Abstract

This paper provides a comprehensive analysis of the economic and political status of the State of Eritrea within the East African regional context. As one of the world’s most isolated and secretive nations, Eritrea presents a paradoxical profile: an economy showing modest growth and current account surpluses alongside profound developmental challenges, and a political system characterized by extreme centralization and human rights abuses coexisting with growing regional geopolitical influence. Drawing on recent data from the International Monetary Fund, African Development Bank, Human Rights Watch, and contemporary political analysis from Africa Confidential and major news outlets, this paper examines Eritrea’s macroeconomic trajectory, its extractive industry potential, the consolidation of authoritarian governance under President Isaias Afewerki, and the country’s evolving and deeply contradictory regional positioning—simultaneously a military occupier of Ethiopian territory, a key ally in regional security arrangements, and a target of renewed diplomatic tensions. The analysis reveals a nation navigating a fundamental tension: the economic benefits of mineral extraction and strategic port access are undermined by systemic repression that drives nearly one-fifth of its population into exile. As regional dynamics shift dramatically in 2026—with Ethiopia demanding Eritrean troop withdrawal and exploring alternative maritime access—Eritrea’s future trajectory hangs in the balance between deepened isolation and leveraged strategic influence.

Keywords: Eritrea, East Africa, Horn of Africa, authoritarian governance, national service, extractive industries, regional geopolitics, Ethiopia-Eritrea relations

1. Introduction

The State of Eritrea occupies an anomalous position within the East African landscape. With a population estimated at 3.8 million and a per capita GDP that international sources place at approximately $12,055 in current prices—though this figure is contested and likely overstated—Eritrea is simultaneously one of the region’s smallest economies and one of its most consequential geopolitical actors . Since achieving independence from Ethiopia in 1993 following a thirty-year armed struggle, the country has followed a trajectory of increasing isolation, centralized control, and militarization that sets it apart from regional trends toward democratization and economic liberalization.

Eritrea’s relationship with East Africa is fundamentally shaped by its position in the Horn of Africa and its complex, often violent, relationship with its neighbors. As a member of the Intergovernmental Authority on Development (IGAD) alongside Djibouti, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda, Eritrea participates formally in regional cooperation frameworks while maintaining a posture of strategic autonomy that frequently places it at odds with regional partners . The country’s 1,000-kilometer Red Sea coastline, including the strategically vital ports of Massawa and Assab, gives it outsized importance for landlocked Ethiopia’s longstanding quest for maritime access—a dynamic that has fueled war, détente, and renewed tension over three decades.

This paper examines Eritrea’s contemporary status through four interconnected analytical dimensions. First, it analyzes the macroeconomic structure and performance, drawing on available data from international financial institutions while acknowledging significant gaps in official information. Second, it examines the political landscape and governance system, including the consolidation of power under President Isaias Afewerki and the human rights situation documented by international observers. Third, it assesses the geopolitical positioning that defines Eritrea’s external relations, including its military presence in Ethiopia’s Tigray region and the dramatic deterioration of relations with Addis Ababa in early 2026. Fourth, it evaluates the developmental challenges and structural constraints that shape Eritrea’s future prospects. The paper concludes by synthesizing these dimensions to assess Eritrea’s evolving and deeply contradictory position within East Africa.

2. Macroeconomic Structure and Performance: Growth Amidst Opacity

2.1 Growth Trajectory and National Accounts

Assessing Eritrea’s economic performance is complicated by profound data limitations and the government’s extreme opacity regarding national accounts. According to the Collaborative Africa Budget Reform Initiative (CABRI), Eritrea has not published a national budget since 2014, and key fiscal documents—including budget proposals, enacted budgets, and audit reports—are unavailable for public scrutiny . This transparency deficit extends to macroeconomic data, forcing analysts to rely on estimates from international financial institutions with limited access to primary sources.

