PFDJ’s Voodoo Economics
‘Where there is smoke, there is fire. Those who insist on seeing the fire before taking action will find out too late that it is.’
PFDJ Myth (1): Private sector in Eritrea is non-existent, and is incapable of developing into world class and vibrant sector.
In reality, Eritrean businesspeople have made millions of dollars (not just in Nakfas) outside Eritrea – in Ethiopia, Sudan, Kenya, other parts of Africa, Saudi Arabia, Dubai, Kuwait, and other parts of the Middle East, Europe and North America. Eritreans did not know the languages in these countries, and they were foreigners, but they were given one chance - to show their business acumen and they proved themselves. There is only one factor that hindered these world class Eritrean businessmen from performing their miracles in Eritrea – PFDJ and its voodoo politics and economics.
PFDJ Myth (2): The Eritrean economy is suffering because of the unresolved border conflict with Ethiopia.
In reality, during the armed struggle, EPLF, when power wasn’t and couldn’t be too concentrated, managed to win the Eritrean independence against all odds and yet managed to achieve more economically and socially in ‘liberated zones’ than an independent nation with immense world support has managed to achieve. These include,
· Pharmaceutical plant in Sahel managed to produce over 32 types of basic drugs during the armed struggle. It took over 14 years after independence to bring the Keren pharmaceutical plant into production with assistance of a Jordanian company. Its products are only comparable with what Eritreans produced under the most strenuous conditions in Sahel.
· Eritreans managed to re-engineer trucks ‘the Eritrean way’, called ‘Vodka-Cola’, that managed to crisscross the difficult Eritrean terrain. What has independent Eritrea under PFDJ managed to do with all the powers of a State?
· Eritreans in Sahel produced sanitary napkins, food products, prosthetic arms and legs, and many other things that were essential for everyday living.
· Each unit, especially those in Sahel, grew their own food and animals and thus ensuring their own self-sufficiency.
· Roads were built, and ‘Biddho’ is considered a structural feat. The same determination and geniuses that built thousands of miles of reinforced trenches/canals could have built far more world-class infrastructure in Eritrea that we are witnessing today.
If Eritreans managed to achieve all these during the armed struggle under the most unfavorable conditions and when the whole world seemed to be against its national birth, what is one naturally expected to achieve after independence? Far, by far, more than what we are witnessing today.
Today’s Eritrea, under PFDJ, is a pale of itself in Sahel, and that is IRONIC!
PFDJ Myth (3): PIA tells us that democracy without economic progress is not attainable. Unfortunately, the Minister of Ministry of Destruction [err … Development) Dr. Woldai Fitur regurgitated the same theme during his interview with BBC few months ago. For purportedly experienced person at the UN, one hopes his lessons did not include about democracy and economic progress.
In reality: Democracy and economic progress operate like ‘hand and glove’. One reinforces the other. It is strange that PFDJ is bent on destroying the Eritrean economy, which is probably PFDJ’s proxy war on democracy in Eritrea. The deliberate and systematic destruction of Eritrean economy has one and only one purpose, and has nothing to do with economic or external political factors.
Minister Haile Woldetensae [Drue] expressed his views in August 2000, which I find to be the most quotable and wisest suggestion I have heard in a number of years, that once the UNMEE troops are deployed in the disputed area, Eritrea should begin to engage, without any delay, in focusing on domestic issues beginning with the Constitution. As an experienced leader, Minister Haile understood that the border issue would become a hostage issue for the PFDJ regime to destroy Eritrea.
Minister Haile is locked up somewhere in PFDJ’s countless dungeons, but not his words and wisdom. Minister Haile’s words are haunting PIA and the PFDJ regime. Eritrea has many brave and wise people like Minister Haile, who could have lived a cozy life by submitting to PIA, but chose not to despite knowing the grave consequences. We simply have to learn to fine-tune our thought wave with those vast majority Eritreans who are working for the betterment of Eritrea.
The following discussions on PFDJ’s voodoo economics are based on my limited understanding of business and economics, and thus encourage my readers to correct me.
The factors of production, or the things one needs to produce such products as foodstuff such as pasta, or building materials such as bricks, are
And let me add this one,
· Rule-of-law, which is like the invisible force that puts the above three factors in motion to achieve the desired results.
The most important factor that drives economies is ‘confidence’. We hear about ‘investor confidence’, ‘consumer confidence’, and other measurements of confidence. Some of these ‘confidences’ are purely economic predictions. For instance, ‘consumer confidence’ is based on future outlook on job opportunities, inflation, etc… which may encourage or curtain consumer spending resulting in some economic impact. These are purely economic, with some social factors.
