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Research Report

ERITREA’S ECONOMY: Ideology and Opportunity

Seth Kaplan
Copyright Date: Dec. 1, 2016
Published by: Atlantic Council
Pages: 29
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Table of Contents

  1. (pp. 3-4)

    Eritrea’s socioeconomic model is an outgrowth of its thirty-year guerrilla-style war to achieve independence from Ethiopia, which shaped the thinking of President Isaias Afwerki and his advisers. Eritrea’s independence was a victory against seemingly impossible odds, and it was achieved without any meaningful outside assistance. The birth of the Eritrean state resulted entirely from the tenacity, resilience, and keen organizational skills of the Eritrean People’s Liberation Front (EPLF), which continues to run the country today as the People’s Front for Democracy and Justice (PFDJ). Individual fighters, who still predominate at the two highest levels of government,⁶ were intensely loyal to...

  2. (pp. 5-5)

    These experiences taught the country’s leadership that its future depends on the following:

    Strengthening self-reliance. No outside actor has proven itself dependable, and many have shown that they are, in fact, unreliable partners. It is crucial that the country is as self-reliant as possible and dependent on no one. Eritrea’s universal military service is an essential facet of this self-reliance doctrine.

    Sacrificing the needs of the individual for the group and promoting social cohesion. An enormous amount of sacrifice for the sake of the country was essential to achieving and maintaining independence, especially given the ongoing threat from Ethiopia. Constructing...

  3. (pp. 6-6)

    Eritrea does not recognize its kinship to any of these regimes. Revolutionary principles are so deeply embedded in how the leadership thinks20—infusing everything from the national narrative to particular decisions by policy makers—that few explicitly articulate them as “core principles” in a comprehensive fashion or acknowledge their ideological roots. In contrast, details of Eritrea’s independence struggle are cited over and over again. However, understanding these core values and how they influence the Eritrean leadership’s way of thinking is essential for anyone who seeks to recognize the logic behind the choices the country has made—or to formulate a...

  4. (pp. 7-14)

    Eritrea’s prolonged national service and high levels of emigration are, to some extent, products of a larger economic malaise. Indeed, the country’s financial woes have consistently hampered its broader security and development agenda. Boosting state revenue and employment opportunities are the country’s two most pressing economic problems, and they are interrelated: many of the ways to resolve one would help resolve the other.

    Reliable data on Eritrea’s economy are scarce, due to the government’s refusal to release even the most basic statistics such as population and GDP figures. Nonetheless, there are a number of international estimates available, most notably those...

  5. (pp. 15-15)

    Eritrea’s challenges seem daunting but are actually quite comparable to those faced at one time by Vietnam and China. These countries are good models for the Eritrean government to examine, because they are both somewhat similar ideologically to the PFDJ and came to the conclusion during the 1980s that a course correction was not only necessary, but could be conducted without abandoning the core principles that had underpinned the regimes. Both permitted free market enterprises to take a larger and more decisive role in shaping the economy, but retained a pivotal central role for the state. As a result, both...

  6. (pp. 16-17)

    As the mining sector and key international partnerships (with the EU, United Nations Development Programme, and AfDB, for instance) show, Eritrea has the capacity to manage a small number of high profile initiatives well when it so desires. The cohesiveness and competence of its top leaders surpass those of many countries in Africa. If this senior-level competence could be applied more pragmatically to developing the economy, Eritrea could certainly grow its economy much faster.

    It could, for instance, develop a number of state- or ruling party–owned investment companies that would play a prominent role in developing the economy, as...

  7. (pp. 18-20)

    Eritrea has a number of sectors that are ripe for development. Some, such as the mining and agricultural sectors, have received ample attention from the government. Others, such as tourism, transshipping, and manufacturing, seem neglected despite rhetoric to the contrary.

    Agriculture: The government has long prioritized farming, seeing it as crucial to food security, poverty reduction, and national self-reliance. Yet yields are quite low, forcing the country to depend on imports to fill gaps despite the relatively small population. Unpredictable water supplies (including frequent droughts) and energy supplies are persistent problems. Although there are ongoing attempts to improve soil and...

  8. (pp. 21-21)

    The international community has strong opinions about the direction Eritrea should take on a variety of issues, from human rights to governance to international affairs to economic policy. While some of this is well-intentioned, much of it is based on a very limited understanding of—and empathy for—Eritrea’s historical experience. Although some of the Eritrean government’s choices deserve criticism, any attempt to assist the country needs to start with where it is now, not where foreigners think it ought to be.

    Eritrea has shown, especially in recent years, a willingness to work with countries and organizations that treat it...

  9. (pp. 22-23)

    Eritrea’s complex situation calls for, above all else, pragmatism. The international community needs to be more realistic—indeed, more agnostic—when engaging Eritrea. Their policies toward the country should resemble those applied to Cuba, not to North Korea. The success of countries such as those in East Asia and Rwanda show that every country has unique assets and challenges, and building incrementally on what already works is far more likely to succeed than trying to import a particular model from overseas.

    As Justin Yifu Lin, the first person from a developing country to serve as the World Bank’s chief economist,...