The available data, drawn primarily from African Development Bank estimates, suggests modest but positive economic performance. Real GDP growth is estimated at 2.9 percent for 2024, following a trajectory of gradual improvement from the contraction experienced during the COVID-19 pandemic period . Trading Economics projects growth of 2.7 percent for 2026, with gradual increases to 2.8 percent by 2028 . These growth rates, while modest by East African standards (comparable to regional averages but significantly below Ethiopia or Rwanda), represent stability rather than transformation.

Gross domestic product in current prices is estimated at $46.61 billion for 2026, with per capita GDP projected at $12,055 . However, these figures should be treated with extreme caution. They diverge dramatically from other estimates that place Eritrean per capita GDP at approximately $965 by 2028 , and from qualitative assessments describing Eritrea as “one of the poorest countries in the world” where “80 percent of population rely on subsistence agriculture” . This discrepancy likely reflects methodological differences in purchasing power parity adjustments, incomplete data on informal economic activity, and the challenges of estimating output in a context of state control and limited market exchange.

2.2 Fiscal Position and Public Finance

The fiscal position of the Eritrean state is characterized by persistent deficits and extreme debt levels, though recent years have shown improvement. According to CABRI data, general government revenue has averaged approximately 33-35 percent of GDP in recent years, while expenditure has declined from 37.95 percent in 2022 to a projected 32.78 percent in 2026 . This expenditure compression has produced modest primary surpluses—estimated at 1.64 percent of GDP for 2026—representing a significant improvement from the substantial deficits recorded in the 2009-2013 period.

The debt burden, however, remains extraordinarily high by any measure. General government gross debt stood at an estimated 146.32 percent of GDP in 2023, declining to a projected 113.73 percent in 2026 . While the trajectory is positive—representing substantial deleveraging from the peak of 290 percent in 2017—these levels remain unsustainable by conventional criteria and constrain the government’s fiscal space. The absence of published debt strategy documents  obscures the terms and structure of this debt, including the extent of concessional versus commercial borrowing and the identity of creditors.

Inflation dynamics have shown remarkable volatility historically but have moderated in recent years. Average consumer price inflation is estimated at 4.06 percent for 2024, with projections of gradual increases to 4.71 percent in 2026 and 5.02 percent in 2027 . This represents significant stabilization compared to the hyperinflationary episodes of the 1990s and the deflationary period of 2016-2018, though price controls and rationing likely distort official inflation measures.

2.3 External Sector: The Minerals-Led Surplus

The most striking feature of Eritrea’s external accounts is the substantial current account surplus, estimated at 12.4 percent of GDP for 2024 . This surplus, projected to reach 13 percent in 2025 and 12.7 percent in 2026, positions Eritrea as an outlier in a region characterized by persistent current account deficits and reflects the growing contribution of mineral exports to the economy.

Minerals production has emerged as a critical economic sector, with significant output in gold, silver, and base metals. CEIC Data reports 2023 minerals production of 480,476 metric tons, including gold production of 4,100 kilograms and silver production of 48.5 metric tons . The Bisha mine, operated by the state-owned Eritrean National Mining Corporation in partnership with foreign investors, has been the primary driver of this production, though detailed operational and financial information remains limited.

Export data reflects this minerals-led growth. Total exports reached $482 million in 2024, a marginal increase from $481 million in the previous year . Import growth has been more rapid, however, with imports rising from $488 million in 2023 to $571 million in 2024, producing a merchandise trade deficit of $89 million that is offset by services exports, remittances, and other current account components . The composition of imports—including food, machinery, and manufactured goods—reflects the economy’s continued dependence on external sources for basic consumption and investment needs.

Trading Economics reports that remittances from the Eritrean diaspora account for approximately 32 percent of GDP , representing a critical financial flow that supports household consumption and external balance. The diaspora, estimated at over 660,000 individuals—roughly 18 percent of the estimated 3.8 million population —provides a substantial and relatively stable source of foreign exchange, though one that is vulnerable to economic conditions in host countries and to the transnational repression that has characterized government relations with diaspora communities.

