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Ethiopia Eritrea Somalia Djibouti COUNTRY REPORT Ethiopia Eritrea Somalia Djibouti 4th quarter 1997 The Economist Intelligence Unit 15 Regent Street, 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 Street 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: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 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 Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (US) Tel: (44.171) 266 2202 DIALOG (US) SilverPlatter (US) Tel: (1.415) 254 7000 LEXIS-NEXIS (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1997 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 1 Contents 3 Summary Ethiopia 5 Political structure 6 Economic structure 7 Outlook for 1998-99 8 Review 8 The political scene 11 The economy 13 Agriculture 13 Foreign trade and payments Eritrea 15 Political structure 16 Outlook for 1998-99 16 Review 16 The political scene 19 The economy Somalia 22 Political structure 23 Economic structure 24 Outlook for 1998-99 25 Review 25 The political scene 29 The economy 29 News from the Somaliland Republic Djibouti 32 Political structure 33 Economic structure 34 Outlook for 1998-99 35 Review 35 The political scene 38 The economy 41 Quarterly indicators and trade data EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 2 List of tables 41 Ethiopia: quarterly indicators of economic activity 41 Djibouti: quarterly indicators of economic activity 42 Ethiopia: foreign trade 42 Djibouti: foreign trade 43 Somalia: trade with major trading partnersa 43 Djibouti: trade with major trading partnersa List of figures 7 Ethiopia: gross domestic product EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 3 December 1st 1997 Summary 4th quarter 1997 Ethiopia Outlook for 1998-99: Economic growth in 1998 will be slower than forecast owing to the current, poor main-crop harvest which will depress economic growth in 1997/98. The introduction of new birr notes in the wake of Eritrea’s creation of a separate currency will create some problems but is unlikely to have a detrimental impact upon the economy. Divisions within the compo- nents of the ruling EPRDF will remain of more significance than the country’s small urban opposition parties. Review: Clandestine negotiations between the government and the OLF have collapsed. The regional governments in both Region 2 (Afar) and Region 5 (Somali) are still embroiled in internal wrangles. The French foreign minister has visited. The armed forces may be allowed to engage in private trade. New birr currency notes are being issued. Electricity rationing has been introduced. A second foreign company is to invest in a new brewery. Late rains have hit the grain crop. Germany has cancelled 80% of Ethiopia’s bilateral debt Eritrea Outlook for 1998-99: Relations with Sudan will remain problematic, with a continued threat of military confrontation, while the unresolved issue of drill- ing rights in the Red Sea will lead to a deterioration of relations with Yemen. The parity of the new currency with the Ethiopian birr may prove hard to sustain. More foreign oil exploration is likely. Review: The risk of military clashes between Eritrea and Sudan has height- ened with reports of skirmishes inside Eritrea. The dispute with Yemen over the Hanish islands has gone to an international tribunal. The development of regional links has been a focus of foreign policy, including in the Great Lakes Region. A national currency has been introduced. More foreign companies have submitted bids for oil exploration licences. Multilateral and bilateral aid has been agreed for port and fishing development. Nine government com- panies are up for sale. Somalia Outlook for 1998-99: The momentum of the peace process is picking up, although small-scale fighting will continue in regions outside Mogadishu, par- ticularly Bay and Bakool. Severe floods will result in a serious food deficit next year and Somalia will remain dependent on international aid. Somaliland will not negotiate on its independence, a stand which will be reinforced if, as is rumoured, it receives diplomatic recognition in 1998. Review: Intense diplomatic efforts have continued with the aim of getting the three main faction leaders to a reconciliation conference. Despite misgivings about the Sodere peace process, because of Ethiopia’s involvement, Mr Aideed did attend preparatory talks in Cairo. The last quarter has seen relative peace between the main militias in Mogadishu. In other regions fighting has con- tinued and many of the remaining aid workers have left. Widespread floods have hit the south, making some 800 000 people made homeless. The Somaliland Republic has refused to engage in the Sodere peace process. EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 4 The cabinet has been reshuffled. Denmark’s parliament blocks a proposed aid package. Djibouti Outlook for 1998-99: December’s legislative elections will result in victory for the ruling party, consolidating Ismael Omar Guelleh’s hopes of the pres- idential succession. Military co-operation with Ethiopia is likely to strengthen. Demobilisation of the army will proceed slowly, suggesting that budgetary targets will not be met. Review: FRUD militia loyal to the exiled Ahmed Dini have clashed with government troops in the north, prompting closer military co-operation between Djibouti and Ethiopia, with the latter expelling Djiboutian Afar activ- ists. Rifts within the opposition parties will aid the ruling RPP in the legislative elections. Djibouti has introduced visa requirements for French nationals. Demobilisation of some 8,500 military personnel is due by the end of 1998. Air Djibouti has been transferred to a private company. Editor: Piers Haben All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 4th quarter 1997 © The Economist Intelligence Unit Limited 1997 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. Representatives were elected to the institutions of the new republic in May 1995, which formally came into operation in August 1995 National legislature The 548-member Council of Peoples’ Representatives is the federal assembly. Nine regional State Councils have limited powers, including that of appointing the supervisory Federal Council National elections June 1994 (Constituent Assembly); May 1995 (federal and regional); next elections due by 2000 (federal and regional) Head of state President, Negaso Gidada, largely ceremonial and appointed by the Council of Peoples’ Representatives National government The prime minister and his cabinet (Council of Ministers), appointed in August 1995 Main political parties The Ethiopian People’s Revolutionary Democratic Front (EPRDF) has evolved from the coalition of armed groups that seized power in 1991. It includes the Tigray People’s Liberation Front (TPLF) and the Amhara National Democratic Movement (ANDM, formerly the Ethiopian People’s Democratic Movement). The Oromo Liberation Front (OLF) withdrew from the transitional government in 1992 and was subsequently banned. Several urban opposition parties boycotted the elections in 1995. A myriad of exiled political factions exist Prime minister Meles Zenawi Deputy prime minister & minister of defence Tefera Walwa Deputy prime minister for economic affairs Kassu
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