The government has spent precious money to import tons of weaponry and ammunition, leaving the country with a severe hard currency shortage.

``There is limited infrastructure activity, no private investment, no exports. The few investment projects there were are now on hold,'' said John Weakliam, a Western banker based in Asmara.

Only last July, the International Monetary Fund called Eritrea's economic progress ``impressive,'' noting a GDP growth rate of between 7 and 8 percent.

In October, President Isaias Afwerki called the fighting a ``temporary distraction'' in the economy. But the war, which began last May, has dragged on for months longer than expected, forcing tens of thousands of Eritreans who would otherwise be working -- and spending -- to fight on the disputed border with Ethiopia.

The country's 3.5 million people have pretty much stopped producing goods, reducing the economy to its most basic form: importing products and distributing them for sale, Weakliam said.

``Until now, there has been only collateral damage. From now on until the war is over there will be structural damage to the economy,'' he said.

Last week, Ethiopia officials said that the war had badly hurt the economy in its regions bordering Eritrea but had only a limited effect on the rest of the country of 60 million people.

Ethiopia's gross domestic product continued its strong rate of growth, and inflation remained in check, said Neway Gebre-Ab, chief economic advisor to Prime Minister Meles Zenawi.

Nearly 2,000 foreign residents fled Eritrea last June when Ethiopian MiG fighters bombed Asmara's international airport. The 54 U.S. Peace Corps volunteers who left never returned.

Members of Britain's Voluntary Service Organization and other foreigners left in February when heavy ground fighting resumed after a seven-month lull.

Since then, rental prices for houses in upscale neighborhoods have plummeted. A furnished four-bedroom ``executive'' villa that only three months ago rented for $1,360 a month now goes for $340.

At the end of March, thousands more Eritreans were sent for military training and service at the frontlines. Estimates of the number drafted range from 20,000 to 60,000. Fewer potential soldiers are receiving exemptions to keep businesses running.

Exit visas for Eritreans under 40 have been suspended. Even some of the 55,000 ethnic Eritreans deported from Ethiopia since the war started say they have received notices to report to National Service.

University students with military experience have dropped out of classes only a few months before the end of the term for training as military police.

``Where I work they lost three people (to the draft),'' said a graphic designer who declined to give her name. ``They had to employ me as a contractor because the others were gone.''

Residents complain it has become increasingly hard to find repairmen -- from auto mechanics to people who know how to fix the ubiquitous roll-up window blinds.

With income-earning relatives off fighting, the personal finances of many Eritreans are in ruins.

Income taxes have been increased to cover war costs. Remittances from family members abroad have dropped as expatriate Eritreans contribute directly to the war effort.

With a deeply ingrained culture of martyrdom based on a 30-year guerrilla war against Ethiopia that culminated in independence, most Eritreans shrug off the problems.

Residents in the capital Asmara continue to stroll down the palm tree-lined streets, buy newspapers and sip coffee and tea in their favorite cafes.

Stores remain well-stocked with imported and local goods. And prices remain low. Meanwhile, new businesses, including bars, video stores and small grocery stores, have opened in recent months.

Observers say the ability to maintain normalcy in such desperate times was built up over Eritrea's independence struggle with Ethiopia.

Eritrean merchants have passed up the chance to capitalize on the crisis by marking up their goods, Weakliam said.

There were no details on the firms listed for sale.

The state privatisation agency said it had already sold 176 state-owned enterprises at an aggregate price of 2.5 billion birr ($333 million) since 1993. The money had been put to development projects across the Horn of African country.

The privatised firms included retail shops, factories, hotels, agro-industries and a gold mine.

Lege-Dembi, the only operating gold-mine in Ethiopia, was sold at $175 million to the National Mining Corporation (NMC) ownded by Saudi financier Shiek Mohamed Hussein al Amoudi.

INTRO:  IN THE PAST YEAR OF FIGHTING, ETHIOPIA HAS DEPORTED 
THOUSANDS OF ERITREAN NATIONALS, SAYING THEY ARE SECURITY 
THREATS.  V-O-A'S EAST AFRICA CORRESPONDENT SCOTT STEARNS REPORTS
FROM ASMARA, MANY OF THOSE PEOPLE ARE FINDING IT HARD TO READJUST
TO LIFE BACK IN ERITREA.

TEXT:  EVEN AFTER THE WAR STARTED LAST MAY, MOST ERITREANS WERE 
SURPRISED TO BE DEPORTED FROM ETHIOPIA -- IN PART BECAUSE THEY 
DID  NOT  THINK FIGHTING WOULD CONTINUE, AND ALSO BECAUSE MANY 
CONSIDERED THEMSELVES ETHIOPIANS.

