Eritrea’s Future is Bright

By Michael Solomon, MD

As we celebrate the 35^th Eritrean Independence Day, it is useful to reflect on the country’s current position and future direction. However, before doing so, it is important to understand recent global developments, particularly those of the past few years and months. The world is experiencing significant shifts in political and economic power, shaped by changing alliances, trade tensions, and competition among major economies. These global dynamics influence international markets, security relationships, and domestic economic conditions, meaning that events especially between East and West have both direct and indirect effects in the horn of Africa and especially Eritrea.

Before we delve into historical context that have implications to current events, we need to establish that it is now widely believed that many global economic and geopolitical developments are connected to the rise of China, the country is increasingly viewed as an emerging superpower with growing economic, technological, and military influence. In response to this shift in global power, it is believed that recent international events reflect attempts to repeat historical strategies used against rising rivals. Over the last few months, comparisons have been drawn to two historical contexts: first, the use of economic pressure and trade restrictions similar to the tactics employed during the era leading up to the Opium War; and second, efforts to influence global energy supply routes and strategic alliances in ways reminiscent of past great-power rivals. 

The Opium War: 

The first historical context is that in the early 1800’s The Opium war started because of growing tensions between Britain and china over trade. Britain was buying large amounts of tea, silk, and porcelain from China but had little to sell in return, causing Britain to lose silver which was used to pay for the products it bought. To solve this trade imbalance, British traders began selling illegal opium, an addictive drug, to Chinese merchants. As opium addiction spread and harmed Chinese society and the economy, the Chinese government tried to stop the trade by seizing and destroying opium shipments. Britain which had military superiority reacted by sending military forces to protect its trade interests, which led to the start of the war in 1839.China was defeated, leading to unequal and unfair treaties that gave Britain greater control over trade and territory, including control of Hong Kong, known as the treaty of Nanjing and Tianjin (after the second opium war). China calls it the century of humiliation.

The New Opium War: 

Over the last few years, the United States has been running a large trade deficit with China, which reached about $202.1 billion in 2025. Some experts compare this economic tension to the historical Opium war, when Britain attempted to address its trade imbalance with China through economic pressure and eventually military force. Today, however, China is a major global military and economic power, making direct military confrontation far less likely. Instead, the U.S. has relied mainly on economic measures such as The Trans Pacific Partnership, tariffs, trade restrictions, the South china Sea confrontation and efforts to reduce dependence on Chinese manufacturing. Because China’s economy depends heavily on imported energy, some geopolitical analysts argue that control over global oil flows and energy markets by the US can influence China’s economic stability. China imports crude oil from countries including Russia, Venezuela and Iran. Some experts claim that conflicts or interventions involving these countries are primarily aimed at weakening China’s economy. 

The Plaza Accord: 

This leads us to the second historical context. When Trump visited China in May 2026, President Xi of China told president Trump about avoiding Thucydides’s Trap. Thucydide’s Trap is a political theory that describes a situation where war becomes more likely when a rising power threatens to displace an existing dominant power. The rise of China is inevitable, so how would they accomplish avoiding confrontation between a superpower and a rising superpower. Well this brings us to the Plaza Accord. The Plaza Accord was an agreement reached in 1985 between the United States, Japan, West Germany, France, and the United Kingdom. It was signed at the Plaza Hotel in New York and was designed to reduce the value of the U.S. dollar in order to correct large trade imbalances, especially the growing U.S. trade deficit with Japan and Western Europe. At the time, the strong U.S. dollar made American exports expensive and imports cheaper, contributing to trade deficits. Through coordinated intervention in currency markets, the participating countries agreed to weaken the dollar relative to the Japanese yen and German mark. In the years that followed, the yen strengthened significantly, which contributed to major changes in Japan’s export-driven economy. The Plaza Accord helped stabilize US economy but had a major and long-lasting impact on Japan, especially its economy in the late 1980s and 1990s. After the Accord agreement, the Japanese yen strengthened sharplyagainst the U.S. dollar. This made Japanese exports more expensive overseas, which slowed demand for key industries like automobiles and electronics. To counter this slowdown, Japan’s central bank adopted very low interest rates, which encouraged borrowing and investment inside the country. This easy credit environment contributed to a massive asset bubble in Japan during the late 1980s. Stock prices and real estate values rose to extreme levels, creating what is now known as the Japanese asset price bubble. When the bubble burst in the early 1990s, Japan entered a long period of economic stagnation often called the “Lost Decades.”

The New Plaza Accord: 

During a recent visit to china, Donald Trump accompanied by seventeen leading US corporate executives, some reports suggested the possibility of large-scale Chinese investment in the United States, potentially reaching $1 trillion. Analysts have interpreted these discussions as an attempt, or at least an analogy, to replicate elements of the Plaza Accord, suggesting a potential effort to manage trade imbalances through coordinated economic arrangements. However, there are reports that China sought to structure trade guarantees in gold rather than currencymanipulation, avoiding the Japanese trap.

Based on current global dynamics, China appears to possess significant leverage in shaping international relations and influencing the broader global order.

Eritrea During the One World Order: 

Prior to the current shifts in global geopolitical and economic dynamics, the international system largely operated under a unipolar world order in which Western powers significantly influenced global economic policies, international participation, and diplomatic engagement. Eritrea, as a nation committed to the principle of self-reliance, faced considerable resistance and punitive measures. This included exclusion from various international economic and diplomatic frameworks, restrictions on global financial transactions, and the imposition of successive sanctions. 

