The Economic Lesson Eritrea Simply Refuses to Learn

…But maybe PFDJ has finally learnt something: when you wheel in the same old faces to tell the world that everything is hunky-dory, when we can all see things are anything but... the world simply switches off…but instead of examining the message the government of Eritrea simply manufactures a different messenger. Those of us who took to rolling our eyes every time Dr. Ravinder Rena and Thomas Mountain were in one of their smoke and mirror shows at the expense of our people were in for a special surprise yesterday with the entrance of the latest ‘expert’ on Eritrea that was heralded by none other than Shabait.com (ministry of information)… complete with a press statement!

Apparently… according to Shabait: Prof. Mark D. Juszczak, an economic expert, said that at a time when the majority of western nations are faced with economic meltdown and African countries are engulfed in dire drought situation, Eritrea is registering continued economic growth anchored on the principle of self-reliance (emphasis is mine)…. I will return to Eritrea’s ‘economic development’ in a second… let me first say a bit about Professor Juszczac (don’t ask me to pronounce that!)…

Based on his bio on an article that the professor co-wrote with Hasan S. AlMatrouk (Knowledge Impact on Measurement: A Conceptual Metric for Evaluating Performance Improvement (PI) at the Kuwait Institute for Scientific Research in 2007): Mark was completing a doctorate in creativity optimization models and knowledge production at Teachers College, Columbia University in New York USA. Mark completed his M.A. in International Politics, specializing in politics of technology and innovation from Warsaw University Warsaw, Poland - Graduated Cum Laude. Mark joined Sanskrit Vidyapeet in New Delhi, India, and was a non-degree student at the Sri Lal Bahadur Shastri Rastriya Sanskrit Vidyapeet, where I took part in spoken Sanskrit classes. He graduated from Columbia College, Columbia University NY, USA with a B.A. – MEALAC (Middle East Asian Language and Culture). Co-Founder & Executive Director at ICAD in New York USA, founder & CEO Excelsior Admissions in London, and senior lecturer P/T at Manhattan Review, London. Mark taught three classes to 2nd and 3rd year journalism students, at University of Warsaw, Poland. The classes were workshops in journalistic writing in English. Mark also joined as an Intern– Executive Office of the Secretary-General at United Nations Headquarters, New York. Mark was the senior research analyst at E-Secure Docs, Inc. in New York USA.

Now as impressive as Mark’s resume is it doesn’t include economy or economic expertise of any shape or form not until 2007 any way… if Mark has gained any economic expertise in the four years since, then the expertise clearly doesn’t include sober assessment of economic analysis based on facts and figures… instead of looking at the evidence for the economic health of Eritrea to date Mark based his ‘paper’ as shabait called on a train journey going no where…

Professor Juszczak wants the world to learn economic miracle making ala Eritrea and bases it on the following virtues:

1.    Sound economic policies (e.g. self reliance)
2.    Virtually zero debt

I will start with the second; I am not sure where the Professor gathers his statistics on international debt but googlable information states that: in December 2008 it was estimated that Eritrea owed $961.9 million  in debt (http://www.indexmundi.com/eritrea/debt_external.html), unless the miracle included the disappearance of millions of dollars in red from international accounts there is absolutely nothing to indicate that Eritrea is debt free… virtually or otherwise…the ‘debt free’ myth remains a myth and only works for slogan minting but not economic policy making… when all is said and done we have a country that owes something like 65% of its GDP to international debt (most of it to IMF actually) and according to IMF repayments were due to start in 2008… since the GOE doesn’t bother to publish annual budgets it is impossible to tell if these repayments are being made… all this is on top of the Domestic debt which is estimated to be at around 135% of GDP… According to Christopher Eads of the Economics Intelligence Unit [1] Eritrea is an ideal candidate for HIPC debt write-off, however the conditions include maintenance of an IMF  programme for six months, something that economic experts contend the Government of Eritrea is unlikely to contemplate… I am afraid if there is a lesson to be learnt from Eritrea here is a lesson on how not to do things