In Eritrea and other third world countries, the most important measuring factor of their investment attractiveness is ‘investor confidence’ towards these countries. Any prudent investor does not want to gamble away their hard earned money in a risky venture. What is risk? In developed countries, there are various types of risks, which the market has internalized. In countries such as Eritrea, there is the additional political risk. Genuine investors, which does not include mafia mobs, loath unnecessary risk.
In PFDJ’s Eritrea, the total absence of the rule-of-law is so blaringly obvious, even the most unscrupulous investors are staying away from it. The Tamar Oil business deal with the Libyans appears to have gone sour. PIA’s pet project in Massawa in collaboration with Italian ‘businessmen’ seems to have fallen through the cracks. Although the various international mining companies have returned to Eritrea after unceremoniously being instructed to halt their operations, Eritrea, and not PFDJ, will pay for this irresponsible act over a number of years. Moreover, PFDJ’s handling of the mining companies will ensure that many other genuine companies shun Eritrea as their destination for direct foreign investment in Eritrea for number of years to come.
The simple question to fellow Eritreans is, would you invest in a country where the government, or its unaccountable leader and his cronies, can seize business assets and revoke licenses without the due process of the law. Absolutely not!
How would a nation that adheres to the rule-of-law handled grievances or differences with the business community. Simple, any nation that respects the rule-of-law would have pursued a legal means to settle its difference or grievance. Under the rule-of-law, a government is just one party, just like any other individual, who must abide the laws of the land. If Government of Eritrea (GOE) had grievance against the mining companies, it should have pursued it through the courts. This is the twenty-first century, not the middle ages. Although the government of Eritrea eventually allowed the mining companies to continue their operations, the damage has been done – and will affect Eritrea adversely for years to come.
Without the rule-of-law, there cannot be ‘investor confidence’. Conversely, without ‘investor confidence’ there cannot be investment, which is critically needed to create employment, and to increase production – and, in general, to achieve economic growth and prosperity. The rule of the game is simple, and yet we end up failing to play the game.
By deliberately destroying the rule-of-law in Eritrea, PFDJ is ensuring that Eritrea is unable to overcome its economic woes, and thus strangling it at its infancy. The nagging question remains, ‘why’? I leave the answer to my readers.
1. Land
The biggest destination of non-farm investment is in and around Asmara. The PFDJ regime has not exerted the necessary effort to resolve the land issue for the benefit of investors.
In general, the land issue is very delicate in Eritrea and requires fair but decisiveness actions to encourage investment. Needless to say, there cannot be investment without availability of land. In other words, if the land issue is not resolved, there cannot be any meaningful investment in Eritrea.
2. Capital
Capital is a resource that society has not consumed, such as a saving or broadly as cash, which is used for production of the many things we need to survive, and beyond that to enjoy life. Capital can be in the form of extra cash, buildings, tools, machineries, and many other things.
Where does capital come from?
Of course, in PFDJ’s Eritrea, capital is formed through their voodoo economics. But in real world, unfortunately, capital is created and increased through ‘profits’. In other words, without profits, there can’t be increased production, and thus no increase in employment – and eventually stifling economic growth and prosperity.
In plain terms, PFDJ’s voodoo economics has strangled the Eritrean economy by usurping ‘profits’.
What are the sources of capital?
a. Eritrean domestic private capital: these are domestic Eritrean business people who have been ridiculed as being ‘greedy’ and ‘non-existent’ and who eventually were prohibited from engaging in any kind of local activities other than to open some local groceries and eating establishments. Instead of encouraging this sector, it has been marginalized and their profits shifted to army officers whose only pastime is draining expensive and draining Eritrea’s meager ‘hard-currency’ on black-label and blue-label whiskies.
b. Diaspora Eritrean private capital: Due to the lack of rule-of-law and transparency, Eritreans in Diaspora have stayed away from investing in Eritrea. The few that managed to invest in Eritrea have learned PFDJ’s voodoo economics the hard way. These are Eritreans who earned their millions in ‘DOLLARS’, and managed to create miracles in other foreign lands. These Eritreans have been told, in effect, to stay away from Eritrea. Had these modern and experienced businessmen were allowed to perform their magic, tens of thousands of new jobs would have been created in Eritrea. The government of Eritrea would have earned its tax dollars for many social and economic projects.
