Country summary report
Eritrea
5.1 What country case is it?
Classification – foreign policy dictates aid relationships
Eritrea differs from the other four case countries – Botswana, India, Malawi and South Africa – in the combination of the following fac- tors:
Eritrea has exercised strong political ownership in the dialogue with donors despite its dependency on aid and fragile geopolitical situa- tion;
Eritrea’s aid relationships with western donors have, to a major extent, been subordinated to foreign policy concerns and determined by fac- tors not related to aid effectiveness or development policy per se; Despite its effective use by Eritrean institutions, aid could not be sustained in an environment of political posturing on both sides of the relationship. Three of the four commissioning donors, Norway being the exception, have de facto phased out bilateral aid.
Eritrea is by no means a unique case in foreign policy concerns overrid- ing aid policy objectives, but it is fair to say that Eritrea has been par- ticularly vulnerable. It is indeed remarkable how aid relations have turned from warm to cold over a short time span. Praise for Eritrea as a •
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development partner runs very high in donor reports at times, while only shortly after the country was discredited as a legitimate partner for aid.
The Eritrea case study43 (reference + weblink) firstly looks at how the
four donors – Denmark, the Netherlands, Norway and Sweden – have handled their aid relations with Eritrea after the country gained inde- pendence in 1993. Despite the declared like-mindedness of the four donors in terms of aid policies and similarly enthusiastic acclamations of the new Eritrean regime and its developmental ambitions, the trajec- tories of the four aid relationships turned out quite differently. This serves to illustrate the difficult and uneasy relationship between foreign policy and development aid. Denmark and Sweden terminated bilateral aid in 2002, the Netherlands placed aid on the backburner, while Nor- way attempted to increase its aid portfolio in the same period.
Secondly, this study looks at the consequences of the Danish exit in more detail. The Danish phase out of two large programmes in the agriculture and education sectors was clearly the most dramatic – from an Eritrean perspective. It represented not only a major financial chal- lenge to the sector ministries concerned (especially agriculture), but was seen as a fundamental breach of trust and disregard for principles of development partnerships.
Governance – tightening the control
Eritrea gained independence in 1993, after 30 years of armed struggle against Ethiopia, when the Ethiopian ally of the Eritrean People’s Lib- eration Front (EPLF) – a coalition of Ethiopian resistance movements – overpowered the Mengistu regime. However, relations with Ethiopia soon deteriorated again leading to the border war in 1998–2000, which left tens of thousands dead. Following the internationally brokered ceasefire, internal discontent with President Isaias Afewerki and the one-party government came to the fore. This triggered a clamp down on the opposition and the media and a reversal of previous commit- ments to democratisation and economic liberalisation.
Political and diplomatic relations with the West have since worsened. From having called the country “a beacon of hope”, the US govern- ment in 2007 sent warnings that it could add Eritrea to its list of rogue states, alongside countries like Iran, North Korea and Cuba. The rea- son for this turnaround was only partly due to the regime’s violations of human rights. Eritrea is accused of providing a safe heaven for leaders of alleged terrorist organisations in the region. What matters for this study is that the image of Eritrea among western donors has shifted
43 This summary contains edited excerpts from the Country Report. The authors of the Synthesis Report in some instances have added new information. For the purpose of comparability between the five country case studies particular findings and lessons have been highlighted.
from one of a promising new development partner to a fragile state playing a risky geopolitical game.
Eritrea has been praised for its committed and corruption free civil service, which largely remains true until today, but the worsening econ- omy and the exodus of educated people severely hamper development cooperation; as do the tightening of internal security, increasing cen- tralisation of power and lack of transparency in public finance.
Economic development – poverty and lack of growth prevails
The combined effects of the border war with Ethiopia, a series of droughts, and the reversal of political and economic liberalisation have had a severe effect on the country’s economic growth. Current eco- nomic activity is characterised by increasing domination of the econo- my by state- and party-owned enterprises. Eritrea remains among the poorest countries of the world. One third of its people live below the food poverty line, and in 2003 food aid covered most of its food needs – in terms of proportion, more than in any other country in the world.
