Eritrea's Economy: Ideology and Opportunity

By Seth Kaplan | Atlantic Council

EXECUTIVE SUMMARY

Eritrea is often in the news for all the wrong reasons: its high rates of migration to Europe (it has sent more refugees to Europe in recent years than any other African nation), its conflicts with neighboring Ethiopia and Djibouti, and controversy over its mandatory and indefinite national service conscription program. Human rights activists, in particular, have long singled out the country for criticism, calling it “the North Korea of Africa.” The inappropriateness of that comparison is increasingly recognized—but misunderstandings about the nature of the Eritrean regime continue to abound.

A substantive comparative analysis of Eritrea and other socialist nations will dispel many of the myths of Eritrean “exceptionalism,” in the worst sense of the word. For all its idiosyncrasies—and it is a unique country in many ways— Eritrea today looks a great deal like pre-reform China, Vietnam during the 1980s, and the pre-1989 communist countries of Eastern Europe. If Eritrea’s political and socioeconomic model resembles any existing today, it is that of Cuba, not North Korea.

Like Cuba, Eritrea is not, and does not desire to become, a democracy. The experience of the three-decade liberation struggle has led the country instead to embrace a highly egalitarian, statist model. Like any other system, this model involves trade-offs: It reduces extreme poverty and promotes national unity, but greatly limits civil liberties, international engagement, and economic growth prospects. As a result of this system of government, Eritrea shows no signs of the violent ethnic conflict that has battered other countries in the Horn of Africa (such as South Sudan, Somalia, and Ethiopia). Nor has jihadism found a foothold in the country. Nonetheless, Eritreans have suffered greatly from human rights abuses and the lack of economic opportunity. These factors are driving many young people to leave the country or to express hopelessness about the future.

Given this context, international attempts to improve the living conditions of Eritreans are more likely to succeed if they are conducted in the same way as they are in Cuba: through engagement that starts with where the country is now, not where outside actors think it ought to be.1 The purpose of this report, therefore, is to explore a pragmatic way forward for the Eritrean economy given the leadership’s current worldview.

At present, Eritrea’s most urgent economic priorities include boosting state revenue and increasing employment.2 The latter is essential if Asmara is to continue updating its national service program. National service plays a major role in building social cohesion and throughout the period of “no peace, no war” has effectively replaced a large chunk of the labor market (many of Eritrea’s civil servants, teachers, waiters, and construction workers, as well as soldiers, are national service conscripts). However, national service is also the font of international criticism of the country and the primary driver of migration. The Eritrean government has recognized the need to normalize the national service program by raising salaries and setting a finite term of service, but has dragged its feet on implementing these reforms3 over concerns about social stability and maintaining the country’s independence. (Reducing the term of service to eighteen months would release tens of thousands of youth into the labor market with few options for employment—a recipe for social unrest.) Given these concerns, the sequencing of economic restructuring will be crucial but should also be conducted in a way that satisfies the population’s expectations, which have changed significantly in one generation.4 

Eritrea can learn much from the successful reform processes undertaken by countries with similar ideologies—such as Rwanda and China—and this report will include those comparative analyses. Eritrea, in many ways, is further along in its economic evolution than Cuba is today, and bears some resemblance to China early in its reform era (late 1980s to early 1990s) as well as Hungary in the 1970s and 1980s. These countries all sought to open up in ways that promoted social cohesion, self-reliance, and national strength; all prioritized nation-building and saw economic inclusiveness as essential to the process; and all sought local solutions and models to guide their decision-making processes and policies. In the face of myriad challenges, they all recognized the need for pragmatism and all asserted that the Western way was not the only way.5 To move forward, Eritrea would do well to study the strategies undertaken by those states. 

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