HAILU ALHAJI MAHMOUD WORKED 55 YEARS FOR THE ETHIOPIAN 
GOVERNMENT, ENDING HIS CAREER AS A SUPREME COURT JUSTICE.  HE 
FOUND THAT DID  NOT  MATTER WHEN THE POLICE SHOWED UP ONE 
MORNING.

                     ///  HAILU ACT ONE  ///

         I WAS ELECTED BY THE ETHIOPIAN PARLIAMENT TO BE A JUDGE.
         THAT PRIVILEGE IS ONLY GIVEN TO FEW FORTUNATE 
         ETHIOPIANS.  AS AN HONEST ETHIOPIAN, I WAS GIVEN THIS 
         CHANCE. I HAVE NEVER THOUGHT THAT I AM AN ERITREAN. 

                        ///  END ACT  ///

LIKE ALL THE CIVIL SERVANTS DEPORTED, MR. HAILU LOST HIS 
GOVERNMENT PENSION.  ERITREANS WHO FOUGHT IN ETHIOPIA'S ARMY  NO 
LONGER RECEIVE THEIR BENEFITS EITHER.  BANK ACCOUNTS ARE FROZEN. 
THERE IS  NO  APPEAL FROM ETHIOPIAN EMBASSIES ABROAD.

BUSINESSMAN BELAY TEWELDE LOST EVERYTHING IN ETHIOPIA.  IF NOT 
FOR OFFICES HE OWNS IN ERITREA AND SAUDI ARABIA, HE SAYS HE WOULD
HAVE NOTHING.

                       ///  BELAY ACT  ///

         I NEVER EXPECTED TO BE DEPORTED.  THEY CAME 5:30 IN THE 
         MORNING WITH SIX OR SEVEN ARMED POLICEMEN AND THEY TOOK 
         ME FROM MY HOUSE.  I HAD NINE DAYS OF TRAVEL WHICH WAS 
         HORRIBLE.  I COULDN'T DO ANYTHING.  I COULDN'T GIVE 
         POWER OF ATTORNEY TO MY EMPLOYEES.  I COULDN'T SEE MY 
         PROPERTIES.  AND AT LAST I UNDERSTAND NOW THEY HAVE 
         AUCTIONED MY HOUSE -- MY PERSONAL HOUSE -- THEY HAVE 
         AUCTIONED IT. 

                        ///  END ACT  ///

SERASH TESFA GIORGIS WAS BORN IN THE ETHIOPIAN CAPITAL.  THE 
20-YEAR-OLD PLAYED ON ETHIOPIA'S NATIONAL BADMINTON TEAM.  SHE 
WAS PREPARING FOR A TOURNAMENT IN SOUTH AFRICA WHEN SHE WAS TOLD 
TO LEAVE FOR A COUNTRY SHE KNEW NOTHING ABOUT.

                    ///  SERASH ACT ONE  ///

         I DIDN'T KNOW ANYTHING ABOUT ERITREA.  ALL THE ERITREAN 
         CULTURE AND LANGUAGE IS NEW FOR ME.  I DIDN'T SPEAK 
         TIGRINIAN. ALSO I DIDN'T UNDERSTAND TIGRINIAN.  IT IS 
         DIFFICULT FOR ME AT THIS MOMENT. 

                        ///  END ACT  ///

IN THE MORNINGS, MS. SERASH WORKS PART-TIME AS A SECRETARY.  IN 
THE AFTERNOONS, SHE IS HELPING ORGANIZE ERITREA'S FIRST BADMINTON
LEAGUE.

FOR THE 25-THOUSAND ERITREANS DEPORTED BY ETHIOPIA IN THE PAST 
YEAR, THE GOVERNMENT HERE HAS GIVEN THEM A SIX-MONTH FOOD RATION,
CASH, AND HELP FINDING A NEW JOB.  STILL, THE ADJUSTMENT HAS BEEN
HARD FOR MANY.  MS. SERASH SAYS SHE CANNOT  UNDERSTAND WHY PEOPLE
MINDING THEIR OWN BUSINESS CAN GET CAUGHT UP IN SOMETHING THAT IS
NOT  THEIR FIGHT.

                    ///  SERASH ACT TWO  ///

         IN THE POLITICAL SITUATION, I DIDN'T KNOW ANYTHING ABOUT
         ETHIOPIA OR ERITREA. I KNOW ABOUT SPORT. 

