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Eritrean Depositors Lose Control of Their Funds

In a move reminiscent of past campaigns, over the last few weeks, the Isaias Afwerki’s government has arrested many people and sealed their businesses. Government sources indicated the reason for the far-reaching arrests is to investigate alleged crimes of corruption.

The doors of at least 200 businesses in Asmara and other places in Eritrea have been sealed by the government on charges of alleged corruption. The charges seem to be limited to businesses owners who issued checks to meet their transactional obligations, but the banks didn’t honor the checks.

Since the government changed the Nakfa currency bills two years ago, it has effectively taken control of all private and business assets entrusted to the banks. At the time the government claimed the move to achieve its goal of bringing Eritrea to the 21st century by limiting cash transactions. Eritreans were forced to use Bank checks instead of paper currency. However, in a country with a high illiteracy rate, and an almost non-existence experience in dealing with checks, the decision practically froze the already weak economy.

Banks who received checks with amounts exceeding the allowed amount were ordered to report the issuers to the security department who arrests the people for interrogation.

Contrary to known banking procedures all over the world, Eritrean banking officials do not disclose to the issuers, why their checks were not honored. Also, the depositors do not know what rules they violated, or the reasons for their arrest. No one including the special courts and bank officials seems to be up to date with the ever-changing rules.

The president’s office is the final and the only arbiter of the bank transaction rules.

Since 2015, depositors have practically lost free access to their funds in the banks; the government has full control of the entire money supply in the banks.

The latest victims of the new rules are Eritreans from the diaspora who hold bank accounts in Eritrea; the rules demand that account holders must appear in person to make a withdrawal. However, it is not known whether dully delegated persons can withdraw limited amounts on behalf of account holders to meet certain obligations.

This year, the tourism industry was the hardest hit due to the uncertainty of the security situation in the country. In addition, the high risk of exchanging hard currency in the black market has discouraged many potential visitors from traveling to Eritrea.

The official exchange of the US dollar is around 15 Nakfa to the dollar, 2 Nakfa lower than the black market.

Related Reading

Eritrea’s New Capital and Social Control through Currency Change
Shortage of Nakfa Bills Reported Outside Eritrea
Water: Black Market Economy of Eritrea
Eritrean Businesses: Between Loyalists and Others

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  • said

    Greetings,

    A NEW WORLD ORDER: IS A NO ORDER

    Jean-Jacque Rousseau, nearly three centuries ago, set the grounds for the frameworks for Civil Society, the New World Order of the time, in anticipation of boding revolutionary disruptions at different corners of the Western Universe, foremost the French Revolution that followed nearly half a century later.

    The intellectual framework that Rousseau edified in his historic doctrine, The Social Contract, permitted the ultimate orderly transformation and streamlining of the ensuing disruptions caused by the impending myriad revolutionary convulsions that followed in different spots of the Western World. The publication of the social contract coincided with the advent of the Industrial Revolution that ushered in technological breakthroughs that dramatically altered the factors of production and industrial relations that inturn had significant bearing on socio-economic relations within a society. The West was catapulted, as a result of these combined developments, into to unprecedented new realms of relative socio-economic prosperity.

    The Social Contract, as the name suggests, was a form of a universal constitution that aimed through the genius insight of Rousseau to the intricacies of Socio-economic relations within a society, and the emerging realities by the force of impending social, economic and political profound changes, to set the precepts for a framework that would harmonize and organize the competing interests of individuals and interest groups with the ultimate purpose of ensuring orderly evolution of the society towards constructive development and capturing of collective latent potentials. Consensual assent between the constituencies making up the social and economic order of a society was aimed at safeguarding social harmony through equitable and just considerations of the rights of the individual and the groups; the very essence and central theme and genius of visionary JeanJacque Rousseau.

    A Constitution (A Charter in the case of relations between nations) is the closest concept of an all-encompassing social contract. The purpose and
    Greetspirit of the laws that emanate from this broad governing framework are to govern the socio-economic and political relations and harmonize equitably the vying interests of all the constituencies of a society, ideally, on the basis of justice and equity. The purpose of Laws is to reconcile competing interests equitably to serve the intended purpose of sustaining social peace and the unleashing of the collective creative capabilities of a society.

