econoimccauses

After Eritrea formally won its independence from Ethiopia both nations preserved most of its economic ties established prior to 1993.
These economic ties have become a burden at the time of a separation
of two nations. The main areas of conflict were as follows:

Eritrea's new currency
Nakfa

In 1997 Eritrea introduced its own currency, the Nakfa, that was unwelcome by Ethiopia which felt threatened by this new Eritrean policy.
Eritrea, however, believed in its right to terminate the hitherto used Ethiopian currency, the Birr. As a result, the economic tensions have been considerably intensified.
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The ports

Since the separation of both nations the use of the two ports, Assab and Massawa located on the Eritrean territory has brought forth disagreement between the two countries. While Ethiopia felt abused in terms of paying
too high fees, under Eritrea's eyes the Ethiopian authorities took too much advantage of their use of ports. In consequence, Ethiopia renounced the use of Eritrean ports replacing them by the port of Djibouti.
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Divergent economic
strategies

Both countries perceived one another's trade policies as standing in
an opposition with each other. Diverse trade patterns as well as taxation
have remarkably deepened the gulf between two states. Ethiopia's perception of Eritrean undeveloped economy persuaded Ethiopian authorities into believing that the real cause of the invasion was Eritrea's
economic rivalry.
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Homepage I Causes of War I Territorial I Economic I Nakfa
Divergent economic policies I The ports
International Involvement I US role I Peace negotiations
Aftermath of war I Bibliography I Related Sites