In 1991 hope reigned in Ethiopia. There was a peaceful transition of governments after a long period of civil strife. The main guerrilla movements in Ethiopia, the TPLF and the EPLF emerged from the war as brothers-in-arms ready to embark on a new era of peace and prosperity. Just seven years later, Eritrea invaded Ethiopia and a war ensued that cost 70,000 lives and did incalculable damage. This paper explores the economic relations between the two countries to show their significance in the eruption of the Ethiopian-Eritrean War.

There are three recurring themes in the recent economic history of these two nations: protectionism, Eritrean status, and the introduction of Eritrea’s new currency, the Nakfa. My work explores the ideas of the TPLF and EPLF when they were emerging guerrilla movements. An examination of the economic climate of the region sheds light on the policy concerns of the governments, culminating with the introduction of the Nakfa, which was the point of no return. It is through these concepts that the decade preceding the war must be analyzed. In this paper, I re-examine statistics, policies, and documents with the hope of revealing a new understanding of the implications of economic relations, and maybe providing a better avenue through which to pursue peace.

Included in

Economics Commons