    Same goes, with an ever fast converging universe – thanks to instant communication and speed of transport – with International Laws that are promulgated and whose ultimate purpose are the organization of relations between nations and societies of a converging world.

    Constitutions and laws change – the primordial laws of evolution – to keep pace with a changing world. The introduced and adopted changes, in the ideal setting, would tend to sustain the social harmony by maintaining the equitable treatment of individuals and groups, and by not causing contingent dispossessions or inequities to the individual and constituencies that are at variance with what originally were consented to preceding changes to the laws. Laws Changes Projects undergo a rigorous due process of reviews and debates by representative elected institutions, and their ultimate confirmation and adoption goes through plebiscite voting – a general public referendum.

    A modified law, a new law, is a new constitution. It is ultimate objective and purpose stems from the spirit of law: to sustain social and political harmony; social peace; to safeguard the equitable interests of individuals and broader constituencies.

    International Law is no exception. Both social peace and international peace predicate on the precepts of equity and justice for the individuals, groups and nations to which the laws and frameworks of assented conventions obligate adherence.

    In their totality, international laws and international conventions constitute what’s conveniently referred to as The World Order. Violations of the precepts, equity and justice, wreck the chances for social peace and international peace. Violations of these precepts violate the whole concept and spirit of the LAWS, local, regional, national or international. Violations of the Laws absolve adherents, volunteered or coerced, from submission and abidance by the Laws; Violations of the spirit and precepts
    of the laws, the bases upon which laws should formulate, are open invitation to anarchy and incessant strife

  • Amanuel

    Hi Gadeb news

    This is a game of cat and mouse. People were getting round the system and playing the the so called government. For example if I want to buy a house in Eritrea for ERN 3m (2 million Nakfa) I would need $200K according the government exchange rate ($ to ERN15), However I can get round the system by arranging alternative exchange rate and artificial loan. I agree an exchange rate of $ to ERN17 with someone (who has been denied access to his hard earned money) which requires $176K and get a check for ERN 3m as a loan. This transaction gives both sides WIN WIN scenario. I save $24K and my partner will have access to his ERN3m (or $176).

    This government moves like Tortoise, he himself (IA) admitted it. It took him two years to work out people are playing him. You know what by now people have already moved to other more sophisticated tricks.

    • Ismail AA

      Selam Aman,
      Glad you showed up, and join Paulos and Haile to welcome you back, sir. You know you owe us a lot of comments on important issue during your absence, which I hope was for good reason. I should add to your comment though that despotic regimes do more often than not resort to odd measures when they realize they are approaching the edge of steep cliff and dropping down becomes inevitable.

      • Kokhob Selam

        Sir Ismail AA,

        I am sure ..the above Aman is not the same with Aman H..but perfect stand as Amanuel does..

        KS,,

  • Paulos

    Selam Professor A. Hidrat,

    We haven’t seen you around in a while. Hope all is well with you.

    • Haile S.

      Hi Paul,
      Good question. You are a firefly (ሓዊ ለይቶ) yourself, though.
      Selam Emma,
      When is the Sabbatical leave from Awate ending? ወዲ ኣቦይ ሕድራት፡ ሕድሪ ኣለና ደሃይካ ክንፈልጥ።

      • Amanuel Hidrat

        Selam Haile, Dr Paulos, & Ismail,

        The comment you read above is not from me. I have Mokussi “Amanuel” who was on long sabbatical also. Sorry I am a little busy these days. I will be back at the beginning of the year. No concern, I am okay. Thank you guys.

        Regards
        Amanuel Hidrat

        • Haile S.

          Good to hear from you, Emma!

  • blink

    Dear all
    What is bad is they ask your family how they got the money ? They wanted to know the origin of the money like you have to tell them “ my daughter or son sent for me “ how could you possibly send money through their system while the black market is higher ? People who deposited big money at the time of new notes are being questioned now , it is like you can not have this money and if your son or daughter sent for you , it was sent through illegal means so you have to fill this and that form . It is simply saying that we will take the money if you did not give them a reason that can satisfy their own rules written just before days . It is mind blowing that they wanted to take money even from private accounts.

