ERITREA: Country Report by Bertelsmann Stiftung’s Transformation Index (BTI) 2018

Executive Summary

During the period under review, the Eritrean government made no significant change in its political and economic agenda, remaining a surveillance state committed to a command economy and an autocratic political system. The economy was under the control of the ruling People’s Front for Democracy and Justice (PFDJ) party and the military. High-ranking military officers were involved in illegal activities, including goods smuggling and human trafficking of Eritreans seeking to leave the country. Human trafficking of Eritrean refugees across the border to Sudan and from Sudanese refugee camps to Libya continued with the involvement of corrupt Eritrean and Sudanese officials. The high-ranking PFDJ cadres of Muslim faith who had been arrested in the aftermath of the January 2013 mutiny remained in custody without due process of law.

The economy remained in a poor state, and the chronic electricity blackouts, shortages of fuels and drinking water continued. The government did not use the revenues from the Bisha mine, estimated at about $1.2 billion since 2011, to invest in the economy, nor did it provide the population with basic imported consumer goods. Military officers applied their own regulations in the administrative regions under their control, while the civilian administrative apparatus was powerless. Military and PFDJ leaders continued to run their own shops.

In late 2015, the government introduced “currency reform.” All existing Nakfa currency notes had to be exchanged for new ones at a 1:1 rate. However, in this process only an amount of ERN 20,000 could be exchanged in cash, all assets exceeding this amount had to be deposited at a bank account. Through this process, the government attempted to contain illicit business activities and to force its citizens to disclose their properties. Since then, withdrawal of cash has been severely limited (to ERN 5,000 per family per month), and the black-market exchange rate dropped to a certain extent. However, in the absence of any economic liberalization it is doubtful if this measure can contribute to containing corruption, and economic activities remain severely hampered.

Politically, Eritrea remained a dictatorship in which public political participation was impossible, civil rights and freedom of expression and assembly were absent, and human rights were routinely violated. In summer 2016, the U.N. Commission of Inquiry on Human Rights in Eritrea stated that the government of Eritrea has committed crimes against humanity since the time of independence. In 2014, President Isaias announced the establishment of a commission with the purpose of drafting a new constitution, but no progress to this end had been achieved as of January 2017. The unlimited-term of national service remained in place without any reforms. Males between 18 and up to 60 years and women until the age of 27 were forced to serve either in the army or the national service, and elderly citizens were forced to patrol their neighborhoods as “militia.” The government continued to exploit the sanctions imposed by the U.N. Security Council to raise money from the diaspora communities by portraying Eritrea as a victim of international conspiracies.

Government functions were executed by the president and a small group of advisers, for which the PFDJ’s head of political affairs Yemane Gebreab played a decisive role. The ruling PFDJ is the only party allowed to exist. Together with the military, it holds a monopoly on the economic sphere. The party-owned Hdri Trust Fund controls all state enterprises with no external financial monitoring allowed. The mass exodus of tens of thousands of Eritreans continued unabated, and throughout 2016, several thousand Eritreans crossed the borders to Ethiopia and Sudan every month. State institutions and social services were further weakened by this process, as large numbers of professionals (teachers, doctors, engineers, etc.) were among the refugees. Arbitrary arrests and religious persecution continued.

There was absolutely no progress toward democratization, which has been ruled out by the president. The public was unable to communicate civic interests without the risk of being arrested. However, the elderly “neighborhood militias” continued their passive resistance against patrolling their communities. In the absence of free market mechanisms, the import-export trade remained in the firm grip of the ruling party’s elite, while the military operated large-scale contraband activities. The city of Tessenei bordering Sudan remained a hub for the contraband trade of goods, organized by military officers and PFDJ cadres, including the Minister of Trade and Industry Nesredin Bekit. There is no public welfare system, and traditional social safety networks based on extended family structures have been continuously weakened by prolonged recruitment into the national service. Diaspora Eritreans usually support their families inside Eritrea financially, and many of them paid the 2% tax imposed on them by the government either voluntarily or by coercion, providing a stabilizing factor for the regime.

Malnutrition and poverty, which are endemic in Eritrea, worsened due to drought-like conditions in 2015, although the government denied any shortage of food in contradiction to UNICEF statements. The continuous use of charcoal for cooking purposes accelerated environmental degradation. Generally, Eritrea has continued to follow a destructive path, which runs counter to democratization and economic liberalization.

Foreign relations with all regional neighbors except for the Sudan remained poor, as were relations with the United States. European politicians approached the Eritrean government throughout the period under review in the hope of curbing the refugee outflow, and development cooperation between the EU and Eritrea resumed. However, European representatives lacked a deeper understanding of the root causes of flight and failed to demand reform of the national service as a precondition to stop the mass exodus. The sanctions imposed on Eritrea by the United Nations in 2009 and in 2011 remained in place.



This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2018. It covers the period from February 1, 2015 to January 31, 2017. The BTI assesses the transformation toward democracy and a market economy as well as the quality of political management in 129 countries. More on the BTI at


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