral war that lasted two years, and that caused approximately 100,000 dead and wounded on both sides.
Under Algerian Government mediation, a cease-fire was accomplished in 2000. In view of the border as the ostensible main issue in contention, the Algerians established the Ethiopia-Eritrea Border Commission (EEBC) to arbitrate the exact boundary line. While the EEBC was doing its work, the long border remained heavily armed on both sides.
The results of the EEBC arbitration upheld Eritrea’s main claims on the border delineation.  The Ethiopian Government made a public statement agreeing to the arbitration result, but insisted that it would not proceed to delineate the final border settlement until they could have bilateral discussions with Eritrea. The Government of Eritrea declared that it was open to discussions without any preconditions, but insisted that Ethiopia first had to delineate the border pursuant to the arbitration decision.  This total stalemate in the bilateral relationship has continued until the present, with both governments holding to their inflexible positions.
Because of the stalemate, the border has remained heavily armed on both sides.  This situation has caused particular hardship to Eritrea. Because of the country’s small population, young men conscripted into the armed forces to patrol the long border have had to serve for indefinite periods without knowing when they would be demobilized and returned to their families. As a result, over the past decade thousands of young Eritrean have ‘illegally’ left their country to seek asylum in the other countries, including Ethiopia, Egypt, Israel, the Emirates and southern Europe.
In addition to the expensive armed camps on both sides of the border, the situation of ‘no peace—no war’ has resulted in a total stoppage of cross border trade, and the loss to Ethiopia of Eritrea’s convenient nearby ports for Ethiopia’s exports and imports.  Ethiopia’s only access to the ocean since the war began has been via the 900 mile antiquated railway from Addis Abeba to the port of the neighboring country of Djibouti at the entrance to the Indian Ocean from the Red Sea.  In addition to the long distance between Djibouti and Addis Abeba, port fees in Djibouti are excessively high.
To make matters worse, both Ethiopia and Eritrea have become ensnarled in the chaos of Somalia since that government collapsed in 1991. The rise of the Islamist group Al Shabab, with abundant assistance from al-Qaeda in the Arabian Peninsula caused Ethiopia to send troops to Somalia at various points from 2006 to the present day. Between 2006 and 2010, the security crisis in Somalia has caused relations between Eritrea and the United States to deteriorate badly. In 2008, the George W. Bush Administration declared Eritrea to be a “state sponsor of terrorism”, thereby triggering US trade, investment, and travel sanctions against Eritrea and its leaders. The reason was the identification of Somali Islamist extremists attending a Somali political dialogue meeting in Eritrea. Indeed, this caused the US Government to become so enraged that the American Assistant Secretary of State for Africa expressed to desire to reopen the EEBC arbitration decision in order to favor the Ethiopian border claims. This request was not adopted.
The Obama administration accused the Eritrean Government of allowing the transit of arms to Al-Shabab – the reason for this  alleged support being that Eritrea wanted to help an enemy of Ethiopia, thereby putting pressure on its neighbour to implement the arbitration decision.
In 2009, Senior Etritrean officials met in Rome with the American Permanent Representative to the UN, Susan Rice, and the US Assistant Secretary of State for Africa, Ambassador Johnny Carson. The American delegation was apparently not satisfied with the Eritrean rebuttal of the allegations about their allowing the transit of arms to Shabab. There were also accusations of Eritrean support to insurgents opposing the Ethiopian regime from within. As a result, Ambassador Susan Rice introduced a resolution in the UN Security Council calling for sanctions against Eritrea.  The resolution, UNSC 1907, was enacted in a watered down version of the original harsh US draft, but nevertheless caused Eritrea to become something of an international pariah.  This situation continues.
However, as far as external support for Shabaab is concerned, all available intelligence indicates that Eritrea has not had any contact since 2009. Earlier intelligence reports, denied by Eritrea as fabricated, indicated that the country was facilitating the transfer of funds to Shabaab – nothing of that sort has been reported since 2009  by any source.  Those of us who know Eritrea well understand that the Eritrean leadership fears Islamic militancy as much as any other country in the Horn of Africa region.
In recent months, positive signals have been coming from both countries.  Eritrean President Isaias Afewerke has been quoted as saying that Eritrea cannot fulfill its destiny without Ethiopia. The Prime Minister of Ethiopia, Hailemariam Desalegn, has said that he is willing to go to Eritrea to engage in dialogue.  In short, the wartime tensions of 1998-2000 no longer have a logical basis for continuing to exist. Normalization of Ethiopian-Eritrean relations promises a win-win future for both nations.