Secondly Professor Juszczak wants the world to learn lessons from Eritrea’s economic model but neglects to tell us exactly what that model is, perhaps because Eritrea continues to follow an economic model that the rest of the world has abandoned; according to Dr Desalegn Abraha [2] whilst professing to follow a market and/or mixed economy models, close observations actually demonstrate that the Economic policies on ground are nothing but a dysfunctional militarist command economy that has been abandoned even by countries like China. Moreover even this has been improperly planned, poorly coordinated and hence extremely mismanaged with serious negative consequences for the Eritrean economy in general and the private sector in particular. To top it all off Abraha observes the Government persists with its mismanagement of the economy refusing to take steps to rectify the negative policies but embedding detrimental practice by introducing yet more egregious measures such as introducing state-owned staple food shops and issuing proclamations that prohibits keeping and transacting hard currencies. What Professor Juszczak failed to appreciate in his one page paper (that warranted a half page ‘press release’ on World Wide Web) is that the ‘sporadic periods of long bread and milk lines’ were neither sporadic nor necessary in this day and age. Eritreans have been forced to queue for one bread a day each as a direct result of the mismanagement that he is asking the world to learn. I suppose those of us who have had to watch our families reduced to scavengers were by this point grateful that the professor was not going to bestow President Issias’ wisdom of asking the nation to halve their calorie intake to support further mismanagement of his misguided policy.

It is clear that Prof. Mark D. Juszczak , didn’t take so much as a glance at other papers written on the real economic situation of Eritrea; for instance the unfavourably balanced reliance on remittance from the diaspora; according to David Styan [3], despite the questionable legitimacy of the ‘voluntary tax’ payments of 2% of income earned by Eritreans living abroad, the Government continues to relay on this for large sums of income that can only be estimated based on circumstantial evidence of income and expenditure (Eritrea’s exports were officially worth only about $20 million  against imports of $700 million- whilst it is difficult to ascertain; diaspora remittance is estimated to equate roughly a third of the value of GDP. 

The Government of Eritrea is only able to continue to extort remittance by controlling all avenues of official contact with ‘home’, ensuring the Eritreans in the diaspora have no other means of obtaining official documents or carrying out official transactions.  

However despite the fact that the Government doesn’t appear to have any compunction about these demands on the diaspora, concurrent economic pressures including those that are of the making of the government (e.g. harsh situations driving hundreds of thousands of young people to flee the country with their escape routes as well as government levied penalties paid for by their kin in the diaspora) is set to have an impact on the amount of remittance that can be drawn from the large diaspora community.

The irony however is despite the nationalistic ideals of self-reliance, Eritrea’s autarky has actually been precariously reliant on the economic activities of foreign countries and the good will of an immensely pressurised diaspora community. 

As mentioned above all of Prof. Mark D. Juszczak research into the Eritrean economy seems to have been carried out aboard the steam trains from Ferrobia he seems to have been impressed by the dignified gentlemen who rebuilt the trains and tracks a labour of love that has gained them international acclaim, but this is no economic miracle for them their children or their grandchildren. For if Juszczak had bothered to scratch beneath the slogans he would have found that invariably every last one of those dignified grandfathers have their children and possibly their grandchildren held hostage to a situation that enslaved an entire generation of young people that the Government drafted into the army and refuses to demobilise. Ironically the fact that the government has practically eradicated the private sector means that even if demobilised there are no jobs for them especially when all they have had the opportunity to do since leaving high school was at best gain rudimentary skills designed to support the government’s ill thought command economy. Not a sound economic policy that any sane person would recommend… much less an economic expert.

The past few months have seen an exciting surge of news of good economic prospects based on the predicted mining boom in Eritrea. God only knows that Eritreans need a miracle and I pray that a miracle would happen, but the track record of the government doesn’t leave much of a scope to hope that the people in charge in Eritrea wouldn’t mismanage even such a miracle.

The world could learn a lot from Eritrea and its amazing people’s courage and determination and that is what Prof Juszczak saw aboard the steam train and in his conversations with the people who painstakingly rebuilt it, but whatever that lesson is it certainly isn’t how to create an economically stable country

Footnotes

[1]The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide.

[2] Command Economy as a Failed model of Development Lesson Not Yet Learned The Case of Eritrea, paper presented at the 13th world business congress in Maastricht school of management in 2006. Dr. Desalegn Abraha Gebrekidan earned his PhD in Business Administration at the Uppsala University, Sweden in 1994. Currently he is Associate Professor of Marketing and International Business at the University of Skovde, Sweden

[3] Discussion Paper: The evolution, uses and abuses of remittances in the Eritrean economy- The Royal Institute of International Affairs, 2007. The Horn of Africa Group a collaboration between four London-based institutions: Chatham House, the Royal African Society, the Rift Valley Institute and the Centre for African Studies at London University.
David Styan has a DEA from the Centre of African Studies in Bordeaux, and a PhD from London School of Economics (department of international relations). In addition to his research on French foreign policy decision making and France's trade in oil and arms with the Middle East, he has written extensively on the Horn of Africa, most notably on the Ethiopian economy.
 

Selam Kidane
19-07-2011