2.4 Structural Economic Characteristics

Despite the growth of extractive industries, Eritrea’s economy remains fundamentally characterized by subsistence agriculture and limited structural transformation. Trading Economics notes that “80 percent of population rely on subsistence agriculture” and that “Eritrea’s economy is dependent on foreign aid (over 50 percent of population receive food aid)” . This characterization, while difficult to verify with precision given data limitations, suggests that the minerals-led growth documented in aggregate statistics has not translated into broad-based economic transformation or improved livelihoods for the majority of the population.

Infrastructure deficits remain severe, constraining both agricultural productivity and industrial development. The African Development Bank’s Regional Economic Outlook identifies “lack of basic infrastructure” as a primary obstacle to growth, alongside unemployment, illiteracy, and insecurity . Telecommunications infrastructure, while showing some development with over 2 million mobile subscribers recorded in 2022, remains limited and tightly controlled .

The labor market is fundamentally shaped by the national service system, which conscripts much of the adult population into extended military or civilian service. This system, discussed in greater detail below, has profound economic implications: it removes substantial portions of the workforce from productive civilian employment, suppresses wages through forced labor, and drives skilled workers into exile . The unemployment rate, where reported as zero in some international datasets , reflects definitional issues rather than labor market reality, as conscription and subsistence agriculture absorb workers without producing formal employment.

3. Political Landscape and Governance: The Consolidation of Authoritarianism

3.1 The Isaias Era: Thirty Years of Unchallenged Rule

Eritrea’s political system is defined by the uninterrupted rule of President Isaias Afewerki, who has led the country since independence in 1993. According to Human Rights Watch’s World Report 2026, “the country has had no elections since independence, and the unelected president, Isaias Afewerki, in power since then, has not implemented the country’s constitution guaranteeing civil rights and limiting executive power” . The legislature has not met since 2010, and no political party except the ruling People’s Front for Democracy and Justice (PFDJ) is permitted to exist .

This consolidation of power represents the institutionalization of the wartime command structure that led the Eritrean People’s Liberation Front (EPLF) to victory in the independence struggle. The transition from liberation movement to governing party has been characterized not by the opening of political space but by its progressive closure, as wartime discipline and hierarchy have been extended to all domains of national life. International Crisis Group analyses, while not directly quoted in available sources, have consistently characterized Eritrea as among the world’s most closed societies.

The absence of constitutional implementation is particularly significant. The constitution ratified in 1997, which guaranteed civil rights and established limits on executive power, has never been brought into force. This legal vacuum leaves citizens without institutional protections against state action and entrenches the president’s authority to rule by decree. The UN Human Rights Council’s special rapporteur on Eritrea has documented the consequences of this legal void, including arbitrary detention, enforced disappearance, and systematic rights violations .

3.2 Indefinite National Service: The Cornerstone of Control

The national service system represents the most distinctive and consequential feature of Eritrean governance. Legally established as an 18-month obligation combining military training with development activities, national service has in practice become indefinite, with no clear criteria for discharge since the government declared a state of emergency during the 1998-2000 border war with Ethiopia .

Human Rights Watch reports that “most Eritreans serve for years, some for decades, with paltry pay and arbitrary punishments, some amounting to torture” . The system extends to students, who are pushed into military service before completing secondary school, with devastating impacts on educational attainment and human capital development. Families of draft evaders face collective punishment, including denial of services and harassment, creating powerful disincentives for resistance.

The economic dimensions of national service are equally significant. The system provides the state with access to conscript labor for agriculture, construction, and other activities at minimal cost, effectively subsidizing state enterprises and projects through forced labor. The UN Office of the High Commissioner for Human Rights has documented “abusive labor practices within the context of indefinite conscription” , though the full extent of forced labor in the economy remains difficult to quantify given information constraints.

3.3 Human Rights: Systematic Repression

Human Rights Watch’s assessment that “the Eritrean government maintained an iron grip on its population at home and abroad” encapsulates the human rights situation . This control extends across multiple dimensions of civil and political life:

Freedom of Expression and Association: “Civic space remains closed with no opposition parties, independent civic organizations, or media. The government controls the domestic media and independent media have been banned since September 2001. Nongovernmental gatherings of over seven people are prohibited” . This closure of civic space eliminates avenues for collective action, political organization, and public discourse, reinforcing the state’s monopoly on information and mobilization.