In view of the absence of any intelligence, real or fabricated, linking Eritrea with Shabaab for over four years, the UN Security Council should terminate sanctions imposed in 2009 by UNSC resolution 1907.  Since European Union governments have maintained normal relations with Eritrea since the country’s independence, one of the European members of the UN Security Council should propose a resolution to end the sanctions. The US should agree to abstain rather than veto such a resolution.
To break the stalemate between Eritrea and Ethiopia over the implementation of the EEBC boundary decision, there needs to be a mutually face-saving solution. I propose that Ethiopia offer to accept a symbolic initial takeover by Eritrea of territory awarded by the EEBC, followed by the same day opening of dialogue with a totally open agenda.  This dialogue could have the benefit of a neutral mediator, or not, depending on the wishes of the two governments. Here again, one of the neutral Europeans should have the ability to inspire confidence in both sides.
A normalization of relations, following the end of UN sanctions against Eritrea, would have immediate benefits for both countries. A resumption of Ethiopian use of Eritrean ports would provide economic benefits to both countries with trade resuming in both directions. Both sides would also be able to demobilise the border with important cost savings.
Both countries, of course, continue to have important human rights issues.  Normalization of bilateral relations would make it easier for the US and the international community to encourage political and governance reforms.
Finally, the normalization of relations between the United States and Eritrea would open the door to military-to-military cooperation of the type that would enlist Eritrea in the war against Islamic terrorism in the Horn coming from across the Red Sea.
Yes, the time has come to bring Eritrea in from the cold.
Herman J. ‘Hank’ Cohen is Former Assistant Secretary of State for Africa.

Bringing Eritrea ‘in from the cold’ needs real policy changes by Eritrea’s government – By the Ministry of Foreign Affairs, Ethiopia

Tedros
Dr. Tedros Adhanom Ghebreyesus, Foreign Minister of Ethiopia.
Every year or two, there’s a wave of suggestions that it might be time for the US to try and once again engage with Eritrea. The latest such effort came in December from former US Assistant Secretary of State for Africa (1989-1993), Herman Cohen in a piece entitled: “Time to Bring Eritrea in from the Cold”. Ambassador Cohen now heads a lobby firm but his recommendation was picked up by former US Ambassador to Ethiopia, David Shinn and by the former US Ambassador to South Africa, Princeton Lyman, both of whom supported the idea but argued (on the same website) that this might not be easy. Ambassador Shinn thought the idea was “harder than it sounds”, while Ambassador Lyman in a masterly understatement said previous efforts by the US had proved “difficult”.  They are likely to continue to be so. Only last October, the Eritrean regime publicly blamed the US (and later the UN) for the Lampedusa tragedy when 366 Eritreans, mainly youngsters, were drowned trying to reach Italy, having fled from their own country. This sort of rhetoric is a commonplace of the Eritrean regime which in the past has claimed the US created the 1998 Eritrean-Ethiopian war, and suggested the  9/11 atrocity was carried out by the US itself. Nevertheless, Messrs. Cohen, Shinn and Lyman seemed to think: “we should try”.
In principle, of course, no one would disagree. Everyone would like to see Eritrea change policies and lose its status as a pariah state, but none of these comments by former US diplomats, get to the heart of the problem. This lies in the nature of the regime in Asmara and, leaving aside its highly repressive internal activities, its external policies. Others, besides the US have tried to improve relations with Eritrea over the years. None have been more than minimally successful.  The reasons are simple and relate largely to Eritrea and President Isaias’ insistence on ignoring all norms of international behavior and international relations. Eritrea has repeatedly demonstrated over the past 23 years that the fundamental principles of its external policies are force, aggression and violence, either open or clandestine. These attitudes also characterize its internal policies. President Isaias operates with little understanding or interest in the wider world, which he has tended to ignore, especially when it fails to treat him with the exaggerated respect he apparently believes he and Eritrea deserve.
In the past neither efforts to establish trust nor attempts to negotiate have made much progress. It is only now as sanctions have begun to cause problems with remittances and offer a possible threat to mining operations which provide the major source of revenue to keep senior army officers and party leaders quiescent, that awareness is creeping in that the regime is facing deep and real economic and social problems. The most recent IMF estimates are that Eritrea’s per-capita GDP adjusted for purchasing power parity will grow only around 1.7% between 2013 and 2018, a mark that will lead to the nation being ranked as the second-poorest country in the world before the end of the decade. This is despite the input of some quite substantial profits from mining, though there have widespread claims that these are dependent upon what amounts to ‘slave labor’.