                        ///  END ACT  ///

JUDGE HAILU STILL CONSIDERS HIMSELF AN ETHIOPIAN BUT VOWS NEVER 
TO RETURN TO THAT COUNTRY AFTER WHAT HAS HAPPENED DURING THIS 
WAR.

                     ///  HAILU ACT TWO  ///

         IF I AM GIVEN THE WEALTH OF THE WORLD, I WILL  NOT  GO 
         BACK THERE.  IT IS  NO  MORE A COUNTRY OF LAW, WHO CAN 
         RESPECT THE RULE OF LAW.  FORTUNATELY, I AM  KICKED OUT 
         TO THE COUNTRY OF MY FOREFATHERS.  I HAVE NEVER THOUGHT 
         THAT AN ETHIOPIAN WOULD BE EXPELLED FROM ETHIOPIA.  IF 
         THEY HAD SOMETHING TO SETTLE WITH ERITREA, LET THEM 
         SETTLE IT ON THE BATTLEGROUND. 

                        ///  END ACT  ///

THERE ARE STILL ERITREANS IN ETHIOPIA AS THERE ARE STILL 
ETHIOPIANS IN ERITREA.  THE ETHIOPIAN EMBASSY HERE (IN ERITREA) 
ESTIMATES THERE ARE AS MANY AS 80-THOUSAND ETHIOPIANS LIVING 
LARGELY AROUND THE CAPITAL.

MOST OF THE PEOPLE ARE FROM ETHIOPIA'S NORTHERN TIGRAY PROVINCE 
WORKING AS MAIDS AND GARDENERS, FIELD HANDS AND DAY LABORERS.  
ERITREA HAS  NO  POLICY TO DEPORT ETHIOPIANS ALTHOUGH SOME 
ETHIOPIANS HERE SAY THERE IS A CLIMATE THAT MAKES THEM FEEL 
DECIDEDLY UNWELCOME.

INDIVIDUAL ACTS OF VIOLENCE AGAINST ETHIOPIANS INCREASED 
FOLLOWING ERITREA'S BATTLEFIELD LOSS AT THE BORDER TOWN OF 
BADAME.

AN 18-YEAR-OLD ETHIOPIAN SAYS HE WAS BEATEN BY A GANG OF 
ERITREANS ON HIS WAY HOME FROM WORK AT A DOWNTOWN CONSTRUCTION 
SITE.  BECAUSE HE STILL LIVES HERE, HE WOULD  NOT  GIVE HIS NAME.
HIS FACE IS SWOLLEN WITH TWO BLACK EYES.  HIS CHIN IS SPLIT.  
THERE ARE BLOOD-SOAKED BANDAGED ON BOTH CHEEKS.

      ///  BEATEN ACT ONE - IN TIGRINIAN - FADE UNDER  ///

HE SAYS HE WAS BEATEN SO BADLY HE LAY THERE ALL NIGHT BECAUSE HE 
COULD  NOT  GET UP.  HE SAYS HIS ATTACKERS TOLD HIM THEY WERE 
GOING TO KILL HIM BECAUSE THEY WERE ABOUT TO LEAVE ASMARA FOR 
MILITARY TRAINING AND DID  NOT  WANT HIM LIVING IN THEIR CAPITAL 
WHILE THEY WERE GONE.

AN ETHIOPIAN SHEPARD SAYS HE WAS BEATEN AT NIGHT WEST OF ASMARA. 
HIS LEFT EYE IS SWOLLEN SHUT.  THERE IS A DEEP GASH ACROSS HIS 
FOREHEAD.

      ///  BEATEN ACT TWO - IN TIGRINIAN - FADE UNDER  ///

HE SAYS TWO MEN WAITED FOR ME AT NINE-O'CLOCK AND KEPT BEATING 
ME.  HE CAME TO ERITREA BECAUSE THERE IS MORE WORK HERE.  NOW 
AFTER SIX YEARS, HE SAYS IT IS TIME TO GO HOME.

THE HEAD OF THE U-N HUMAN RIGHTS AGENCY, MARY ROBINSON, HAS 
CRITICIZED ETHIOPIA FOR EXPELLING ERITREANS, SAYING THE 
DEPORTATIONS VIOLATE INTERNATIONAL LAW.  ETHIOPIA SAYS THE 
ERITREANS IN QUESTION WERE RAISING MONEY FOR THE WAR EFFORT OR 
THEMSELVES POSED A DIRECT THREAT TO NATIONAL SECURITY.  (SIGNED)

NEB/SKS/JWH

23-Apr-99 9:26 AM EDT (1326 UTC)
NNNN
Source: Voice of America