For clarity, Eritrean businessmen in Diaspora did not stay away from Eritrea because of the border conflict. It is simply due to the total failure of PFDJ to abide by any kind of civil behavior.
c. PFDJ capital:
i. Most of PFDJ capital is rumored to be deposited in international banks. This is a capital loss or drain for Eritrea, and gain to those countries that use Eritrean capital usurped by PFDJ.
ii. PFDJ cadres and army officers continue to siphon off funds and business profits, but are more interested in today’s enjoyment rather than tomorrow’s Eritrea. None have the capacity to run a business that is not conducted by the barrel of the gun.
d. International investors: will continue to observe the following failures,
i. Eritrean people in general, and specifically Eritrean businessmen in Diaspora have failed to return to Eritrea to engage in business activities.
ii. Total absence of the rule-of-law and human rights violations will ensure that international investors remain uninterested in Eritrea. These investors review human rights reports, consult their embassies, and other reports before making their decisions.
iii. Unsettled and still inflamed border dispute will discourage the vast majority of international investors.
3. Labor
There are different types of labor – professional, skilled, and unskilled. Developing human resources is not about turning every youngster into bricklayer, or construction laborer. Any economy needs different types of professions and skills.
In the past few months, we have been hearing news of University of Asmara (UofA) getting closed down. UofA has currently only third and fourth year students. The Mai Nefhi technical school was closed down no sooner than it was opened. In what one can only speculate as frustration, the President of UofA, Dr. Woldeab Issac, has resigned and is back in the USA.
If we don’t train doctors, engineers, plumbers, electricians, computer specialists, and hospitality industry experts today, doesn’t this tell us what Eritrean labor market will look like in five years or ten years? By closing down these institutions, aren’t we closing down Eritrea’s future? It would be dumb to express an opinion that sounds optimistic such as ‘we will see what will happen in five years or ten years. We will worry about it then when we cross that bridge’. What ain’t here today, will not be there tomorrow, period. It doesn’t take a genius to figure that out.
Even the so-called ‘unskilled’ workers in many Asian countries are far more efficient at utilizing newer and modern technologies. There are extensive on the job-trainings. Even Eritrea’s unskilled laborers are falling behind very fast.
Who is to blame for the closing down of institutions of higher learning in Eritrea? The Woyanes? The G-15? The endless traitors that pop out like spring water from the belly of the earth?
In an age when higher degree of specialization, sophisticated use of knowledge and information is the order of the day, Eritrea is being left way far behind. Instead of using its meager resources to make valiant attempts to catch up, Eritrean youth are spending their days staring at the sun during the day and the moon at night, totally disconnected from the world. At a time, when the globe is shrinking into a small village, our youth are not being equipped and prepared to transcend their physical world and to enter into the cyber world.
Instead, the discredited ‘Warsai Yekalo’ campaign, which has been mercifully dropped from PIA’s speeches, and yet desperately being kept alive by the cronies, is all about destroying labor. Utilizing thousands of young bodies where one bulldozer can efficiently do is a waste of precious resource. Some argue that our young must learn ‘hard work’. Hard work without commensurate compensation is slavery. No one wants to be a slave. Any economic philosophy that believes people will continually engage in ‘hard work’ without commensurate compensation is building their economic policy on sand. The simple question is, can the economy generate the type of activities that will encourage people to work hard? This means pursuing an open and free economy where those who work hard will be rewarded accordingly. ‘Incentive’ and ‘hard work’ are synonymous. Only then will people work hard.
Ironically, in PFDJ’s Eritrea, those young people who are told to work hard for free in the name of their country are the ones whose families are suffering all the economic burdens. The beneficiaries of this ‘hard work’ are the army officers and PFDJ cadres whose idea of ‘hard work’ is draining down expensive whiskies and impregnating every girl that comes within their sight. Warasi Yekealo is the most negative lesson for our youth in that hard work is punished and the opposite is rewarded. In the meantime, Eritrea continues to sink not slowly but at a pace that will leave the country in a state of trauma very soon.
The lack of trained professionals and skilled laborers in Eritrea will present very difficult challenges to the next government, which will inherit totally unskilled, unprepared, and disenfranchised youth.
It is with a degree of amusement that I note many people getting excited about the prospect of discovering commercial level natural [mineral] resources, including gold, copper, and oil & gas in Eritrea, ‘AS IF’ Eritrea is now poor and that our richness depends on these discoveries.