At the center of the argument of Messrs Cohen and Shinn is the issue of Eritrea’s relations with Ethiopia. Both seem to accept the idea that President Isaias’ hostility to the outside world, the US and everybody else, is caused by insecurity in the face of a continued threat posed by Ethiopia, seen of course, as a US ally. The excuses for the increasing sacrifices demanded of the population is provided by the threat of the “evil, hostile, menace of Ethiopia,” or by the machinations of the US and its control of the UN and indeed almost everybody else. Indeed, to paraphrase an older US diplomat, referring to Stalin’s policies after the Second World War: “A hostile international environment is the breath of life for the prevailing internal system…” The “threat” of Ethiopia is the standard official line provided by Eritrea and has provided the excuse for keeping national conscripts mobilized since 1998, but it no longer appears to be working. The population is hemorrhaging at a rate of 600 people a week across the border with Ethiopia and similar numbers to the Sudan, in spite of shoot to kill orders along the frontiers. According to the UN Special Rapporteur for Eritrea, some of those now crossing the border are unaccompanied children as young as five or six.
In fact, any external danger to the concept or reality of an independent Eritrea vanished in 1991 when the Ethiopian People’s Revolutionary Democratic Front (EPRDF) took power in Ethiopia. The EPRDF played a major role in helping the EPLF win its war for independence. Once in power in Addis Ababa it immediately encouraged the assumption and recognition of Eritrea’s independence. There has been no change of policy since, despite Eritrea’s invasion of Ethiopia in May 1998.
Messrs. Cohen and Shinn go into some detail of the 1998-2000 war, but much of their comment is inaccurate. They also miss the central point, noted by the UN Claims Commission –“Eritrea violated Article 2, paragraph 4, of the Charter of the United Nations by resorting to armed force to attack and occupy Badme, then under peaceful administration by Ethiopia as well as other territory…in an attack that began on May 12, 1998…”. (Claims Commission’s Partial Award Jus Ad Bellum (December 19, 2005), paragraph 16). The war was the result of Eritrea sending pre-prepared mobilized infantry and mechanized brigades across what was, at the time, the accepted administrative border between the two countries.  It was a very clear case of aggression.
Eritrea’s defeat in June 2000 and its signing of a Cessation of Hostilities Agreement, followed by the Algiers Peace Agreement in December, produced no change in attitude. The Algiers Agreements required the creation of a 25 kms wide Temporary Security Zone along the border inside Eritrea, and the deployment of a United Nations Peacekeeping Mission to Ethiopia and Eritrea (UNMEE) to monitor this and the ceasefire. UNMEE was also given the task of providing logistical and security assistance to the demarcation exercise which was due to follow the Decisions of the Eritrea Ethiopia Boundary Commission, announced in  April 2002.
Eritrea began its efforts to underline the Algiers Agreements prior to 2002, and subsequently ignored Ethiopia’s acceptance of the EEBC Decisions in November 2004. Ethiopia had  originally raised some concerns over the EEBC Decisions, but after failing to get satisfaction for these, it made it clear  it was prepared to proceed to demarcation in conformity with international practice, and  consistent with the Algiers Agreements and their aim of bringing about sustainable peace and the normalization  of relations between Ethiopia and Eritrea. However, as soon as Ethiopia accepted the EEBC Decisions, Eritrea openly began to flout the Algiers Agreements, persistently violating the TSZ and imposing restrictions on UNMEE. By 2007, the UN Secretary General noted in a report to the Security Council that the Eritrean troops that had illegally entered the Transitional Security Zone in October 2006, not for the first time, had remained, and that Eritrea had also deployed additional troops accompanied by tanks and heavy armament. He described Eritrea’s restrictions on UNMEE as representing “a serious violation of the Agreement on Cessation of Hostilities of 18 June 2000, the 2001 Protocol Agreement of 17 June 2001 concluded between Eritrea and UNMEE, and relevant Security Council resolutions…”.  When these activities met with no more than mild verbal criticism from the Security Council, it steadily expanded its activities until it had taken over the whole TSZ, rendering the Algiers Agreements, including the Agreement on Cessation of Hostilities, effectively null and void. The Security Council did pass a number of resolutions demanding Eritrea remove all restrictions on UNMEE, but it took any action and in February 2008 the situation reached a point where UNMEE, humiliatingly, was forced to withdraw.