Unlawful Detentions and Enforced Disappearances: “Due process rights continue to be systematically violated with detainees subjected to arbitrary and prolonged detention without charges, trials, or judicial review. Many Eritreans, notably perceived dissidents, government critics, human rights defenders, religious leaders, and journalists, are subjected to enforced disappearances for years or even decades” . The fate of 11 former senior government officials known as the G-15, arrested in 2001, remains unknown, as does that of 10 independent journalists arrested during the same period . These disappearances serve as powerful deterrents to dissent, demonstrating the state’s capacity to make individuals vanish without accountability.

Freedom of Religion: Religious freedom is severely restricted, with “religious leaders and Christians affiliated with both the officially recognized and ‘unrecognized’ faiths continu[ing] to face unlawful detentions and other abuses linked to their beliefs” . As of April 2025, 64 Jehovah’s Witnesses remained imprisoned without trial, some in their 80s, while hundreds of evangelical Christians and Muslim teachers and imams are also detained . The detention of over 100 Orthodox priests, monks, and followers of the late Orthodox Patriarch Abune Antonios, who spent over 15 years in house arrest before his death, illustrates the state’s willingness to target even established religious institutions .

Sexual Orientation and Gender Identity: “Eritrea’s penal code, under article 310, punishes same-sex relations with up to seven years’ imprisonment. This provision encourages prosecution, discrimination, and violence” . Criminalization of consensual same-sex relations reinforces broader patterns of social control and exposes LGBTQ+ Eritreans to state persecution and societal violence.

3.4 Transnational Repression and Diaspora Relations

The government’s control extends beyond national borders to encompass the Eritrean diaspora, estimated at over 660,000 individuals . According to the UN special rapporteur, “ongoing transnational repression, with Eritrean authorities’ suppression of dissent in the diaspora, including through intimidation, and the refusal of consular services” has characterized state-diaspora relations . This repression has generated “increasing polarization between government supporters and opposition” and “greater mobilization of opposition groups and polarization abroad” .

The diaspora’s significance to Eritrea is both economic and political. Economically, remittances constitute an estimated 32 percent of GDP , providing essential foreign exchange and household income. Politically, diaspora organizing has sustained opposition movements and advocacy for human rights, challenging the government’s narrative of national unity and external threat. The government’s response has combined co-optation of diaspora institutions with intimidation of critics, including surveillance, harassment of family members at home, and denial of consular services .

3.5 International Engagement and Accountability

Eritrea’s relationship with international human rights mechanisms has been characterized by consistent non-cooperation. Human Rights Watch notes that “Eritrea remains one of very few countries to have never accepted a visit by a UN independent human rights expert” . In July 2025, the UN Human Rights Council rejected the government’s bid to terminate the mandate of the special rapporteur on Eritrea, instead renewing the mandate citing “deep concern” at ongoing abuses .

This non-cooperation extends to regional mechanisms. While Eritrea ratified the Convention on the Rights of Persons with Disabilities in December 2024 , it has not engaged substantively with African Union human rights bodies or submitted to peer review mechanisms. The government’s posture toward international accountability reflects a broader strategic orientation that prioritizes sovereignty and non-interference over engagement with global norms.

The international response to Eritrea’s human rights record has been inconsistent. While the UN Human Rights Council has maintained the special rapporteur mandate, and some countries such as Switzerland have taken actions including the February 2026 decision to end development assistance “due to the government’s refusal to accept Eritrean deportees” , strategic considerations have often tempered criticism. Eritrea’s cooperation on regional security issues, including its role in the Tigray conflict and its strategic location on the Red Sea, has led some international actors to prioritize engagement over accountability.

4. Geopolitical Positioning: From Pariah to Kingmaker and Back?

4.1 The Ethiopia Relationship: War, Peace, and Renewed Tension

The relationship with Ethiopia defines Eritrea’s regional position and has undergone dramatic shifts over three decades. Following the 1998-2000 border war that killed an estimated 80,000 people, relations remained frozen under a “no war, no peace” stalemate until the 2018 election of Ethiopian Prime Minister Abiy Ahmed. The July 2018 peace accord between Abiy and President Isaias, celebrated globally as a breakthrough, reopened embassies, restored transport links, and raised hopes for lasting reconciliation .

