Economy will be hurt by crackdown on dissidents

Desperately in need of foreign aid for a vast variety of development projects, Eritrea's recent crackdown on dissidents could hurt its economy, the Economist Intelligence Unit (EIU) warned on Wednesday. In a worst-case scenario, GDP growth would be highly unlikely to reach one to two percent. According to the EIU, the crackdown, to which a large number of government critics and journalists have fallen victim, largely reflects the kind of domestic turmoil which had been expected to occur after the end of the Eritrea-Ethiopia war in December 2000.

"With the Ethiopians more or less safely separated by 4,200 UN peacekeepers, Eritrea's politicians have begun to turn to issues of democracy and good governance within the country. The detention in September of leading members of the ruling People's Front for Democracy and Justice, after they signed an open letter criticising President Isayas Aferwerki, and calling for improved transparency, has been followed by the closure of all the country's private newspapers. Although these events clearly do not bode well for democracy, the real damage may be to the economy," the EIU's latest country briefing on Eritrea states.

Although World Bank funding and humanitarian projects under the European Union are likely to continue, project funds dedicated to improving infrastructure, rebuilding hospitals and schools, and providing technical support for various government agencies could fail to materialise. Remittances from Eritreans living abroad - which are the largest source of current transfer inflows in the balance of payments - could also be affected if Eritreans living abroad began to think their government was becoming undemocratic, the EIU said.