This demonstration of UN weakness encouraged Eritrea in its bellicosity, its aggressiveness and its disregard for international norms, and another example followed almost immediately. In June 2008, Eritrea invaded Djibouti and seized several strategic locations just inside northern Djibouti, including the islands of Doumeira and Kallida. In subsequent fighting nearly sixty Djiboutian soldiers were killed or wounded, and a senior officer and 18 others captured. Eritrean losses amounted to around 200 killed or captured. President Isaias denied there had been any clashes and persisted in this despite all the evidence of fighting. Eventually, two years later, in June 2010, following mediation efforts by Qatar at the request of Djibouti, Eritrean troops withdrew from the border areas, though the government still refused to admit there had been any conflict. A Qatari observation force was deployed to monitor the border area until a final agreement could eventually be reached, but no progress has been made in releasing Djibouti prisoners of war or in reaching a settlement as President Isaias still denies that anything happens. This time, the Security Council did react and imposed sanctions. Subsequently, with no apparent change in Eritrea’s attitudes or policy over Djibouti, extremist support or destabilization policies in the region, the Security Council, not unreasonably, repeated its belief that Eritrea was a threat to international peace and security, and extended sanctions by another 16 months, to the end of 2014.
Another area of activity by Eritrea which also led to the imposition of UN sanctions was over Eritrea’s persistent interference in Somalia and its support for extremist and terrorist organizations there. After the fall of the ICU in Somalia in December 2006, Eritrea gave refuge to Sheikh Hassan Dahir Aweys and other leaders of what later became Hizbul Islam and supported its anti-government operations in Somalia with planeloads of arms as well as training and funds.  These activities included support for Al-Itihaad, Hizbul Islam, and Al-Shabaab, and the  UN Monitoring Group produced detailed evidence of its transactions.  President Isaias has also repeatedly insisted that Al-Shabaab and similar organizations must be considered Somali stakeholders, claiming despite all evidence they are not terrorists and they should be brought into government. Eritrea, unlike all other IGAD states, refused to recognize either the TNG or the current Federal Government of Somalia. It even withdrew from IGAD in anger that other IGAD states refused to follow its line, though it has now asked to return.  It hasn’t changed policy. In 2013, the Monitoring Group on Somalia and Eritrea issued two separate reports and concluded that Eritrea had diversified its support for extremist operations to Sudan, South Sudan, Uganda and Yemen in addition to fronting a number of business operations.
This is, indeed, a government that relies so totally on the fiction of external threats to maintain its own internal legitimacy that whenever and wherever the fantasy appears threadbare, it has deliberately recreated it with another outbreak of violence or aggression. This is in the conflicts it started with Yemen in 1996/7, Ethiopia in 1998-2000 and  Djibouti in 2008. On other occasions it has repeatedly backed opposition forces, extremists and known terrorists, consistently attempting to destabilize Ethiopia and Somalia and interfere in the internal affairs of Sudan and later of South Sudan. Its foreign policy has, in fact, consistently and persistently continued to demonstrate a pattern of aggression and hostility.
In fact, like any bully, Eritrea rapidly backs down when faced by firm action. Indeed, it is clear from past experience that the government in Asmara only responds to the threat of superior strength. Nothing less will produce change. As the UN Monitoring Group reports for both 2012 and 2013, as well as a mass of additional evidence, make clear, Eritrea has continued its efforts at regional destabilization. There has been no change of policy, merely some misrepresentation and verbal fiction. To lift sanctions now would send very much the wrong signals, giving Eritrea a green light to continue its policies of aggression and regional destabilization.
The lack of movement, whether in normalizing relations between Eritrea and Ethiopia, in response to UN sanctions over regional destabilization or UN demands over the conflict with Djibouti, is quite clearly the responsibility of Eritrea, and Eritrea alone. It has nothing to do with Ethiopia or Eritrea’s border “dispute” with Ethiopia. Bringing in Eritrea “from the cold” can only come after a visible change of attitude in Eritrea, with implementation of a fundamental shift in attitude, an end to all aggressive policies, dismantling of training camps for extremists and terrorists, abandoning support for armed opposition groups and all other efforts to destabilize its neighbors. This needs to be accompanied by acknowledgement of the necessity for dialogue and acceptance of the norms of international diplomacy and adult relationships. Then and then only the lifting of sanctions and Eritrea’s reintegration into regional organizations and international politics might follow.
