Eritrea Gets Fast Start Rebuilding Economy

MORE than 18 months after Eritrea won its war of independence from Ethiopia, there is water and electricity again in the main city of Asmara. Everywhere schools and hospitals are being built and reconstructed.

Agricultural production has increased four-fold after years of drought and famine, and all of the 40 publicly owned industries that stood idle during the war are working.

These are major accomplishments for a territory devastated by more than 30 years of fighting. When the Eritrean People's Liberation Front (EPLF) finally wrested control of Eritrea from the defeated Mengistu regime of Ethiopia in May 1991, the province's infrastructure was shattered.

Eritrea is still not officially a nation. Foreign aid agencies are reluctant to offer assistance until a United Nations-sponsored referendum in April, when 90 percent of the population is expected to vote in favor of independence. Until then aid must go through the Ethiopian government.

"With the resources they have and the lower-than expected aid they have received, they are doing their utmost," one foreign diplomat says. "They paid so much for liberation that they want it to be a launching point for development."

Greater varieties of fruits, vegetables, and other goods fill the shops now.

People can place telephone calls outside the country and main roads and bridges are passable. New cars are even appearing on the streets instead of the 1960s models prevalent during the war.

With a good rain and official distribution of seeds, fertilizer, and oxen, the provisional government has boosted agricultural production.

The government also initiated the planting of millions of trees and construction of dams, terraces, and ponds. Help from abroad

Eritreans living in wealthy Western countries are sending back contributions, returning refugees are volunteering to teach in makeshift schools, and villagers are building hospitals from scratch. Former fighters, now government employees, agreed to work without pay for two years.

Besides reactivating the public-sector factories, the provisional government has started evaluating them in preparation for privatization, which will start later this year.

Because the government inherited a bankrupt treasury from Ethiopia, remittances from Eritreans abroad provide most of Eritrea's hard currency. Other income sources include custom duties and sales and income taxes.

"So far the amount of assistance we have received for reconstruction is extremely small especially when compared with our needs and when you take into account the damage after 30 years of war, recurrent drought, and the willful neglect of the Ethiopian government," says G. Michael Mengistu, head of the External Economics Cooperation Office.

Foreign donors have complained about the Eritrean administration's inflexibility. Believing that it knows what is best for its country-to-be, the provisional government has rejected some aid that it said had too many conditions attached.

In mid-December, however, a World Bank-sponsored mission, including representatives from the United States, the European Community, Italy, and the United Nations Development Programme, pledged $140 million toward Eritrea's reconstruction. Economic promise

Eritrea has begun invigorating its most promising economic sectors, including fisheries, tourism, and oil and gas.

With a 750-mile Red Sea coastline practically untouched during three decades of war, Eritrea has plentiful supplies of fish offshore. The administration has achieved a three-fold increase in seafood consumption among people more accustomed to grains.

The provisional government is also renovating several hotels in the port city of Massawa and the capital Asmara. It is negotiating with potential investors in tourist villages, hotels, and other tourist activities. Studies are also continuing that suggest significant oil and gas deposits exist in Eritrean waters.

The people's lives have improved somewhat since May 1991.

Besides the increased availability of water, electricity, fruits, vegetables, and other foods, the provisional government has increased employees wages by as much as 100 percent.

But Eritrea is still a poor region where most struggle to survive. Two-thirds of the area's 3 million people still rely on foreign food aid, and the gross national product is $115 per capita, one of the world's lowest.

Nevertheless, the people are still reveling in the calm and stability after years of violence.

"We are rich, not poor, because we have peace," said a 60-year-old woman from Massawa, about 75 miles northeast of Asmara.