Level of aid dependence – high but fragile
The average ODA per capita for Sub-Saharan Africa in 2005 was about USD 42, while for Eritrea it amounted to about USD 8144; as much as
40 percent of ODA committed from 1993 to 2003 was humanitarian assistance. As seen in Figure 5.1 there was a steady build-up of aid dis- bursements until 2005, when a drastic reduction is recorded in the OECD-DAC database. Total aid commitments (grants and loans) also plummeted in 2006 – to almost half the level of the previous year. There was a peak of commitments in response to the humanitarian crisis after the border war.
New commitments in recent years mainly come from multilateral sources – World Bank, European Union and African Development Bank – with bilateral partners reducing their involvement. Following the World Bank, the United States was the major donor since independ- ence, followed by Italy; Norway ranks fifth followed by the Netherlands and Denmark. However, aid relations with the US have now almost ceased, confirming the highly politicised context of development part- nerships in the region.
44 Human Development Report 2007/2008, uNDP.
Figure 5.1 Net ODA disbursements for Eritrea 1997–2006
Source: OECD – DAC database www.oecd.org Main features of aid from the four donors
The following table presents some of the main characteristics and trends of the involvement of the four donors in Eritrea:
Table 5.1 Overview of the involvement of the four donors
Denmark Netherlands Norway Sweden
Embassy Closed in 2002 yes yes Ambassador
Stockholm-based Trends in bilateral aid volume See Figure 5.2 Rapid increase, until dramatic fall since 2002 See Figure 5.3 Increasing flows until major drop in disbursement in 2002 See Figure 5.4 Reduced flows during border war, higher and consistent level after 2002
See Figure 5.5 ups and downs – first in 1995/96 and second since 2002 Main sectors Agriculture, education and legal sector Governance, agriculture, fisheries and education Good govern- ance, humani- tarian aid and rehabilitation Energy, education, research and public administration Main aid modalities Project and sector pro- gramme support Project sup- port and prepa- ration of sector support Project support Project support Non-aid
relations Denmark totally phased out bilateral relations Retaining Embassy despite scaling down of aid; decision to close Embassy made in late 2007 Playing a role in peace proc- esses on the Horn of Africa Effort to develop new areas of cooperation with a mission in 2002
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New commitments in recent years mainly come from multilateral sources – World Bank, European Union and African Development Bank – with bilateral partners reducing their involvement. Following the World Bank, the United States were the major donor since independence, followed by Italy; Norway ranks fifth followed by the Netherlands and Denmark. However, aid relations with the US have now almost ceased, confirming the highly politicised context of development partnerships in the region.
Figure V.1 Net ODA disbursements for Eritrea 1997-2006
ODA - net disbursement
0 50 100 150 200 250 300 350 400 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Years U SD m ill io ns Total ODA Bilateral Multilateral
Source: OECD – DAC database www.oecd.org
Main features of aid from the four donors
The following table presents some of the main characteristics and trends of the involvement of the four donors in Eritrea:
Denmark – up and out
Eritrea was granted the status of programme country in 1993. In 1996, the agriculture and education sectors were selected as priority sectors for Danish development cooperation, and in 2001 an agreement to de- velop the legal sector was signed.
Denmark became the main donor in the education sector. The agreement in 1996 outlined a 13-year programme consisting of a three- year pilot phase to be followed by two five-year phases. The last phase never materialised because of Denmark’s exit decision. Danish coop- eration focused on the development of human capital resources in Eri- trea with a major part of the budget going to capacity building, techni- cal and vocational education, and training and curriculum development (over 60 percent in total).
In 1996, a similar agreement for the agriculture sector was signed, envisaging two five-year phases. Only the first phase was completed. The cooperation focused on strengthening Eritrea’s internal capacity to administer a sector programme, in which the Ministry of Agriculture (MoA) would be responsible for the planning and implementation of the agricultural development activities.
The agreement for support to the legal sector covered the period 2002-2005. It was abruptly terminated in October 2003 with 70 per- cent of funds remaining unspent. Figure 5.2 below describes the dra- matic rise and fall of the Danish-Eritrean partnership.