This response was first published on the website of the Ethiopian Foreign Ministry.

Eight Business benefits of resuming economic relations between Ethiopia and Eritrea – By Tony Carroll

CarrollEthiopia and Eritrea ceased business relations upon the commencement of the border war in 1998. While a small amount of barter trade still exists, it is fair to say that trade relations between the two countries are non-existent – this is very much to the detriment of the private sectors in both countries (and across the region).
Since the closure of the border, the economic fortunes of Ethiopia and Eritrea could hardly have been more divergent. While both remain poor countries in terms of per capita wealth, Ethiopia has been among the fastest and growing countries in the world averaging a steady 10% per annum growth for the past nine years. Conversely, as per the chart below, Eritrea has suffered vast fluctuations in its economic growth from a low of – 9% in 2008 to the 2012 level of + 7.5%.
GDP Growth over the years (“Eritrea Country Report.” Global Finance).
Year Real GDP Growth in Percentage
2001 8.8
2002 3
2003 -2.7
2004 1.5
2005 2.6
2006 -1
2007 1.4
2008 -9.8
2009 3.9
2010 2.2
2011 8.7
2012 7.5
Ethiopia has also been a leader in Africa in terms of infrastructure development, especially in the construction of roads, power infrastructure and water supply. Eritrea has endeavoured to rebuild its transportation infrastructure after the border war but progress has been slowed by inaccessibility of finance.  In terms of education, Ethiopia has built dozens of institutions of higher education in the past 10 years and has begun to develop a work force that is increasingly in demand by manufacturers from Turkey, China and India. Despite promising signs of self reliance immediately after Independence, Eritrea continues to find its work force diminished due to emigration and military service.
Last, Ethiopia is rapidly modernizing its domestic and export agriculture whereas as Eritrea still relies on subsistence methods of production – albeit while eschewing food aid.
As a business consultant who has worked on investment in both countries, I am confident that a comprehensive settlement of disputes that underlie the 1998-2000 border war and normalization of economic relations will create myriad benefits, including:
  1. Increase in road, rail and port infrastructure in Eritrea. With assistance from the Chinese, Ethiopia has expended billions on building its transportation corridor to Djibouti. However, for many regions in Ethiopia, Eritrean ports are closer.
  1. Increase in power infrastructure and opening of export markets. By combining their respective sources of power, hydroelectric, wind and geothermal, Eritrean and Ethiopian consumers would benefit from lower costs and greater reliability of supply.
  1. Reduced power and transport costs would increase manufacturing investment in both Ethiopia and Eritrea. Although Ethiopia remains one of the world’s most expensive countries in terms of road transportation costs, there have been a swath of new manufacturing ventures in textiles, apparel and leather goods, driven by low labour costs and increased skill training.
  1. With its port access, Eritrea could also become a manufacturing hub, perhaps even adding strategic value to raw or semi-processed materials coming from Ethiopia.
  1. Renewed access to the US market under the Africa Growth and Opportunity Act (AGOA). In 2004, Eritrea was deemed ineligible for market access benefits offered and while the impact was minimal at the time, Ethiopia has been able to substantially grow its exports to the US in the past five years. The normalization of political and economic relations with its neighbour would not in itself restore AGOA eligibility, but it would demonstrate progress toward that end.
  1. Increased convertibility of currencies. Normalization of economic relations would allow the establishment of banking relations, now non-existent between the two countries. The Nakfa is among the world’s least convertible currencies and an open and transparent exchange with the Ethiopian birr could lower transaction costs for all businesses and consumers.
  1. Return of the commercial sector. As a result of the border war, Ethiopian businesses were expelled from Eritrea and vice versa. This bar has constrained companies from both countries to achieve scale. Moreover, among the most dynamic business communities in Ethiopia for generations were those of Eritrean origin.
  1. Fostering regional integration. Africa is striving to integrate its markets and Ethiopia has been leading in this process by establishing agreements with its neighbours for power and transportation corridors. There has been speculation that Ethiopia seeks membership of the East Africa Community. EAC membership would also provide benefits to Eritrea.
As reported by my friends Ambassadors Cohen, Shinn and Lyman, this appears to be a moment of inflection in the relationship between Eritrea and Ethiopia. Certainly the implementation of the border agreement and the resumption of commercial relations will not be an easy process. However, the economic benefits that would accrue to both countries could be substantial and should motivate leadership in both to expedite the process.
Tony Carroll is Vice President of Manchester Trade and Director of Acorus Capital.