ERITREA: AGOA RESPONSE

UNCLAS ASMARA 000306

SIPDIS

SIPDIS

DEPT FOR AF/EPS JPOTASH
LONDON FOR AFRICA WATCHERS
PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: ETRD ECON PHUM ER
SUBJECT: ERITREA: AGOA RESPONSE

REF: STATE 22438


1. Post point of contact: Pol/Econ Officer Holly Holzer, Tel:
291-1-12-00-04, Fax: 291-1275-84, Email holzerhc@state.gov.


2. Post's response is keyed to headers in Reftel.


3. Market Economy/Economic Reform/Elimination of Trade Barriers:
One of the world's poorest countries, Eritrea maintains economic
policies contrary to free-market principles. The government and the
sole political party, The Peoples' Front for Democracy and Justice
(PFDJ),operate a command economy and control all aspects of the
economy. The private sector is extremely small and limited to
mainly small family owned shops. In the past the government has
seized businesses and provided no restitution for the owners. Trade
is strictly controlled. The government severely limits foreign
exchange and imports. In 2005 and 2006, the GSE issued
proclamations further restricting the access to and use of foreign
currency and limiting imports. In practice, imports are permitted
only by businesses affiliated with the PFDJ.


4. Political Pluralism/Rule of Law/Anti-Corruption:
Initially scheduled in 1998, the government postponed elections
citing the war with Ethiopia and to date have not rescheduled them.
The 1997 constitution provides for democratic freedoms, however, it
has not been implemented. The only political party permitted to
operate in country is the Peoples' Front for Democracy and Justice
(PFDJ). No independent media exists and the journalists, editors
and political party members arrested in 2001 following criticism of
the regime remain incarcerated with no due process. The government
continues to detain two Eritrean U.S. Embassy employees, arrested in

2001. While corruption is not overt, graft exists. On paper the
judiciary system is fair, however, government proclamations and
police practice have undermined the strength of the judiciary, which
is subject to executive influence. Individuals are often arrested
and detained without due process. The government argues that until
the border is demarcated in Ethiopia, national security remains a
primary concern and all other issues, such as democracy and economic
freedoms are secondary.


5. Poverty Reduction: Eritrea ranks 157 on the UN Human Development
Index. Poverty is widespread, particularly in the rural areas, and
affects much of the population. The government, even with limited
resources, does strive to reduce poverty, focusing on infrastructure
development and health and education. Limited resources and
capacity have constrained significant improvements and the
government often makes confusing and contradictory policy choices.
For example, despite food shortages, the government in 2006 stopped
all food distributions for 10 months by international organizations,
allowing for food to rot in warehouses. Equally puzzling was the
demand by the government in July 2005, for USAID - Eritrea's largest
bilateral partner - to cease all development programs in Eritrea.
USAID's offices were closed in December 2005 with only a small
humanitarian aid unit remaining in the Embassy. Since May 2005,
when the GSE issued a proclamation requiring all non-governmental
organizations (NGOs) to register in order to continue working in
Eritrea, the GSE has greatly reduced the number of NGOs allowed to
operate in country by refusing to register them. Many of these
NGOs' programs were directly related to poverty reduction efforts.
The GSE continues to limit the operations of those NGOs remaining
in-country by means of travel restrictions, limitations on the
number of expatriate staff allowed to work within the organizations
and difficulties in obtaining fuel and supplies.


6. Labor/Child Labor: The unimplemented constitution forbids forced
or compulsory labor and under Eritrean law children under the age of
14 are not permitted to work. Youth 14-18 are prohibited from
working more than 7 hours per day and are not allowed to work in the
transport industries and in jobs involving toxic chemicals or
dangerous machines. In the rural areas, children often work on
family farms. The government has ratified ILO 29, ILO 105 and ILO
138 however has not ratified ILO 182. All men between the ages of
18-40 and single women 18-27 who do not have children are
conscripted into the military or national service program, with some
working in civilian jobs at significantly reduced wages. There are
no formal restrictions on labor unions and there are three
government sponsored unions. Freedom of assembly and association is
greatly restricted, thus limiting the formation of private unions.

DELISI