Ethiopia hopes Eritrea peace will bring prosperity

Ethiopian hotel owner Taeme Lemlem, 75, sips a coffee at his hotel which was once destroyed during the war between Ethiopia and Eritrea (AFP Photo/Maheder HAILESELASSIE TADESE)
Eighteen years after the guns fell silent following Ethiopia\’s bloody border war with Eritrea, the frontier town of Zalambessa is a quiet, rubble-strewn outpost crossed by a road to nowhere.
But change could be on the horizon after the leaders of Ethiopia and Eritrea agreed to re-establish relations, raising hopes that trade will resume and towns like Zalambessa will boom again.
"There\’s no question," said Tirhas Gerekidan, a hairdresser in the town. "If the road opens, things will change."
Both small and large businesses in Ethiopia, one of Africa\’s fastest-growing economies despite widespread poverty, would be expected to benefit from the border re-opening.
But analysts warn that Eritrea, which under President Isaias Afwerki has become one of the world\’s most closed societies with an unwelcoming business climate, may not share the economic spoils of the new era of engagement.
"The potential for this accord… to revitalise its economy is huge," said Seth Kaplan, a professor at Johns Hopkins University in the United States who has studied Eritrea\’s economy. "The great unknown is what will Isaias do."
Eritrea, once a province of Ethiopia that incorporated the single nation\’s entire coastline, fought a decades-long independence war before voting to leave in 1993.
The decision landlocked Africa\’s second-most populous country — although Ethiopia continued to export through Eritrean ports until a border dispute erupted into war in 1998.
– \’Systematically bulldozed\’ –
Eritrean troops poured south into Zalambessa which is the last Ethiopian town on the main road between the countries\’ capitals.
Eritrea then "systematically bulldozed" it, the local Catholic bishop wrote in a 2003 letter to the United Nations Secretary General.
"There wasn\’t anything left. All we found were rocks that weren\’t even a metre in size," said Taema Lemlem, the owner of a cafe in the town.
A peace treaty ended fighting in 2000, but hopes that the frontiers would re-open were scuppered when Ethiopia rejected a UN-backed effort to definitively settle the border question two years later.
The road from Zalambessa to Eritrea is blocked by the military, and the once-bustling trade hub where cactuses sprout from conflict-damaged buildings is eerily quiet.
Barred from Eritrea\’s ports, Ethiopia shifted its sea trade to neighbouring Djibouti, investing heavily in a railway and other infrastructure as it became one of the fastest growing economies in Africa.
But facing soaring debt and a foreign exchange shortage, Ethiopia\’s new prime minister Abiy Ahmed announced in June that he would privatise key state-owned companies including Ethiopian Airlines and Ethio telecom.

– Like slavery –
Getachew Teklemariam, a consultant and former Ethiopian government adviser, said that while the economic reforms and warming relations were not necessarily linked, they could both reinvigorate the economy.
"The rapprochement relieves resources from the military buildup that has been going on over the years," Getachew said.
Eritrea responded to Ethiopia\’s rejection of the UN border settlement with an extensive crackdown on dissent that in turn deterred investment.
Repressive policies stifled its emerging entrepreneurial class, dissidents were arrested and an indefinite military service programme was mandated that drew comparisons to slavery from the UN.
"Eritrea has done almost everything it can to keep foreign investment out," Kaplan said.
Hundreds of thousands of Eritreans have fled abroad, partly to avoid conscription which many migrants say contributes to poverty.
– \’Listening to gunfire\’ –
Isaias insisted the mandatory national service was necessary to deter Ethiopian aggression, but has not commented on the scheme\’s future since the thaw with Addis Ababa.
Kaplan suggested Eritrea may not change its hardline policies or become more welcoming to foreigners, but could instead seek investment for two of its most promising sectors — ports and mining.
Getachew added that trade between Ethiopia and Eritrea had been fraught even before the war.
The smuggling of Ethiopian contraband through Eritrean ports and Asmara\’s manipulation of its nakfa currency strained relations and contributed to the border conflict.
"My fear is now, even after all these years, our regulatory capacity is not really strong enough to avoid those sorts of malpractice," he said.
And even though Ethiopia is eager to access Eritrea\’s more cost-effective ports of Assab and Massawa, Getachew warned that both are believed to be run-down after trade dried up following the war.
In another sign of the rapid rapprochement, Ethiopia\’s foreign ministry spokesman Meles Alem this week that roads to Assab were already being repaired to enable rapid use of the port.
Residents living along the frontier are hopeful that cross-border trade will begin to flourish and occasional shootouts between Ethiopian and Eritrean troops will end.
"While other people were listening to music, we were listening to gunfire," said Taema, the cafe owner. "Being open is better than being closed, and peace is better than war."
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