The government was building a power plant, a port, a telecommunications
system, an airport, and a bus station in Massawa, a steamy, whitewashed
city designed by Arab traders and Ottoman Turks.
Granite office buildings were rising from the rubble left after
Ethiopia ruthlessly bombed the city during Eritrea's 30-year war of
liberation, which ended in 1991.
Now the young nation of Eritrea once again finds itself in conflict
with its larger neighbor, and many of the nation's development plans have
ground to a halt. This nation of 3.5 million people has been forced to
divert enormous human and financial resources to fight the war.
Throughout Africa and in many of the world's poorest countries, war is
absorbing much of the money that could go for such basic commodities as
food and shelter. The costs of armies and weapons have also made it
impossible for many countries such as Eritrea to pay for more ambitious
projects: schools, highways, water and sewage works, and other utility
Worldwide, about $750 billion, or roughly $125 per person, was spent on
military costs last year. Although nearly one-third of that was spent by
the United States, the burden fell disproportionately on the poorest
countries that were least able to afford it.
Military expenditures represent about 44 percent of Eritrea's gross
national product, the highest such percentage in the world, according to
analysts' estimates of the nation's military spending. In the United
States, which spends more of its budget on arms than most countries do,
the comparable share is 3.4 percent.
The wars are also taking the would-be nation builders.
"Hundreds of thousands of young people are at the front,"
said Amanuel Ghebresellasie, the manager of Eritrea Railways, whose
project to rebuild a rundown colonial railroad from Massawa inland has
lost much of its trained labor to the battle trenches. "The young are
the most productive workers."
The war has taken a big toll. Eritrea's annual growth rate fell from 7
percent to 4 percent last year, and the economy this year will be close to
stagnation, Yemane Ghebremeskel, an adviser to President Isaias Afwerki,
Foreign investors have cooled on Eritrea: Several mining and petroleum
exploration projects are delayed. The government, which was proud of
reducing taxes set during Ethiopian rule, has added a 20 percent surtax to
pay for the war, boosting the personal tax rate to about 50 percent. The
savings rate has fallen, defaults on mortgages are increasing, and fewer
Eritreans are investing in new homes.
The evidence of the slowdown is painfully apparent in Massawa, the
nation's decrepit principal port that supplies the inland capital, Asmara.
At the $49 million Massawa Housing Complex, where the government is
building 536 upscale units, a retail and office center, and new provincial
and municipal offices, the war has put contractors one year behind
During the first panicked days of the war, foreign contractors ordered
their expatriate workers to leave Eritrea. And most Eritrean laborers
rushed to the border to fight the Ethiopians. The result: The sprawling
waterfront construction project lost all but 375 of its 4,000 employees.
The contractors have since trained some replacement workers, but the
project has only one-quarter of the staff it had a year ago.
Construction of the $160 million Hirigio Power Plant outside Massawa -
a project that will nearly double the nation's generating capacity - was
also stymied when legions of workers downed tools to go to the war front.
So many workers rushed off to fight that Afwerki exempted power plant
employees from war service.
"We had to bring some of them back from the war," the general
manager of the Eritrea Electric Authority, Abraham W. Micael, said.
"It's really amazing. Some wanted to go to the war so much that they
left during the night."
Eritrea is an unusual nation on a continent where many countries are
dependent upon international aid. The war instilled Eritreans with an
unassailable sense of self-reliance, discipline, order, and scorn for
Young Eritreans are committed to giving 18 months to national service,
much of it spent on public works projects to improve roads, irrigation, or
soil conservation. Crime and corruption are rare, drivers respect
pedestrians, homeowners keep their houses painted, and shop owners sweep
The Organization of African Unity, supported by Western nations,
including the United States, is attempting to broker a peace deal between
the two former allies.
Even if a truce is struck, the mistrust between the two nations will
So will the economic damage.
"People have less income," the credit manager for the Housing
and Commerce Bank of Eritrea, Tekle Ghebremedhin, said. "There's less
money available for loans. Construction has been delayed because of the
inability to import. It's going to take a couple of years for things to
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