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Ethiopia Eritrea Somalia Djibouti COUNTRY REPORT Ethiopia Eritrea Somalia Djibouti The full publishing schedule for Country Reports is now available on our website at http://www.eiu.com/schedule. 4th quarter 1999 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 subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; 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 EIU Electronic New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 This publication is available on the following electronic and other media: Online databases NewsEdge Corporation (US) Microfilm FT Profile (UK) Tel: (1.718) 229 3000 World Microfilms Publications Tel: (44.20) 7825 8000 (UK) DIALOG (US) CD-ROM Tel: (44.20) 7266 2202 Tel: (1.415) 254 7000 The Dialog Corporation (US) LEXIS-NEXIS (US) SilverPlatter (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.20) 7930 6900 Copyright © 1999 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 7 Outlook for 2000-01 9 The political scene 11 Economic policy and the economy Eritrea 17 Political structure 18 Economic structure 19 Outlook for 2000-01 20 The political scene 22 Economic policy and the economy Somalia 25 Political structure 26 Economic structure 27 Outlook for 2000-01 28 The political scene 34 Economic policy and the economy 35 News from the Somaliland Republic Djibouti 37 Political structure 38 Economic structure 39 Outlook for 2000-01 40 The political scene 42 Economic policy and the economy 45 Quarterly indicators and trade data List of tables 12 Ethiopia: macroeconomic indicators, official estimates 15 Ethiopia: coffee export earnings 42 Djibouti: macroeconomic targets, 1999-2002 EIU Country Report 4th quarter 1999 © The Economist Intelligence Unit Limited 1999 2 45 Ethiopia: quarterly indicators of economic activity 45 Djibouti: quarterly indicators of economic activity 46 Ethiopia: foreign trade 46 Djibouti: foreign trade 47 Somalia: trade with major trading partners 47 Djibouti: trade with major trading partners List of figures 11 Ethiopia: gross domestic product 22 Eritrea: gross domestic product 42 Djibouti: gross domestic product EIU Country Report 4th quarter 1999 © The Economist Intelligence Unit Limited 1999 3 29th October 1999 Summary 4th quarter 1999 Ethiopia Outlook for 2000-01 The current OAU-initiated peace process to end the war with Eritrea will remain stalled, as mutual mistrust is high and both sides appear to be preparing for more fighting. Federal elections are scheduled for May 2000, but they are unlikely to impact the political scene. The war will prevent an agree- ment for a new economic programme with the IMF and any new donor commitments. The medium-term outlook for the economy will continue to depend upon the main harvest. The political scene Ethiopia has rejected the latest technical arrangements of the OAU peace plan. International efforts to push the plan have continued. Limited fighting with Eritrea has resumed, while both sides have continued to aid opposing Somali militias. The government has said all remaining Eritrean citizens must register. Economic policy and the The IMF and Ethiopia have concluded Article IV consultations. A public expen- economy diture review has been completed, which has attempted to calculate the costs of the war. A privatisation plan for 1999-2001 has been outlined. The power and telecoms sectors have been opened to foreign investment. Coffee earnings and volumes have declined. Sugar and vegetable exports have shown promise. Initial signals for the main crop harvest have been mixed, as food security has remained a problem. Eritrea Outlook for 2000-01 The lull in fighting with Ethiopia is highly likely to end in the near future, as the rains have eased and a diplomatic solution remains remote. The immediate economic consequences of the war will continue to take a toll, while the impact on the economy over the longer term could also be substantial. The political scene Minor clashes with the Ethiopian forces have occurred. There have been signs that both sides are preparing for renewed conflict. The OAU plan appears to have stalled. Relations with Sudan have cooled again over the issue of harbour- ing opposition groups. Eritrea has had a diplomatic row with Malawi, and has opened an embassy in Libya. Economic policy and the The economy appears to have stagnated. The port at Massawa has reported economy that it is running well below capacity. Labour shortages have delayed several development projects. The World Bank has suspended fresh lending. Ethiopia has sued Eritrea over goods stranded when the war broke out. Shortages of food supplies have been reported. Some limited mining activity has continued. EIU Country Report 4th quarter 1999 © The Economist Intelligence Unit Limited 1999 4 Somalia Outlook for 2000-01 The arrival of new arms shipments indicates that violence between clan factions will escalate. International efforts at reconciliation will remain stalled. Islamic courts will increasingly challenge the clan militias. Food shortages will be a problem, especially in the southern regions. Somaliland’s case for some form of international recognition will grow stronger. The political scene Fierce fighting has continued in the central and southern regions. Ethiopian- backed militias have targeted Qoroley and Balidogle airport. General Morgan’s whereabouts have remained unknown. Ethiopia and Eritrea have continued to supply Somali militias with support and arms. Three aid workers have been killed, prompting a series of peace marches, but also threatening the future of humanitarian assistance. Islamic courts have pacified some neighbourhoods of Mogadishu, but security has remained a problem. A new pro-peace political party has been formed, while a new coalition has emerged in Puntland. Djibouti’s president, Ismael Omar Guelleh, has attempted to put Somalia back on the UN’s agenda. Economic policy and the More bank-notes have arrived in the country, driving up local prices. One of economy Mogadishu’s airports has been re-opened. Food shortages have been reported in southern regions. Puntland has faced weather-related disruptions of trade. News from the Somaliland President Mohamed Ibrahim Egal has travelled to New York and Washington, Republic DC to seek some form of recognition from the UN and US government. The Sanaag region has opted to join Somaliland. Berbera port and Hargeisa airport have been renovated. Djibouti Outlook for 2000-01 The government’s authoritarian response to criticism will continue, but France and other donors could press for improving human rights conditions in the country. Much-needed economic reform will likely be piecemeal. The political scene President Guelleh has attacked the press and arrested his primary political opponent. Security problems have continued, including the temporary closure of the railway to Ethiopia. The president has addressed the UN General Assembly. Economic policy and the The IMF has approved a three-year ESAF worth $26.5m. The government has economy set optimistic macroeconomic targets, while reforms have centred on the civil service and privatisation programme. Donors have reported food shortages. France has closed a trade office, but a foreign investor may buy the Sheraton hotel. Editor: Todd Moss All queries: Tel: (44.20) 7830 1007 Fax: (44.20) 7830 1023 Next report: Our next Country Report will be published in February EIU Country Report 4th quarter 1999 © The Economist Intelligence Unit Limited 1999 Ethiopia 5 Ethiopia Political structure Official name Federal Democratic Republic of Ethiopia Form of state Federal republic Legal system The federal constitution was
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