Much of the progress made by Ethiopia and Eritrea in the decade since independence was undermine and even reversed at the end of 1997. In November, Eritrea introduced its own currency to replace the old Ethiopian birr. The new currency, the nakfa, represents not just an historic break with Ethiopia, but an economic one too – annulling the de facto currency union that had been in operation until then.
A despite over Eritrea’s whole exchange-rate system followed, and in early 1998 bickering began over bilateral trade relations. Resulting tensions between the countries escalated into a major military conflict that erupted in May June 1998 over a disputed border post near Badme.
Eritrea then occupied the town of Badme, followed in June by the towns of Shiraro, Zala Ambassa and Tsorena. An interim settlement proposed by the OAU was accepted by Ethiopia. At the same time, a much criticized mass deportation of people of Eritrea origin began from Ethiopia. After Ethiopia’s recapture of Badme in February 1999, Eritrea agreed to accept the plan. However, the fighting continued with major battles occurring on the Tsorena-Zala Ambassa front.
In June 2000, after a further ten months of failed international diplomacy in which Eritrea refused to approve changes to the peace plan proposed by the UN and OAU envoys, Ethiopia launched a major offensive that recapture all territory. It was on to occupy parts of central and western Eritrea as well. An amended settlement was then accepted by Eritrea which implemented a ceasefire and the installation of a OAU-UN buffer zone on Eritrean soil.
In December 2000, a formal peace settlement was signed in Algiers. In April 2001, a 25km deep demilitarized strip which ran the length of the internationally recognized border on the Eritrean side, was set up under UN supervision.
The Ethiopia – Eritrea War (1998 – 2000)