This rapprochement, however, has proven fragile. The two leaders’ rhetoric at the time—with Abiy describing Asmara as Isaias’s “own home” and Isaias stating it was foolish “to assume we are two separate people” —suggested aspirations beyond normalized relations toward some form of integration. Africa Confidential reports that “Abiy and Issayas have already created the Horn of Africa Council of Ethiopia, Eritrea and Somalia and are looking to get South Sudan to join,” with the apparent intention of replacing IGAD with “another more directly under their control” .

The Tigray conflict, which erupted in November 2020, fundamentally transformed the bilateral relationship. Eritrean forces entered Tigray in support of Ethiopian federal troops against the Tigray People’s Liberation Front (TPLF), Isaias’s long-standing adversaries. This intervention, which Human Rights Watch documents as involving “serious abuses including sexual violence, disappearances, and looting of livestock” , deepened Eritrea’s military entanglement in Ethiopia and entrenched its forces in occupied territories.

4.2 The February 2026 Rupture: Ethiopia Demands Withdrawal

The carefully constructed post-2018 architecture collapsed dramatically in February 2026. On February 7, Ethiopian Foreign Minister Gedion Timothewos addressed a formal letter to his Eritrean counterpart demanding the “immediate withdrawal of Eritrean troops from its territory and an end to all forms of collaboration with armed groups” . The letter accused Eritrea of occupying Ethiopian territory “for a considerable period” and providing “direct material support to militant groups operating in Ethiopia,” characterizing recent troop movements as “acts of outright aggression” .

This diplomatic rupture represents a fundamental shift in regional dynamics. Ethiopia, which had previously praised Eritrean military cooperation during the Tigray war, now frames Eritrean presence as occupation. The timing reflects growing tensions over Ethiopia’s quest for maritime access, with Timothewos stating Ethiopia’s willingness to negotiate “comprehensive settlement of issues of mutual interest, including maritime affairs and access to the sea” . This formulation explicitly links the troop withdrawal demand to Ethiopia’s long-standing ambition for Red Sea port access—an ambition that directly challenges Eritrea’s sovereign control over its coastline.

Eritrea’s response, as of this writing, has been limited to dismissive statements. Information Minister Yemane Gebremeskel characterized Ethiopia’s accusations as “false accusations to justify a potential conflict linked to calls for ‘sovereign access to the sea'” . The absence of direct engagement with the withdrawal demand suggests either calculation that Ethiopia lacks capacity to enforce it, or preparation for further escalation.

4.3 Regional Alignments and Competing Blocs

The Ethiopia-Eritrea rupture has exposed and deepened regional divisions. Africa Confidential’s analysis situates the conflict within “the growing regional divide between Somalia, Eritrea and Egypt on the one hand and the opposing alliance of Ethiopia, and the breakaway region of Somaliland, backed by the United Arab Emirates” . This alignment positions Eritrea with Egypt—which views the Grand Ethiopian Renaissance Dam as an existential threat to its water security—and against Ethiopia’s quest for sea access.

The Eritrea-Egypt alignment has deepened in recent months, with reported military cooperation and diplomatic coordination. For Egypt, Eritrea offers strategic depth and a partner on Ethiopia’s northern flank; for Eritrea, Egyptian support provides counterweight to Ethiopian pressure and validation of its regional position. This alignment, combined with Eritrea’s military presence in Tigray and its historic interventions in regional conflicts, positions Isaias as “a major regional presence with a willing and powerful partner” in Abiy’s Ethiopia .

The Horn of Africa Council initiative, launched with such fanfare in 2018, appears increasingly moribund. Somalia, whose president Farmajo is described as “a weak link in the grand regional lash-up” , faces internal political crises and Al-Shabaab insurgency that limit its capacity for regional leadership. South Sudan remains mired in implementation challenges to its peace agreement. The regional architecture that Abiy and Isaias sought to construct has been overtaken by renewed bilateral tensions.

