Thread by @saayEritrea

1. Disclosure: I am on record as having said Statecraft is very hard. So critique of #Eritrea prez is within context of “statecraft is hard, but he makes it harder.” Let’s discuss today’s show (not interview) whose topics covered role of investment, including FDI, in economy.

2. Of the many levers used for economic development and which ones to prioritize, choosing is hard because everything is a priority in subsistence economies. Economics not being a hard science (and even its social science status being questionable) it’s a lot of trial and error.

3. In #Eritrea, it’s all trial and all error because this not-really-a-science field (economics) is at the mercy of another not-really-a-science field (politics) which, being authoritarian cronyism, is less capable of auto-correcting. For example:

4. In a previous interview, the president expressed remorse for a decision he (his ruling party) made in 2011: to approve extraction and export of copper concentrate. That is 12 years later, during which time a free press, an oppo party could have expedited the correction.

5. Todays focus being the economy, let’s narrow it down on the role of investment towards economic growth. One deals with Diaspora #Eritrean investment. And the other deals with Foreign Direct Investment (FDI.)

6. Prior to this interview, some devoted supporters of #Eritrea|s ruling party, did something they never do: mildly (but publicly) criticizing a policy (or lack thereof) that is making #Kenya #Uganda #SoSudan beneficiaries of Eritrean enterprise. Why not in Eritrea?

7. The president gave direct answers to both: direct but wrong. How do I know it’s wrong? Didn’t we just establish that economy is not a science? Because it has been tried for 24 consecutive years (excluding 1991-97), and it has failed.

8. If ur argument is US hostility, not the policy itself, which is responsible for the anemic economy (nations fending for their survival don’t grow), inviting US hostility was a political decision the #PFDJ made.

9. In any event, to hear #PFDJ media the same “US hostility” remains so why would 2023 be expected to yield different results from all the hospitality years? So the argument is really unpersuasive.

10. The prez flat-out said Foreign Direct Investment (FDI) is a zero-sum game. This is mystifying at many levels. Just because something is said emphatically doesn’t make it a correct policy. It is also dangerous for the country when an all-powerful man states it like a dogma.

11. The distance between a citizen expressing disagreement with this policy, and facing career ruin (ምድስካል) or indefinite detention is one phone call away. In addition to the injustice, the country’s opportunity to correct flawed policies is delayed by years, decades.

12. One can argue that certain types of FDI are harmful to the economy, or they don’t help reducing unemployment, but the categorical claim it is a zero-sum game is not supported by any data. In fact, the most comprehensive research done on FDI says the following:

13. “… we can conclude that the relationship between ‘economic growth’ and ‘foreign direct investment’ is a very strong one.”

[I was going to put this in article format but nobody reads anymore. No domestic direct investment on writing. It’s negative sum game 😎]

Back to FDI

14. He had an audience not reporters so not one of them asked “what do you mean by FDI is a zero sum game?” It’s not the direct economic benefit that Isaias is disputing when he says it’s a zero-sum game. He fears the power diffusion; its impact on his power, not #Eritrea

15. Example: let’s pick a company from the least political country, say, Liechtenstein which decides to invest in #Eritrea building a false teeth manufacturing center. Now will the Eritrean employees working in that company pray for the well being of their bosses or Isaias?

16. Will they get some ideas on what freedom, liberty mean? Will they ask “why not us?” Will they be critical of their government? Will they organize a labor union? Will all the FDI companies focus job creation on our region of #Eritrea? Will they compete with our parastatals?

17. As for Diaspora investment, the prez talks about the undesirable “corruption” it introduced when it was last tried (1991-97.) Again, there was no follow up on this “what do you mean by corruption” but those of us with grey hair may have some ideas.

18. What he means: the #Eritrean investors were engaged in activities that yield the highest return on investment (capitalists!) without considering overall impact on what it means to take a gov official (who happens to be your cousin) to lunch. And overtipping!

19. If that is “corruption”, what is the word for governing without a constitution, without a parliament or a private press that gives room and protection to whistleblowers so we don’t “regret” our decisions 10 years later, or popular mandate when your legal term expired in 1997?

20. CORRUPTION.

21. The president keeps referring to an economic “road map.” Is that in reference to the 1994 Macroeconomic Policy? Is it in reference to the National Indicative Development Plan which gets renewed every four years? Both? Where is an investor supposed to get information?

22. The investors have to get info from the presidents State of the State annual reports (in the form of an interview) with focus on area where language shifts from we (party, gov) to me (ነዓይ ዘገድሰኒ). Literally, “what matters to me.” Investors, here is ur መርሓ ጎደና:

23. ነዓይ ዘገድሰኒ:

⭕️ will your investment begin by employing 2,000 people or is it the usual bar/restaurant (no disrespect to bars/restaurants)?
⭕️ is there ability to scale to hiring 5, 8, 10,000 employees?
⭕️ is there capacity building, knowledge/technology transfer?

24. Sectors

⭕️ Is it focusing on animal herding? That’s a huge economic sector, including animal husbandry. Will the herders quality of life improve as a result of your investment?
⭕️Is it focusing on farming. That’s also a huge sector. Will the farmers benefit?

25. Organization

⭕️ a proprietor or have you pooled resources to form an LLC or a company?

⭕️ are you undercapitalized but you think just because you have a Samsonite you actually matter?

Wait: That was from a different interview years ago: it gives you peek into his mindset

26. As an investor, you are familiar with the phrase “Past performance is no guarantee of future results.” But, in the case of #Eritrea|s ruling party, it really is: its highest priority is maintain the same level of tight control over all aspects of #Eritrean life.

27. Therefore, it is unlikely to allow either foreign direct investment or Diaspora investment, no matter how many investor conferences it organizes. It is unwilling to take risks with anything that introduced an unknown into its formula tor eternal rule.

28. It prefers you save all your money and put your trust on the Eritrean parastatals: Red Sea Trading Corporation. It started out with $20,000 USD in 1984 and look at it now: it’s a conglomerate. Its Director is more important than the Minister of Finance.

29. Here are some safe & patriotic places u can invest your money:

Housing & Commerce Bank; Segen Construction; Asmara Wine and Liquor; Harat; Intercontinental…

Not even including our contraband & human smuggling business. We can put your money to better use than you can.

30. That’s it. Every year is ground zero: “beginning this year…”. Next year, it will also be “beginning this year.” The most dangerous place to be in #Eritrea is between #PFDJ and its money. So save yours, until better days.