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Ethiopia Eritrea Somalia Djibouti COUNTRY REPORT Ethiopia Eritrea Somalia Djibouti May 2000 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery This publication can be viewed by subscribing online at http://store.eiu.com/brdes.html Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office London: Jan Frost Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 New York: Alexander Bateman Tel: (1.212) 554 0643 Fax: (1.212) 586 1181 Hong Kong: Amy Ha Tel: (852) 2802 7288/2585 3888 Fax: (852) 2802 7720/7638 Copyright © 2000 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1352-2922 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK Contents 3 Summary Ethiopia 5 Political structure 6 Economic structure 8 Outlook for 2000-01 8 Political forecast 9 Economic policy outlook 9 Economic forecast 11 The political scene 14 Economic policy and the economy Eritrea 18 Political structure 19 Economic structure 20 Outlook for 2000-01 20 Political forecast 20 Economic outlook 21 The political scene 23 Economic policy and the economy Somalia 25 Political structure 26 Economic structure 27 Outlook for 2000-01 27 Political forecast 27 Economic outlook 28 Somaliland outlook 28 The political scene 31 Economic policy and the economy 33 News from the Somaliland Republic Djibouti 35 Political structure 36 Economic structure 37 Outlook for 2000-01 37 Political forecast 38 Economic outlook 38 The political scene 40 Economic policy and the economy EIU Country Report May 2000 © The Economist Intelligence Unit Limited 2000 2 List of tables 12 Ethiopia: Russian imports 16 Ethiopia: main exports 40 Djibouti: macroeconomic targets, 1999-2002 List of figures 15 Ethiopia: gross domestic product 24 Eritrea: gross domestic product 40 Djibouti: gross domestic product EIU Country Report May 2000 © The Economist Intelligence Unit Limited 2000 3 May 1st 2000 Summary May 2000 Ethiopia Outlook for 2000-01 Ethiopia continues to reject implementation details of the OAU peace initiative. Proximity talks between Eritrean and Ethiopian leaderships scheduled for May in Algiers are unlikely to ease tensions. The military situation remains extremely unstable. The war will overshadow federal elections scheduled for May 14th, which will be dominated by affiliates of the ruling EPRDF. Food shortages will be exacerbated if forecasts of poor harvests are confirmed. This will increase the numbers dependent upon emergency food supplies, with an estimated 8-12m people in need of aid. Food insecurity and a deteriorating fiscal position will not undermine the government’s determination nor its ability to prosecute the war. The political scene The military situation on the Ethiopian-Eritrean border remained deadlocked in the first four months of 2000. The diplomatic stalemate has also remained unchanged. Campaigning for Ethiopia’s May elections has been lacklustre, due to the ongoing war and urgent need for famine relief in many areas. Opposition groups have complained of harassment. Ethiopia’s former prime minister, Tamrat Layne, has been sentenced to prison on corruption charges. Economic policy and the Following a UN food assessment, Ethiopia’s disaster commission launched an economy appeal for 900,000 tonnes of cereals. Relations with donors have been strained over depletion of food reserves, delays in donor food appeals, war-related expenditure, and port usage. The war has muddied government finances. On May 12th Ethiopia launched a major offensive against Eritrean positions along the western front; fighting quickly moved to other fronts. After apparent major Ethiopian gains, there is a window of opportunity for renewed diplomatic efforts, but only after the fighting appears to be over. Eritrea Outlook for 2000-01 Diplomatic efforts are not expected to lead to any significant breakthroughs, and fighting could resume any time. Rains due in June/July may accelerate military operations. A drawn-out period of uncertainty, with resumption of war an ever-present threat, is likely to hurt Eritrea more than Ethiopia. Eritrea’s economy appears stalled. Most manpower is mobilised at the front. The political scene The 12th round of national service has begun. President Isaias has offered to allow Ethiopian food aid to come through Assab. Diplomatic ties have been resumed with Djibouti. Refugees in Sudan have been repatriated. Economic policy and the Food prices have begun to rise. Nearly one-third of the population will require economy food aid. The Massawa power project has received an EU loan. EIU Country Report May 2000 © The Economist Intelligence Unit Limited 2000 4 Somalia Outlook for 2000-01 Prospects for peace are still very poor. Fresh rounds of fighting between rival clan factions have erupted throughout central and southern Somalia, even in areas that had been relatively peaceful of late. The Djibouti reconciliation initiative appears bound to fail. Based on the 1999 gul harvest assessment in Somalia, an estimated 1.2m people are at risk of serious food insecurity in 2000. The political scene Djibouti’s reconciliation conference has been put back. The Mogadishu administration has split. There has been more violence in Mogadishu, Puntland and central and southern regions. Ethiopian troops have been active inside Somalia. Economic policy and the The World Food Programme (WFP) has warned that a major famine looms in parts economy of the south if the main rainy season fails. Insecurity has continued to hamper the aid effort. Health conditions have deteriorated, but some NGOs have returned. Refugees from Kenya have been repatriated. Bossasso’s power plant is planned to be refurbished. News from the Somaliland Relations with Djibouti have been strained over Somaliland’s rejection of the Republic reconciliation conference. Confrontations with Puntland have continued. A budget for 2000 has been announced. Djibouti Outlook for 2000-01 President Guelleh will continue to push for a Somali reconciliation conference, overshadowing Djibouti’s troubled domestic politics, in which Mr Guelleh’s authoritarian rule will continue to be contested. Mr Guelleh is likely to use the return of an exiled FRUD leader to further divide domestic political critics. It is likely that Djibouti will be unable to meet the timetable outlined in the economic reform strategy, resulting in disappointing levels of growth. The political scene The government has signed an unexpected peace deal with Ahmed Dini in Paris. Several FRUD detainees have been released, and Mr Dini has returned to the country. However, the political details of the agreement have yet to be decided. Relations with Somaliland have deteriorated, but they have warmed with Eritrea. Economic policy and the A policy framework paper has been published outlining the government’s economy reform timetable, but it appears to be over ambitious. Djibouti’s port is benefiting from an influx of food aid bound for its neighbours, but the situation is creating strains with Ethiopian traders. Djibouti itself has been estimated to have some 100,000 people requiring food assistance. Editor: Todd Moss Editorial closing date: May 1st 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule EIU Country Report May 2000 © The Economist Intelligence Unit Limited 2000 Ethiopia 5 Ethiopia Political structure Official name Federal Democratic Republic of Ethiopia Form of state Federal republic Legal system The federal constitution was promulgated by the transitional authorities in December 1994. In May 1995 representatives were elected to the institutions of
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