4.4 Military Posture and Regional Projection

Eritrea’s military capabilities, while difficult to assess given secrecy, are substantial by regional standards. The national service system provides a deep pool of conscript soldiers, estimated at over 200,000 under arms, though equipment and training limitations affect combat effectiveness. The military’s performance in Tigray, while demonstrating capacity for sustained operations, has also revealed discipline problems and reliance on irregular tactics.

Beyond Ethiopia, Eritrea has projected military power regionally through multiple channels. Africa Confidential notes that “Issayas is re-activating his 1990s interventionist policies, when Eritrea was involved in Congo-Kinshasa, Sudan and Chad, went to war with Yemen and Ethiopia, and carried out incursions into Djibouti” . Unconfirmed reports suggest Eritrean troops have arrived in Mogadishu to support Ethiopian forces stretched thin by redeployments to Tigray , indicating continued willingness to engage militarily beyond its borders.

The military’s role extends beyond conventional operations to include support for proxy forces. Ethiopia’s accusation that Eritrea provides “material support to armed groups operating inside Ethiopia”  reflects long-standing suspicions that Asmara maintains relationships with anti-government elements, including some Oromo insurgent groups. These relationships provide deniable capacity to pressure Ethiopia while avoiding direct confrontation.

4.5 Regional Cooperation: IGAD and Digital Integration

Despite bilateral tensions, Eritrea maintains formal participation in regional institutions, including IGAD. The January 2026 IGAD workshop on digital integration, supported by the World Bank through the Eastern Africa Regional Digital Integration Project (EARDIP), included Eritrea among the eight member states . This participation suggests continued engagement with regional cooperation frameworks, even as bilateral relationships deteriorate.

The digital integration initiative aims to build “a unified digital market by improving cross-border broadband, data flows, and digital trade” . For Eritrea, with limited telecommunications infrastructure and tight state control over information flows, participation raises complex questions about the balance between connectivity benefits and regime security concerns. The government’s historical preference for control over connectivity suggests cautious engagement rather than rapid liberalization.

5. Challenges and Vulnerabilities

5.1 The Exodus: Demographic Collapse

Perhaps the most fundamental challenge facing Eritrea is the sustained outflow of its population. Human Rights Watch reports that “over 660,000 Eritreans were in exile as of late 2024, representing roughly 18 percent of an estimated 3.8 million population” . This exodus, driven by indefinite national service, political repression, and economic stagnation, represents a demographic crisis of exceptional proportions.

The consequences are multi-dimensional. Economically, the loss of working-age adults—particularly those with education and skills—constrains productive capacity and undermines development. The diaspora’s remittances, while economically significant , cannot compensate for the absence of entrepreneurs, professionals, and workers who would otherwise contribute to domestic production. Socially, families are fractured, communities depleted, and the fabric of national life attenuated. Politically, the exodus deprives the government of potential critics while also creating diaspora communities that sustain opposition movements abroad .

5.2 Governance and Institutional Weakness

Beyond the human rights dimensions discussed above, Eritrea’s governance model presents fundamental challenges to sustainable development. The absence of the constitution, non-functioning legislature, and concentration of power in the presidency  create an institutional vacuum that leaves policy dependent on presidential discretion rather than established processes. Succession, when it becomes necessary, will occur without constitutional guidance or institutional mechanisms for orderly transition.

The national service system, while serving regime security objectives, undermines human capital development. Students conscripted before completing education  never acquire the skills needed for modern economic activity. Professionals conscripted into extended service lose currency in their fields. The resulting skills deficit constrains all sectors of the economy and limits the country’s capacity to attract investment or develop new industries.

5.3 Economic Sustainability

Despite current account surpluses and growth in extractive industries, Eritrea’s economic model faces fundamental sustainability questions. Mineral resources are finite, and without development of other productive sectors, the economy will remain dependent on depleting assets. Agriculture, the primary livelihood for most Eritreans, remains low-productivity and vulnerable to climate variability .