Figure 5.2 Danish bilateral assistance to Eritrea 1991–2006
Source: Ministry of Foreign Affairs, Statistical Office Netherlands – fizzling out
Dutch bilateral development cooperation with Eritrea started in 1993 with a wide variety of rehabilitation and reconstruction projects in de- mobilisation and training (police), agriculture, fisheries and emergency
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Figure V.2 Danish bilateral assistance to Eritrea 1991-2006
Danish bilateral assistance to Eritrea 1991-2006 Annual disbursements 0 20 40 60 80 100 120 140 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 D K K m ill io ns
Source: Ministry of Foreign Affairs, Statistical Office Netherlands – fizzling out
Dutch bilateral development cooperation with Eritrea started in 1993 with a wide variety of rehabilitation and reconstruction projects in demobilisation and training (police), agriculture, fisheries and emergency food aid. Eritrea was granted partnership country status in 1999, making it eligible for sector support. Preliminary talks were held on the scope and manner of sector support but financial commitments were put on hold, mainly because of the border war. Subsequently, the Netherlands largely continued with the bilateral projects initiated during the period 1993-1999.
In 2001, with the ceasefire agreement in place, discussions on a sector-wide approach were resumed, and the Eritrean government requested Dutch involvement in the education sector and good governance. Actual disbursements then doubled for a few years, in large part (almost 60 percent) due to emergency aid through UN organisations (WFP, UNHCR, UNDP/UNICEF).
Further discussions were put on hold again in 2002/2003, as there was no improvement in Eritrea’s political situation as perceived by the international community. In 2003, the Dutch budget stood at Euro 8 million, but actual disbursements dropped dramatically and have not picked up since.
food aid. Eritrea was granted partnership country status in 1999, mak- ing it eligible for sector support. Preliminary talks were held on the scope and manner of sector support but financial commitments were put on hold, mainly because of the border war. Subsequently, the Neth- erlands largely continued with the bilateral projects initiated during the period 1993–1999.
In 2001, with the ceasefire agreement in place, discussions on a sec- tor-wide approach were resumed, and the Eritrean government re- quested Dutch involvement in the education sector and good govern- ance. Actual disbursements then doubled for a few years, in large part (almost 60 percent) due to emergency aid through UN organisations (WFP, UNHCR, UNDP/UNICEF).
Further discussions were put on hold again in 2002/2003, as there was no improvement in Eritrea’s political situation as perceived by the international community. In 2003, the Dutch budget stood at Euro 8 million, but actual disbursements dropped dramatically and have not picked up since.
Figure 5.3 Dutch bilateral assistance to Eritrea 1993–2006
Source: Various reports, Ministry of Foreign Affairs Norway – staying in
Norwegian NGOs (especially missionary organisations and Norwegian Church Aid) have had a long relationship with Eritrea that had already started before the country’s independence. In the 1990s, Norwegian bi- lateral development assistance to Eritrea covered a broad array of smaller projects dealing with social and economic development, demo- cratic development and natural resource management. In 1999, with
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Figure V.3 Dutch bilateral assistance to Eritrea 1993-2006
Source: Various reports, Ministry of Foreign Affairs
Norway – staying in
Norwegian NGOs (especially missionary organisations and Norwegian Church Aid) have had a long relationship with Eritrea that had already started before the country’s
independence. In the 1990s, Norwegian bilateral development assistance to Eritrea covered a broad array of smaller projects dealing with social and economic development,
democratic development and natural resource management. In 1999, with the border war, Norway reduced disbursements on all regular government-to-government agreements, and funds were transferred to humanitarian aid. From 2000 onwards, Norwegian aid to Eritrea has particularly focused on humanitarian aid and support for rehabilitation, and good governance.
Figure V.3 shows that Norway reacted to the ceasefire agreement by raising its level of aid. This reflected Norway’s ambition to play a leading role in resolving the security issues in the Horn of Africa. Norway was a member of the UN Security Council at the time (2001-2002). Since then Norway has emphasised the need to keep aid commitments at a stable level. From 2004 onwards, Norwegian aid to Eritrea has been relatively steady at some NOK 120 million annually (or about USD 18 million), about half of which is humanitarian aid, but disbursements have shown a slightly downward trend. The reason for this is an increase in operational problems in aid partnerships in Eritrea generally due to less transparency and freedom of interaction.
