The EPLF has systematically stripped Eritrea of any trace of the former regime. The battlefields around Dekemhare, Ghinda and Keren have been meticulously cleaned of debris. The word `Ethiopia’ has been effaced from every public building. Ethiopian Airlines, whose daily flights from Asmara to Addis Ababa are fully booked until next year, have had their Asmara office and airport installations painted in the blue and green of the Eritrean flag.

While the EPLF insists on a separate international telephone code, such acts of symbolic chauvinism are gradually giving way to a pragmatic acceptance that the future viability of an independent Eritrea will be largely dependent on its economic integration with northern Ethiopia. The EPLF envisages the possibility of a trading block incorporating Djibouti, Eastern Sudan and northern Ethiopia, the natural hinterland for Massawa which, like Assab, will become a free port for goods in transit. The Addis Ababa authorities are also keen on regional integration: on September 20, they lifted visa requirements for Sudanese and Djiboutians.

Grandoise talk of a separate currency, or of Eritrea as the future Taiwan of the Red Sea, is hardly shared by the head of the newly created Department of Economic Planning and Coordination, Haile Wolde Tinsai, who has more pressing and prosaic problems. The EPLF alleges that bank records show that 500 million birr on deposit in Asmara were transferred to Addis Ababa prior to May. Eritreans are still able to draw only small sums of birr from the few banks offering a limited service. A 150 million birr donation from the Ethiopian government to the EPLF, announced in early September, temporarily eased their financial predicament, but Eritrea remains desperately short of foreign exchange. Eritrea’s annual fuel bill put at around US$40 and $60 million is required immediately to resurrect Asmara’s rudimentary industrial infrastructure. Remittances from Eritreans abroad cover only a fraction of total financial needs. The most significant source of investment capital – from Eritrean residents in Ethiopia – will remain largely inaccessible until current doubts over the devaluation of the birr are lifted. The EPLF has not, as widely believed, devalued the birr in Eritrea; nor could it, as it has no leverage over Ethiopian banks.

The EPLF’s representatives in Addis Ababa, Haile Menkarios, is excluded from negotiations between the Finance Ministry, the National Bank of Ethiopia and the International Monetary Fund over the conditions for future aid to Ethiopia. While World Bank project aid may be earmarked for Eritrea (a feasibility study for upgrading Assab’s facilities is continuing), until the referendum the EPLF will remain dependent on Ethiopia’s good offices for links with international institutions. Eritreans did not join the 10-member Ethiopian delegation at the World Bank and International Monetary Fund annual meeting in Bangkok. As yet, Western governments are distinctly cool about committing consuls to Asmara.

Any international aid will be largely devoted to agriculture. The EPLF plans widespread privatizations, with foreign investment actively sought in developing tourism and exploiting proven mineral resources, notably copper. British Petroleum and Amoco both bid successfully for oil concessions along the Danakil coast from the Ethiopian government in March 1989, and are now in the process of renegotiating their mineral rights with the EPLF.

The EPLF will retain the free services of its troops until after the referendum, thus minimizing the its expenditure and avoiding an aggravation of either unemployment or growing income disparities. These are all the more evident as property prices spiral upwards and well-heeled, educated exiles return from Saudi Arabia, Europe and the United States.

Excerpted from Africa Confidential