The fiscal position, while improved, remains precarious. Debt levels above 100 percent of GDP  constrain policy flexibility and consume resources that could otherwise fund development. The absence of transparent budgeting and debt management  raises questions about the sustainability of current arrangements and the terms of any future borrowing.

5.4 Regional Vulnerability

Eritrea’s regional position, while offering opportunities for strategic leverage, also creates profound vulnerabilities. The deterioration of relations with Ethiopia  threatens the economic benefits of normalized relations and raises the specter of renewed conflict. Ethiopia’s quest for sea access, if pursued aggressively, could directly threaten Eritrean sovereignty over its coastline.

Relations with other neighbors remain tense. Djibouti and Eritrea have not resolved the border dispute that led to military clashes in 2008 and 2017. Sudan’s internal conflict creates instability on Eritrea’s western border, with potential for refugee flows and security spillovers. Regional alliances are shifting, with the alignment among Eritrea, Egypt, and Somalia potentially drawing Eritrea into broader confrontations.

5.5 International Isolation

Eritrea’s human rights record and non-cooperation with international mechanisms have produced significant isolation. Switzerland’s February 2026 decision to end development assistance  reflects broader donor fatigue and reluctance to engage with a government that rejects accountability. European Union engagement has been limited, and United States relations have been cool despite strategic cooperation on counterterrorism.

This isolation has economic consequences. Access to international financial institutions is constrained, limiting development finance. Trade preferences and investment agreements are limited. The private sector, already constrained by domestic policies, lacks the international linkages that could support diversification and growth.

6. Opportunities and Future Trajectories

6.1 Extractive Industry Potential

Despite the challenges outlined above, Eritrea possesses significant mineral wealth that offers opportunities for economic development. Gold, silver, copper, zinc, and potash deposits have attracted foreign investment, with production contributing to the current account surplus . The Bisha mine has demonstrated the viability of large-scale mining operations, and exploration continues for additional deposits.

Realizing this potential sustainably requires addressing governance deficits. Transparency in revenue management, environmental protection, and benefit-sharing with affected communities are essential for translating mineral wealth into broad-based development. The current opacity of mining arrangements  raises concerns about whether these conditions are being met.

6.2 Strategic Port Access

Eritrea’s Red Sea coastline, including the ports of Massawa and Assab, represents a strategic asset of continental significance. For landlocked Ethiopia, access to these ports is an existential economic need; for Eritrea, control over access provides leverage and potential revenue. The February 2026 Ethiopian letter explicitly linking troop withdrawal negotiations to “maritime affairs and access to the sea”  confirms the centrality of this issue.

The development of Assab port, in particular, could transform regional trade patterns and generate substantial revenues. However, realizing this potential requires resolution of the political tensions that have kept the port largely idle since the 1998-2000 war. A negotiated settlement that provides Ethiopia with reliable, affordable port access while respecting Eritrean sovereignty could benefit both countries and transform the regional economy.

6.3 Regional Integration Participation

Despite bilateral tensions, Eritrea’s membership in IGAD  provides a platform for regional cooperation that could deliver development benefits. Participation in digital integration initiatives, if pursued constructively, could improve connectivity and support economic diversification. Engagement with regional infrastructure planning could attract investment and reduce transport costs.

Realizing these benefits requires a shift from the confrontational posture that has characterized Eritrea’s regional engagement. Participation in regional institutions as a constructive partner, rather than as a spoiler or reluctant participant, could unlock cooperation dividends that unilateralism cannot achieve.

6.4 Reform Scenarios

Eritrea’s future trajectory will be shaped by the interaction of domestic pressures, regional dynamics, and international engagement. Several scenarios are conceivable:

Status Quo Continuation: The government maintains its current policies, repressing dissent, continuing national service, and managing regional tensions through strategic alliances. Economic growth remains modest, driven by mineral extraction, while the population exodus continues. This scenario, while plausible, faces mounting pressures from demographic loss and regional tensions.