Dutch bilateral assistance to Eritrea 1993 -2006 Annual disbursements 0 2 4 6 8 10 12 14 1993-1999 annual average 1999-2002 annual average 2003 2004 2005 2006 Eu ro millions
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ANNEx 5the border war, Norway reduced disbursements on all regular govern- ment-to-government agreements, and funds were transferred to hu- manitarian aid. From 2000 onwards, Norwegian aid to Eritrea has par- ticularly focused on humanitarian aid and support for rehabilitation, and good governance.
Figure 5.3 shows that Norway reacted to the ceasefire agreement by raising its level of aid. This reflected Norway’s ambition to play a lead- ing role in resolving the security issues in the Horn of Africa. Norway was a member of the UN Security Council at the time (2001-2002). Since then Norway has emphasised the need to keep aid commitments at a stable level. From 2004 onwards, Norwegian aid to Eritrea has been relatively steady at some NOK 120 million annually (or about USD 18 million), about half of which is humanitarian aid, but disbursements have shown a slightly downward trend. The reason for this is an in- crease in operational problems in aid partnerships in Eritrea generally due to less transparency and freedom of interaction.
Figure 5.4 Norwegian bilateral assistance to Eritrea 1992–2006
Source: Norad, Statistical Office Sweden – ups and downs
The relationship with Sweden has gone through frequent ups and downs, standing at an all time low today. Relations between Eritreans and Swedes go back to the independence struggle, and the Eritrean di- aspora in Sweden is among the largest in Europe. However, soon after Sweden started its bilateral relations with Eritrea in 1993, aid (mostly disaster relief grants) was frozen in 1994 because of disagreements over an asylum question concerning Eritrean refugees in Sweden.
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Figure V.4 Norwegian bilateral assistance to Eritrea 1992-2006
Norwegian bilateral assistance to Eritrea 1992-2006 Annual disbursements 0 20 40 60 80 100 120 140 160 180 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 N O K m ill io ns
Source: Norad, Statistical Office
Sweden – ups and downs
The relationship with Sweden has gone through frequent ups and downs, standing at an all time low today. Relations between Eritreans and Swedes go back to the independence struggle, and the Eritrean diaspora in Sweden is among the largest in Europe. However, soon after Sweden started its bilateral relations with Eritrea in 1993, aid (mostly disaster relief grants) was frozen in 1994 because of disagreements over an asylum question concerning Eritrean refugees in Sweden.
With a new Swedish government in power in 1996, the parties agreed to resume cooperation and started to establish a fully-fledged country programme. Sweden entered into negotiations on a Memorandum of Understanding, largely guided by Eritrea’s lack of political plurality. The process was arduous and resulted in “an agreement of mistrust”, as one Swedish official involved commented. The MoU signed in September 1997 was made valid only until the end of 1998, when it was extended for another year.
From 1997 until 2001, Swedish aid to Eritrea steadily increased from SEK 20 million to about SEK 75 million with a focus on energy, education, research and public
administration. Overall, the implementation of Swedish bilateral development projects was slow except for in the research sector. Starting in 2002, however, Swedish aid dropped considerably to an average of SEK 20 million per annum, with bilateral aid phasing out and most of the funds now being channelled through a NGO, Norwegian Church Aid, mainly for humanitarian assistance.
With a new Swedish government in power in 1996, the parties agreed to resume cooperation and started to establish a fully-fledged country programme. Sweden entered into negotiations on a Memorandum of Understanding, largely guided by Eritrea’s lack of political plurality. The process was arduous and resulted in “an agreement of mistrust”, as one Swedish official involved commented. The MoU signed in Septem- ber 1997 was made valid only until the end of 1998, when it was ex- tended for another year.
From 1997 until 2001, Swedish aid to Eritrea steadily increased from SEK 20 million to about SEK 75 million with a focus on energy, educa- tion, research and public administration. Overall, the implementation of Swedish bilateral development projects was slow except for in the research sector. Starting in 2002, however, Swedish aid dropped consid- erably to an average of SEK 20 million per annum, with bilateral aid phasing out and most of the funds now being channelled through an NGO, Norwegian Church Aid, mainly for humanitarian assistance. Figure 5.5 Swedish bilateral assistance to Eritrea 1991–2006
5.2 Exit decisions and planning – different responses
to political challenges
In fact, only Denmark and Sweden took clear exit decisions. The main characteristics are summarised in the following table:
Joint Evaluation of Aid Exit and Transformation Management