Identifier
Created
Classification
Origin
09ASMARA248
2009-08-04 14:38:00
CONFIDENTIAL
Embassy Asmara
Cable title:
ERITREA'S MORIBUND FREE ZONES
how-toP 041438Z AUG 09 FM AMEMBASSY ASMARA TO SECSTATE WASHDC PRIORITY 0404 INFO IGAD COLLECTIVE CIA WASHDC DIA WASHDC NSC WASHDC SECDEF WASHDC CDR USCENTCOM MACDILL AFB FL JICCENT MACDILL AFB FL CJTF-HOA J2X CAMP LEMONIER DJ HQ USAFRICOM STUTTGART GE COMUSNAVCENT
C O N F I D E N T I A L ASMARA 000248
DEPARTMENT FOR AF/EX AND AF/E
E.O. 12958: DECL: 08/01/2019
TAGS: ECON ETRD EINV EWWT ER DJ
SUBJECT: ERITREA'S MORIBUND FREE ZONES
Classified By: Ambassador Ronald K. McMullen for reason 1.4(d)
C O N F I D E N T I A L ASMARA 000248
DEPARTMENT FOR AF/EX AND AF/E
E.O. 12958: DECL: 08/01/2019
TAGS: ECON ETRD EINV EWWT ER DJ
SUBJECT: ERITREA'S MORIBUND FREE ZONES
Classified By: Ambassador Ronald K. McMullen for reason 1.4(d)
1. (SBU) Eritrea's planned Free Zones (foreign investor and
trader friendly enclaves) are often touted along with gold
mining as the key to reviving the country's flagging economy.
However, following the June 08 border clash with Djibouti,
shipping costs to Massawa have increased and port
capabilities are falling further behind modern region
transshipment centers like Jeddah and Djibouti. As a result,
the 13 new factory-sized buildings at Massawa's Free Zone
stand empty. Newly poured concrete aprons and floors are
already cracked and the place has the feel of an instant ruin.
2. (SBU) Dr. Araia Tseggai, the AmCit CEO of Eritrea's Free
Zone Authority, told the ambassador July 24 that major
shipping lines no longer call at the port of Massawa due to
lack of cargo volume. Rather, they offload Eritrea-bound
goods at Jeddah, where they sit until critical mass
accumulates for a shuttle run down the Red Sea. Due to the
severing of transportation links with Djibouti in the wake of
the June 08 border clash, Jeddah now has almost a monopoly on
shuttling cargo to Massawa and costs have risen sharply.
Further, Massawa has no modern gantry cranes designed to
handle containerized cargo, so the port itself is slow and
inefficient compared to Jeddah and Djibouti. With expensive
shipping and an inefficient port, no major investor has
stepped forward to kick-start the Massawa Free Zone, Dr.
Araia lamented.
3. (C) COMMENT: In addition to expensive shipping and an
inefficient port, Post suspects lack of rule of law and
contract enforcement have spooked many potential investors.
The Isaias regime's unilateral abrogation of the
Intercontinental Hotel's contract last year had a chilling
effect on the business climate, and rumblings of sanctions
against Eritrea have furthered investor wariness. Slow,
regime-provided internet connections, concern about forced
labor in the guise of National Service, and a record of
uncompensated expropriation do nothing to reassure potential
Free Zone investors. Cargill reportedly considered bringing
in bulk commodities for bagging and regional distribution,
but (perhaps understandably) no longer appears interested.
MCMULLEN
DEPARTMENT FOR AF/EX AND AF/E
E.O. 12958: DECL: 08/01/2019
TAGS: ECON ETRD EINV EWWT ER DJ
SUBJECT: ERITREA'S MORIBUND FREE ZONES
Classified By: Ambassador Ronald K. McMullen for reason 1.4(d)
1. (SBU) Eritrea's planned Free Zones (foreign investor and
trader friendly enclaves) are often touted along with gold
mining as the key to reviving the country's flagging economy.
However, following the June 08 border clash with Djibouti,
shipping costs to Massawa have increased and port
capabilities are falling further behind modern region
transshipment centers like Jeddah and Djibouti. As a result,
the 13 new factory-sized buildings at Massawa's Free Zone
stand empty. Newly poured concrete aprons and floors are
already cracked and the place has the feel of an instant ruin.
2. (SBU) Dr. Araia Tseggai, the AmCit CEO of Eritrea's Free
Zone Authority, told the ambassador July 24 that major
shipping lines no longer call at the port of Massawa due to
lack of cargo volume. Rather, they offload Eritrea-bound
goods at Jeddah, where they sit until critical mass
accumulates for a shuttle run down the Red Sea. Due to the
severing of transportation links with Djibouti in the wake of
the June 08 border clash, Jeddah now has almost a monopoly on
shuttling cargo to Massawa and costs have risen sharply.
Further, Massawa has no modern gantry cranes designed to
handle containerized cargo, so the port itself is slow and
inefficient compared to Jeddah and Djibouti. With expensive
shipping and an inefficient port, no major investor has
stepped forward to kick-start the Massawa Free Zone, Dr.
Araia lamented.
3. (C) COMMENT: In addition to expensive shipping and an
inefficient port, Post suspects lack of rule of law and
contract enforcement have spooked many potential investors.
The Isaias regime's unilateral abrogation of the
Intercontinental Hotel's contract last year had a chilling
effect on the business climate, and rumblings of sanctions
against Eritrea have furthered investor wariness. Slow,
regime-provided internet connections, concern about forced
labor in the guise of National Service, and a record of
uncompensated expropriation do nothing to reassure potential
Free Zone investors. Cargill reportedly considered bringing
in bulk commodities for bagging and regional distribution,
but (perhaps understandably) no longer appears interested.
MCMULLEN