Conflict Escalation: The deterioration of relations with Ethiopia leads to renewed military confrontation, potentially drawing in regional allies on both sides. This scenario would devastate both countries, reverse any economic gains, and deepen humanitarian crises.

Reform and Opening: Pressure from international partners, diaspora activism, and domestic discontent leads to gradual reform, including implementation of the constitution, regularization of national service, and opening of political space. This scenario, while desirable, appears unlikely given the government’s demonstrated capacity to resist pressure and its ideological commitment to current arrangements.

Succession Crisis: President Isaias’s departure from the scene, whether through death or incapacity, triggers a succession struggle within the ruling elite. The absence of established succession mechanisms and the personalization of power create risks of instability and potential fragmentation.

7. Conclusion: Eritrea’s Paradoxical Status in East Africa

Eritrea’s economic and political status in East Africa is defined by fundamental contradictions. Economically, the country shows modest growth and current account surpluses driven by mineral extraction, yet remains one of the world’s poorest countries with 80 percent of the population dependent on subsistence agriculture. Fiscal indicators have improved, yet debt remains unsustainable and data transparency is virtually absent. Mineral wealth offers potential for transformation, yet governance deficits constrain its realization.

Politically, Eritrea under President Isaias Afewerki presents a picture of extreme centralization and control unmatched elsewhere in East Africa. The indefinite national service system, suppression of political and religious freedom, and systematic human rights abuses have produced one of the world’s most封闭 societies and driven nearly one-fifth of the population into exile. International criticism has been consistent but ineffective, as strategic considerations have limited pressure for accountability.

Geopolitically, Eritrea occupies a position of paradoxical influence. Its military intervention in Ethiopia’s Tigray conflict, its strategic Red Sea coastline, and its alignment with Egypt have made it a consequential regional actor despite its small size and economic weakness. Yet this influence is precarious, dependent on the continuation of regional tensions and alliances that could shift rapidly. The February 2026 rupture with Ethiopia, and Addis Ababa’s demand for troop withdrawal, demonstrate the fragility of Eritrea’s regional position.

The picture that emerges is one of a nation at a crossroads. The economic benefits of mineral extraction and strategic port access are real but contingent on governance improvements and regional stability that current policies undermine. The political system’s control over the population is complete but has produced demographic collapse and international isolation. The regional influence achieved through military intervention and strategic alignment has come at the cost of renewed confrontation with Ethiopia and entanglement in conflicts that offer no clear exit.

For East Africa as a region, Eritrea’s trajectory matters profoundly. A stable, cooperative Eritrea integrated into regional institutions could contribute to economic development and maritime security. An isolated, confrontational Eritrea locked in renewed conflict with Ethiopia would destabilize the entire Horn of Africa. The choice between these futures lies, ultimately, with Eritrea’s leadership and the international actors with influence over its calculations.

The coming months will test whether the diplomatic rupture of February 2026 can be managed peacefully, whether Eritrean forces will withdraw from occupied Ethiopian territory, and whether negotiations over maritime access can produce outcomes acceptable to both sides. The answers to these questions will determine not only Eritrea’s future but the trajectory of the entire East African region.

References

1. Collaborative Africa Budget Reform Initiative (CABRI). “Eritrea.” Budgets in Africa database.

2. Human Rights Watch. “World Report 2026: Eritrea.” February 3, 2026.

3. Trading Economics. “Eritrea GDP Annual Growth Rate.” African Development Bank data.

4. Africa Confidential. “Addis and Asmara exchange vows.” Vol. 67, No. 3, February 2026.

5. Anadolu Ajansı. “Ethiopia accuses Eritrea of border incursions, supporting armed groups.” February 8, 2026.

6. CEIC Data. “Eritrea Economic Indicators.” February 2026.

7. Trading Economics. “Eritrea Current Account to GDP.” African Development Bank data.

8. Ecofin Agency. “East Africa Moves Toward Stronger Digital Cooperation on Connectivity and Innovation.” January 30, 2026.

9. Al Jazeera. “Ethiopia demands Eritrea ‘immediately withdraw’ troops from its territory.” February 8, 2026.