Do sanctions work ? The case of Eritrea says “no”

Eritrean President Isaias Afwerki
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Eritrea has lived under United Nations economic sanctions for more than ten years without any notable impact on its politics or economy. Due to its covert economic operations and owing to weak and ineffective enforcement, Eritrea evaded the objective of the sanctions. A new unilateral sanction regime was recently re-imposed by the United States on the belligerent Horn of Africa nation – will the impact be different this time around?      

The U.S. treasury imposed economic sanctions November 2021 on the Eritrean ruling party, the armed forces, and a slew on Eritrean businesses, institutions, and individuals. The measure was in response to the growing humanitarian and human rights crisis in Tigray, Ethiopia, where the Eritrean armed forces reportedly committed widespread atrocities, which may amount to war crimes according to the Ethiopian Human Rights Commission and UN.

In August last year, the U.S. Treasury sanctioned the Eritrean army’s chief of staff, General Filipos Woldeyohannes, for the same reasons. Those sanctions were preceded by E.U. sanctions on Eritrea’s National Security Office in March 2021. Thus Eritrea and its officials have joined the club of more than two dozen countries and more than 6,000 companies, individuals and groups sanctioned by the US.  

But will they work?

Old or new sanctions, the same sins

The new sanction regime on Eritrea comes only three years after the UN Security Council lifted the old sanctions. The Eritrean regime has been at war with its neighbours since it declared independence in 1993, after a 30-years war of liberation from Ethiopia. After conflicts with the Sudan, Yemen, Ethiopia, and Djibouti during its first decade as an independent nation, President Isaias Afwerki turned his eyes on Somalia and reportedly started to support the Islamic rebel group Al Shabaab around 2007.

Hence the UN Security Council imposed an arms embargo on the Isaias regime in 2009, as well as travel and economic sanctions, for its links to Al Shabaab and for refusing to withdraw its troops from a disputed territory, namely Djibouti. The core criticism of Eritrea at the time was that its aggressive foreign policy had destabilised the fragile political context in the Horn of Africa.

In 2018, Ethiopia’s new Prime Minister, Abiy Ahmed, helped the regime in Asmara emerge from isolation and picked up a Nobel prize along the way when he signed a peace agreement with Eritrea in 2018. Subsequently, Ethiopia employed its leverage to help lift all the sanctions imposed on Eritrea.

It soon became clear, however, that this rapprochement was not intended to ensure long-term peace, but was rather a ploy by Isaias Afwerki to once again go to war against his arch-enemy the Tigray People’s Liberation Front (TPLF), this time with the support from the Ethiopian government itself.

Why sanctions failed

The informal and clandestine nature of the Eritrean government’s businesses and money-laundering operations makes them difficult to target with a formal sanction regime. Eritrea runs a vast and complex informal economy through which senior officials in the government and the ruling People’s Front for Democracy and Justice (PFDJ) party collect and control hundreds of millions of dollars each year in unofficial revenue streams, mainly from (partly coerced) taxation of Eritreans in the diaspora and private business arrangements involving PFDJ-run companies or business partnerships abroad.

Some of these enterprises, which are owned by government-controlled conglomerates, such  as engineering and construction companies, operate abroad. As a consequence, Eritrean government-owned revenue is “deposited” with a new class of Eritrean diaspora millionaires in South Sudan, Kenya, Uganda, and Angola, who are closely linked to military officials at home. The regime also runs small businesses across the world, including money transfers, bars, and restaurants, that operate simultaneously as instruments of surveillance of Eritreans abroad.

The Red Sea Corporation, one of these government owned conglomerates, has been named an octopus entity involved in multiple sectors that serve the ruling elite’s interests. The Red Sea Corporation also allegedly exports illicit gold and large quantities of alcoholic beverages to Sudan through individual trading networks.

The Eritrean government is moreover experienced in manipulating regional currency differences, a craft they developed during the early 1990s when they siphoned off millions of dollars from Ethiopia by using a different exchange rate to the Ethiopian currency in Eritrea than that officially set by the Ethiopian National Bank (ENB).

General Tsadkan, one of the leaders of Tigray Defence Forces, claimed in a recent interview that the Eritrean regime has more than 20 official foreign exchange bureaus in Ethiopia today – replicating their strategy from the 1990s – which they use to make a profit while laundering the state’s foreign currency – an accusation supported off-the-record by international diplomats.  

Taken together, these covert operations, the manipulation of the informal economy, ineffective implementation, and the use of international partners to facilitate revenue flows outside formal channels, enabled Eritrea to survive the decade long UN sanctions. In doing so, they have consistently relied on trusted “partners in crime”. First, Libya was such a trusted partner under President Gaddafi; after his fall, Eritrea engaged the Gulf countries, notably Qatar and Iran, before shifting focus to Saudi Arabia and the UAE in 2016.

What could be done to make sanctions effective?

The effectiveness of sanctions – and how to make them effective – is disputed.

Experts indicate that for US sanctions to be effective, they need to be specific, and to identify and target sources of revenue that keep the regime afloat and key players who control the funding. It helps also if those entities sanctioned have strong economic ties to the US, which makes it possible to go after the money directly.

For the sanctions on Eritrea to be effective, they must thus hit the economic nerve centre of the regime surgically and unveil its covert money laundering operations in Africa and the West. It may thus take considerable time and effort to be able to identify the appropriate business enterprises and individuals responsible.

For symbolic reasons, an effective strategy would probably also need to name and target President Isaias Afwerki in person and his main functionaries. Furthermore, all Eritrean ambassadors and consuls would need to be sanctioned for two reasons: first, they are vested with the responsibility to oversee the illegal activities in the countries they are accredited to, and secondly, it sends a strong signal to host governments that they harbor sanctioned diplomats.

To work, the sanctions would also need to target the primary known revenue sources of the Eritrean government, such as Bisha gold mine and the new Potash Colloli development and the foreign companies involved in those projects. All countries that help facilitate revenue streams, particularly Saudi Arabia and the United Arab Emirates, would need to be warned, and the illegal trade with Sudan and Ethiopia would need to be monitored.

To date, the U.S. imposed sanctions on Eritrea have not forced the Eritrea government to stop meddling in Ethiopian affairs, and it seems unlikely that they will do so in the future. In a recent interview with local government, the Eritrean president described the sanctions as ‘unjust and unfair’, and argued that it was imposed by special “interest groups” in the USA.

Isaias admitted that the sanctions hurt, but added that they made Eritrea even more resilient.

The U.S. has suspended development aid to Ethiopia, as well as the country’s status under AGOA, due to the atrocities that its troops have committed during the conflict in Tigray. However, Washington has yet to activate direct sanctions under the Executive Order sanctions regime, although Ethiopia has been warned about such possibilities.

So far, however, neither international criticism, nor the recent warnings, have persuaded the Ethiopian government to stop its aerial bombardment of targets in Tigray – or to allow humanitarian assistance to its famine struck population. Thus, sanctions or no sanctions, the most important net result is likely to remain the same: the humanitarian disaster in Ethiopia will continue.

Kjetil Tronvoll (@kjetil.tronvoll), Professor (of peace and conflict studies), Oslo New University College

Dr Mohamed Kheir Omer (@mkheirom), African-Norwegian writer with interest in the Horn of Africa, based in Norway 

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