Mining Boom in Eritrea: Blessing or Curse?

States that depend on tax revenue are less repressive, stipulates an economic theory, because of its direct impact on the revenue collected, and to a large extent this is true. Exceptions were not lacking, however. By African standards, Eritrea is one of the few countries in the continent credited for its “efficient” taxing administration, but does not dispense the least form of good governance. Quite the contrary, what it is identified with is tyranny. Yet, the international institutions and most countries have been timid to say anything critical about the state of affairs in the country. They have been silent and unwilling to point out the extractive, and “robbery” aspect of the economy in Eritrea, which is often carried out in the form of forced grain acquisition from the local farmers and confiscation of food aid from the donors. What explains the practice in Eritrea?

The infamy of totalitarian states is not restricted to the absence of individual freedoms, human rights and democracy. In corollary with such denials, the denials of property rights and the produce of honest toil are common features of the system. Without exception, all of them have habitually exacted burdensome duties and taxes on their subjects bordering in many instances to serfdom. Unencumbered by a vibrant press, they did not hesitate to enforce requisition, which predictably led to the deaths of millions of their rural population. Unfettered by any moral scruples, they spent massive amount of resources on grandiose projects and the military.

At first glance, the expansion of facilities such as roads, hospitals and schools under these regimes may appear as a reciprocal exchange to the heavy tax endured by the public. In reality, the infrastructure was particularly designed for the command economy and military needs of the political powers, leaving no space for private commerce and consumer goods. Likewise, the quality of the schools and health services that unfairly obtained the government praise and accolade for decades has lately been put in its right perspective: as poor, shoddy and not dependable.

In light of the assertion put so far, would the expected boom from the mining sector in Eritrea result in the lowering of the tax burden and other duties for the inhabitants in Eritrea? Would the revenue transform the Eritrean regime into a rank renter state? Rent according to economists is “income derived from the gift of nature.” [1] Last but not least, would the largesse from the resource of the mining sector influence the government into neglecting the manufacturing and the large but inefficient agricultural sector? The reply can only be in the negative. The reason is simple: access to precious metals or other resources do not slacken the grip of totalitarian regimes. Eritrea is one of the types.

Only the traditional, corrupt, civil or military states have the proclivity to abandon the neglect of both agriculture and the fledgling manufacturing sectors. In their place, small but lucrative economic enclaves such as the mines become the dependable source for royalties. The Nigerian state in the oil boom times of the 80s is a good example. Its treasury, and the pockets of its politicians full with money from the oil wells in Niger Delta, it neglected the agricultural and the manufacturing sector, a policy that had left its adverse impact to these days.

Given the totalitarian nature of the regime in Eritrea, its militaristic foreign policy and grandiose ambitions in the Horn of Africa, the scenario from the “curse of plenty” such as gold and other minerals as experienced by other nations is less benign. It is almost certain that the suffering of the Eritrean people will have no comparison. A scrutiny of the regime’s policy is sufficient. The state habitually confiscates their land for both farming and other commercial purposes. It also forces hundreds of thousands of the able bodied portion of the population to work for it for a slave wage. The state’s reach is so deep and broad that not even the hundreds of thousands of low income Eritreans living in the West are able to evade it, including those who are below the poverty level. It is probably the only country in the planet, which systematically taxes other nationality holding citizens. Considered illegal, the British government recently ordered the ambassador of Eritrea to cease the activities. [2]

Apart from this exception, its policies are identical to the ones in former Cambodia, and North Korea. What is typical about these nations is their political will to expend a huge percentage of their meager resources on militarism. North Korea illustrates this horror in the most glaring sense. It possesses modern armaments such as nuclear missiles and submarines, and peasants who can barely eke out a living and in many instances were being starved to death. Abandoned by the xenophobic state in their unpainted houses, the farmers were observed by various reporters picking left over grain and wild plants.

If the regime in Eritrea has established a high rate of militarism and control with scant means, the expected revenue from gold will certainly embolden it. The agricultural crisis and its adverse impact on the vulnerable population do not seem to trouble it. Used to brazen lies and perfidy since it movement days, the regime has denied famine at various times despite the warnings of UN agencies and NGOs. It only admits it in the dark, if at all, behind the back of the public as recently observed in the Wikileaks. In short, its food policy is nothing but a deliberate design to leave the responsibility to the Diaspora families and the donor communities. The enterprising regime has again cleverly outsourced this public service.

Thanks to its experience during the long guerrilla days, food aid is also a fungible resource cleverly used for also its military programs. The completed disregard for the public welfare at the expense of maintaining a massive army deployed repeatedly to attack Yemen, Sudan, Djibouti and Ethiopia have troubled the region. The military intervention was not limited to its immediate neighbors and across the Red Sea but went further into the old Zaire. The source for such assertion is none other the head of state.

Isaias met the UN Secretary General Ban Ki Moon in the independence celebration event in Juba, South Sudan. Strangely, he blurted out a state secret that was hidden from the public for many years. According to the regime’s mouthpiece, Shaebia.org, Isaias said, “We have consistently supported the people of South Sudan including with the blood of our citizens, who gave their lives in South Sudan fighting alongside the Sudan People’s Liberation Movement.” [3] Confessing such exploits to a revolutionary such as Fidel Castro may be chic, but is completely crass stupidity and undiplomatic when whispered to the head of the world body, who is entrusted after to ensure the sovereignty of its member states, that included Sudan proper. There is also no coherency in the policy. His support for the SPLM, and the cause of independence was lately dropped in exchange for some support from the beleaguered regime of the Beshir government of the North and Egypt, which vigilantly watches its Nile interests. And this is nothing something new. Long before independence, when the EPLF trained OLF fighters and tried for the first time to introduce then to western part of Ethiopia, EPLF fighters had to accompany them through Sudanese territory all the way to Wollega, and in the process had to fight their way through SPLM held territory.

