Ethiopia. War broke out in May with neighboring Eritrea,
after Ethiopia accused Eritrea of occupying an area around
the town of Badme on what was considered Ethiopian territory
(for description of the conflict, see Eritrea). Behind the
conflict lay a time of irritation of economic nature. After
independence in 1993, Eritrea continued to use the Ethiopian
currency birr until 1997 when the country introduced its own
currency nakfa. According to
Countryaah, Eritrea claimed that the currencies were
equal, while in Ethiopia the nakfan was considered to be
greatly overvalued and demanded that trade between the
countries should be in hard currency. Eritrea responded by
doubling the fees for handling Ethiopian goods in its ports
and expelling Ethiopian customs and shipping personnel.
Ethiopia then redirected all foreign trade from Eritrea to
Djibouti and, after the outbreak of the fighting, closed
most of the telephone lines to Eritrea, which severely
limited the neighboring country's contacts with the outside
The war became a heavy burden for the already strained
economies of both countries. Ethiopia was granted a loan of
DKK 42 million from the International Monetary Fund (IMF) in
October. dollars, then the central bank eased their currency
The trial for the past three years against former
dictator Mengistu Haile Mariam and his associates continued.
A request from the defense for an end to the negotiations
after more than 500 testimonies was rejected in July.
However, in September, a larger number of senior officers
were released from the old regime, of all judges, to
reinforce the troops along the Eritrean border.