Despite these challenges, Eritrea continued its nation-building efforts by investing strategically in human capital, national defense, education, water conservation, healthcare, maritime security, and food security. Eritrea has made measurable progress in expanding access to education and improving literacy rates over the past two decades. The country’s adult literacy rate reached approximately 76.6%, while youth literacy exceeded 93%. Primary school enrollment stands at roughly 83%. There are many higher education institutions in Eritrea, distinguished not only by their number but also by the quality of education they provide. This quality is evidenced by the strong performance of Eritrean students who pursue further studies abroad in countries such as China, Russia, across Europe, North America, and South Africa, where they consistently rank among the top 10 percent of their peers. Their achievements serve as a testament to the high standard of education in Eritrea.

Eritrea’s healthcare system has historically placed strong emphasis on primary preventive care, focusing on immunization programs, maternal and prenatal care, sanitation, mosquito net distribution, and nationwide efforts to reduce and eliminate diseases such as tuberculosis and malaria. The country has also made notable progress in secondary healthcare services, including screening and treatment for diabetes and hypertension, heart disease, and specialized medical services such as ophthalmology, orthopedics, and neurology. Eritrea is now directing greater attention toward the development of tertiary healthcare services. This includes expanding capacity for advanced and complex medical procedures such as neurosurgery, open-heart surgery, organ transplantation, specialized burn treatment, and advanced cancer therapies requiring infusion-based treatment. The development of tertiary care has been one of the sectors most significantly impacted by Western sanctions and external political pressures, which have constrained access to medical technology, equipment, and specialized resources. Eritrea produces a range of pharmaceutical products domestically, including medications used for conditions such as diabetes, hypertension, cardiovascular diseases, and various antibiotics. This expansion in local pharmaceutical manufacturing is often viewed as part of broader efforts to strengthen healthcare self-sufficiency and improve access to essential medicines within the country. Azel Pharmaceutical which initially only produced three medications now produces over one hundred different medications that treat different medical ailments. Significant progress has been achieved in agriculture, food security, and water conservation. In the last 30 years, the government has built more than 800 dams and water reservoirs across the nation to support sustainable development and improve resilience against drought. 

Eritrea occupies one of the world’s most strategically significant locations in the Red Sea basin, positioned along the critical Bab al-Mandeb Strait, a vital maritime corridor for global trade. Ethiopian politicians often argue that Eritrea’s ports would be ineffective without Ethiopia’s economic participation, portraying Eritrea as economically dependent on its larger neighbor. However, this perspective is arguably shortsighted. In many respects, the opposite may be closer to reality: Ethiopia’s overall significance to Eritrea’s long-term economic prospects and trade partnerships is limited.

Ethiopia-A Beggar on a horseback:

Ethiopia continues to grapple with unresolved nation-building challenges and persistent ethnic-based political divisions. Economically, the country remains heavily reliant on agriculture and the export of largely unprocessed raw materials, generating approximately $7 billion in annual exports. At the same time, Ethiopia imports nearly $18-20 billion worth of goods each year, resulting in a chronic trade deficit of roughly $12–13 billion annually. To sustain this imbalance, Ethiopia depends heavily on financing from international institutions such as the IMF and the World Bank. In return, the country is often required to implement economic reforms and engage in repeated debt restructuring negotiations. These structural challenges have contributed to persistent foreign currency shortages, inflation, rising living costs, weakened investor confidence, unemployment, and increasing dependence on external financial support. Regarding the much-discussed Grand Ethiopian Renaissance Dam, there have been recurring reports that its energy output may be increasingly leased out or allocated to energy-intensive foreign industries such as cryptocurrency mining and data processing operations. These sectors are often attracted to large, relatively low-cost power sources, but they are also controversial in many countries due to concerns over high electricity demand and potential environmental impacts, depending on the energy mix and operational practices. If a significant share of this energy is directed toward such uses, it may raise questions about whether the dam’s full economic potential is being leveraged to directly support broader national development goals, including improving public services and raising living standards for the general population. This is a country that have been affected by mismanagement and policy shortcomings. At the same time, the situation can be interpreted as part of a broader period of transition and adjustment, as the nation continues to define its identity and position within the international community, provided it remains stable and avoids fragmentation.

Conclusion:

By contrast, Eritrea’s strategic advantage lies not only in its geographic position along one of the world’s busiest maritime trade routes, but in its principled leadership, resilient and self-reliant population, and strong work ethic. Even aside from the country’s broader natural and maritime advantages, its location alone presents substantial economic potential. Approximately $1 trillion worth of goods passes annually through the Bab al-Mandeb Strait and the Red Sea corridor, creating significant opportunities for Eritrea to benefit from international shipping, logistics, port services, trade infrastructure, and regional commerce.

Furthermore, global economic trends are shifting. China has emerged as the world’s leading manufacturing powerhouse, accounting for roughly 35% of global manufacturing output—surpassing the combined manufacturing output of the United States, Japan, and Germany. Also as Africa’s consumer markets continue to expand, Eritrea’s strategic location places it in a favorable position to capitalize on evolving trade dynamics and emerging economic opportunities in the Red Sea corridor.

Based on these considerations, Eritrea’s future outlook appears increasingly promising in terms of long-term economic opportunity and strategic relevance.

Happy 35^th Independence day
Awet N’ Hafash.