Soon after the independence of Eritrea, several members of the Inter Governmental Authority for Development were embroiled into a conflict that was provoked by the militaristic and uncouth rulers. The causes for the conflict were not of course of their own making. They were pressured and often intimidated to play a subservient role to serve the wishes of the young nation. Their recent specific call to the UNSC to impose a sanction of the mining sector and the Eritrean Diaspora attests to the assumption made earlier. In the annals of African history, a condemnation and a call for punitive measure on a member nation is a very rare occurrence.

After having denigrated the OAU (before it was replaced as AU) as a useless entity, Isaias eagerly joined the IGAD with the intention of putting it under his control. To his dismay, he found out that IGAD was not malleable enough for him, and hastily decided to suspend the membership of Eritrea in 2007 following the conflict with the 1998-2000 war with Ethiopia. IGAD’s recent call for sanction may be easily construed by the regime as the utter envy of the neighboring states or the manipulation of weak African states by the United States of America. An examination of the president’s frequent pronouncement on the mining investment is, however, very telling.

In his interview with the state media, Isaias says little about the mine business. Instead, he habitually lectures the public to lower its expectations, and prepare for sustainable and reliable future. An unsuspecting person might deduce from that the dictator has in mind what is largely known as the “Dutch disease.” It was originally coined to describe the distortion made to the Dutch economy subsequent to the gas discovery in 1959. The gas appreciated the currency of the country, diverted labor from the manufacturing and agricultural sectors, and consequently tradable goods became expensive. The fear of a “Dutch disease” in Eritrea as Isaias’ bantering often implies is simply a delusion. The reasons are not complex.

The small but vibrant light industry that existed in Eritrea was almost extinct before the arrival of independence in 1991. More worrisome, the agricultural sector was so decimated that a large section of the population was dependent on food aid for many years. The advent of free Eritrea did not secure the economic condition of its people. In fact, it aggravated the already semi-subsistence livelihood of the people. By design, the regime obliterated the private sector and forcefully took hundreds of thousands of people from their agricultural hamlets into its boot camps leaving the masses more vulnerable than ever. This was done despite the absence of the demographic bulge as observed in many sub-Saharan and the North African nations. Labor was so short that tens of thousands of Ethiopians migrants had to fill the gap. Hence, the flow of hard currency from the new minerals’ industry would not do any damage that was not there to begin with.

There are no lagging industries in the country that will suffer from the undue attention given to the mining sector. Labor and capital have already been denied to them for the last 20 years. The arrival of less labor-intensive mining enterprises would, therefore, not make any difference to the economy that was already in shambles. Thus, the “Dutch disease” phenomenon is not plausible. Maybe the expected bonanza is meant to be kept in hidri (trust) for the future generation. Incidentally, this commonly used word by the authorities in Eritrea is almost the most abused word.

The head of state, that is often garrulous about Ethiopia, Somalia and other issues, uncharacteristically says little about the mineral industry. Is it because he has plans of establishing a sovereign wealth for dire times and the future generations of the nation? Norway and a few other countries are often praised for cleverly avoiding the “curse from plenty”. In Eritrea, however, secrecy is so ingrained in the system that no semblance of transparency is tolerated. Let alone such a thing, even the budget of the nation and other data has always been kept out of the reach of most people. The fact that the country has not signed on the Extractive Industries Transparency Initiative (EITI,) an agency that requires “member nations to make public all payments to the state revenues accruing from oil, gas, and mining” is a good indications. [4] The reluctance of the regime to disclose anything can only be construed as nothing but a typical characteristic of a totalitarian regime.

Consistent with its patronizing attitude, it is telling the masses to “mind its business.” In a country where there is least trace of sovereign power in the hands of the masses, envisioning the possibility of sovereign wealth under the regime is stupendously wrong. If the public is to be the witness, a sovereign wealth under the regime would not be any different from the scores of enterprises established under the hegemony of hidri. The masses do not have any thrust in them, nor do members of the regional organization (IGAD.) The troubles of the Eritrean masses do not end there. The regional organizations’ request for a sanction on the mining industry and the Diaspora community that served the bids of the regime for the last two decades should be well taken.

Although the exact figures are not known, Eritreans residing outside the country are a sizable percentage of the country’s population. Through propaganda, fear, subterfuge and an onerous tax system, the government was able to obtain both reluctant and active collaboration. Taking advantage of the lax laws of the host countries, the regime has maintained a strong political and economic link with the communities. Through its agents, among who are considerable citizens of the asylum giving nations, the Eritrean government orchestrated rallies and meetings have become a norm. With their help the regime has repeatedly attempted to influence the decisions of the UNSC. In the eventuality of any economic sanction, the Diaspora Eritreans will remain as instruments busting its effects.

The call for a sanction of the Eritrean Diaspora as summoned by IGAD is a cue for the nations of the West to endorse and do the same. In the same fashion, the Eritrean communities who were willingly or with coercion, or blackmail supporting the regime’s domestic repression and its subversive activities must immediately desist from such collusion. They should instead applaud and endorse the courageous call of the IGAD made in Malabo, Equatorial Guinea, to sanction Eritrea where it matters most – the mining companies and its Diaspora supporters.

1. Keiger, Dale. The Curse of the Golden Egg, Johns Hopkins Magazine February 28, 2011.

2. Shaebia.org, Ban Ki Moon Applauds Eritrea’s Role in Sudan, July 9, 2011.

3. Keiger, Dale. The Curse of the Golden Egg, Johan Hopkins Magazine February 28, 2011.

4. BBC. June 12, 2011.