Eritrea doesn’t need to wait until mineral resources are discovered to be rich. It is already extremely rich, especially when one factors in a small population base. Eritrea is endowed with marine resources, which can yield upward of $500 Million USD in fisheries. It can sell salt, marble, granite, cement, and other natural resources. Our coastal line and islands are an envy to tourists. Eritrea is strategically located for shipping, airline, and many other activities.
The only thing that is obstructing Eritrea from getting rich is PFDJ’s voodoo economics, which hides unexplainable political agenda. It has nothing to do with the border conflict or Woyane or G-15. As Minister Haile Drue said we must concentrate in engaging in our domestic issues only.
Some of my fellow Eritreans will argue that PFDJ has brought some fishing trawlers to begin exploring our marine resources. Business, and especially international business, cannot be run by naval and other army officers, whose hard liquor-drinking binge begins at 10:00 AM in the morning, and whose innocent lady victims are served as desserts for their lunch. Business is not about having the necessary equipment, business is a culture. Army officers’ ideas of business are to conduct their affairs at the end of the gun barrel.
In North America, entrepreneurship is adored and encouraged above all in our economy. Entrepreneurship is about culture, skill, innovativeness, and calculated risk. Western governments have instituted laws and support programs that encourage this breed. If Eritrea is to grow into prosperous nation, entrepreneurship is the only way to proceed.
If Eritrea is to become a prosperous nation, government and political parties must totally abstain from direct business involvement. Where there is a perceived lack of public interest or capacity to engage in certain economic activity, public discussions must take place before allowing government to directly engage in that particular business [only]. Otherwise, politics and business create a narcosis effect that will surely destroy the private sector.
Eritrean Airlines is case in point. If rumors are true, the general manager of Eritrean Airlines, Capt. Asres, has left the airline and is back in the USA. Someone, whose credentials may not extend to business dealings, has filled his position. What bodes for Eritrean Airlines is for us to observe in the next few months. Regardless, mixing politics and business is disastrous for both.
Some members of PFDJ may claim that they must take up government posts because their livelihoods depend on it, but not Dr. Woldai Fitur. That a well educated, and someone without any financial worries, would willingly become the face of PFDJ’s voodoo economics is probably the tragic story of Eritrea.
EDA has held a couple of press briefings pertaining its latest meeting. However, eight days after the signing, it is still struggling to publicize the platform upon which an agreement was reached. Its difficulties only add to our worries. Issues can be resolved, but the wrong initial perceptions stick.
EDA’s claims during its press briefings that it is struggling for democracy, transparency, and accountability should show that it is [today], not that it will be [tomorrow] in post-PFDJ Eritrea.
In my opinion, I found Mr. Mussie Ephrem’s interview with GIC to be the most concise and satisfying. Mr. Mussie was very articulate in raising the key issues discussed during the opposition meetings. The fact that a new generation Eritrean is the one that has transcended a perceived paralysis in discussing the key issues speaks volumes about the need to inject young blood into opposition politics. The words of Minister Petros Solomon rang in my head. Minister Petros Solomon raised the same issue of injecting new blood into Eritrean politics to overcome political excess baggage.
Whether EDA holds press conference with Al-jazeera, Al-BBC, or Al-WYZ is secondary. The ones that will remove the PFDJ regime are the Eritrean people, not Al-WYZ. There is a wrong perception within the Eritrean politics that those Eritrean politicians that gain access to foreign media will win Eritrean public’s heart. We have heard of PIA’s refusal to hold interviews with local Eritrean newspapers while holding interviews with Al-Hayat, etc… We should regard this as disrespect to one’s own people.
What should make us proud should be when Mr. Hussein Khalifa holds press conference with Asmarino.com, Awate.com, Meskerem.net, and other Eritrean media [use phone or cyber conferencing] and receives and answers questions [through internet or other means] from the Eritrean public. Only after that should EDA hold meetings with the foreign press. One might be tempted to say that Mr. Hussein will hold meetings with the Eritrean public (in Diaspora) in due time. But perception is most important. All efforts must be made to reach out Eritreans first before reaching out to foreign press. By reaching out, I mean more than just a brief press statement. The most prudent thing for EDA would have been to withhold any press meetings until it is ready to present its platform to Eritreans, and then hold press conference with Eritrean news media first. By Eritrean media, it is more than simply one selected Eritrean media outlet, and must extend its invitations to ALL Eritrean media outlets. After holding press conference with Eritrean media, then proceed with meeting the foreign press the next day or some other days.
In the end, if we Eritreans do not respect each other, no one else will.
Berhan Hagos
March 13, 2005