    • Mez

      Dear Blink,

      This looks like an internally antagonistic development.

      No fredom of wealth creation; very unfortunate development.

      Thanks

  • Peace!

    Selam Asmerom,

    It is always hard for seller and for the buyer as well when a regime is fully engaged in reverse bank robbery in which no enough cash and no reliable check to keep the circulation and maintain purchasing power. If persists, it would be safe to say the regime is clinically dead.

    Sounds the beginning of the end.

    Peace!

    • Mez

      Dear Peace,

      “….safe to say the regime is clinically….”

      Not really; What the government (seems) doing is:

      1) quazi freez the private and business people, and use their money as a capital source for PFDJ projects. (Here no need to sale bond or ask permission of the owners),
      2) Disrupt and Dispossesse all business networks and transfer them to more PFDJ affiliated entities,
      3) buy more loyalty this way,
      4)…..

      The 1% (high-income class) is getting sqeeeezed now.

      The name for this is COMMAND ECONOMY.

      Thanks

      • Peace!

        Hi Mez,

        You are right if you assume PFDJ as a private entity otherwise it is hard for a government to function properly in the absence of tax revenue, Investment, and trading. The economy has to generate something in order for the government to squeeze the 1% and buy loyalty.

        Peace!

  • Haile S.

    Selam Gedab,
    Insightful!
    What the president’s office or its special court is doing is like the amharic proverb that says የቆቱን ኣወርድ ብላ የብብትዋን ጣለች which can be translated as “to grab the bigger placed high on the wall, she drops the one under her arm.” Instead of leaving alone the money do its magic and collects taxes on its progeny, the regime gazes it checking it is safe and sound in the bank.

    • Daniel Solo

      You have no tigrinya saying to explain what you want to say Guhaf ,why do you have to use amharic ?just passing me off like that ,improve on your tigrinya first before you come here to tell or advice on matters you have no clue,and don’t use words like “progeny” they mean nothing to the English man leave alone to Eritreans,bidey afna tezarubuna…

      • Haile S.

        Dear Daniel Solo,
        Your name sounds familiar…
        ዳኒኤል፡ ኣምሓርኛይ ክንድዚ ዘሕመመካ
        ትግርኛይ’ሲ ይመስለኒ እንተ ዝተርፈካ
        ሕውነታዊ ምኽሪ ክልግሰልካ
        መን መን ምዃኑ ከይፈለጥካ
        ንባዕልኻ ሽም ተለቂሕካ
        ካብ መሬት ተላዒልካ ዘናጢልካ
        ሰላምታ ዘይብሉ ወቐሳ ይትረፍካ
        ንድሕሪት ግን ኣይትበል ጥብ ዘላትካ
        ንኣኻ ትደልዮ ክብረት ኣተግቢርካ

        • Ismail AA

          Dear Haile S.,
          Extreme indulgence in self-righteousness is token of extreme ignorance whose trait is rudeness and roughness as the comment you had responded to demonstrated. Your response graced by sobriety could educate the most callous among them.

          • Fanti Ghana

            Selam Ustaz,

            Haile S. is not only a genius he is also very tolerant and a born leader. A rare combination.

            Anyway, to criticize someone for using a certain language is wrong as it is, but to do so using a colonizer’s language makes one lose credibility.

          • Haile S.

            Selam Fanti and Ismail,
            I am not sure to deserve all these great and generous qualification. If at all, it is a shared one. Do you remember some of your responses to similar challenges you faced? I learn from examples like you guys. Thank you a lot!
            Sincerly

      • Ahmed Idris

        Why only he needs to improve his Tigrinia. Why not improving his Kunama as well didn’t you say all language are equal in Eritrea..
        “Or some language are more equal than the others..”
        My apologies to Animals Farm by George Orwell

      • Alem

        Daniel, I bet you would have not reacted this way had Haile used French or German proverb. Don’t you say this kind of paternalistic and provincial attitude is the source of much of our misery?