The Forgotten Wars
Last of three parts

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 services.

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, said.

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 schedule.

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 outside assistance.

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 their sidewalks.

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 linger.

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 straighten out."