Q&A-Has Eritrea softened its foreign policy?

By Jeremy Clarke

NAIROBI, June 30 (Reuters) - Eritrea and Djibouti struck a deal earlier this month to end their two-year border dispute. It was a move that caught most analysts by surprise.

The two Red Sea nations, who overlook vital shipping lanes linking Europe and Asia, have engaged in occasional border skirmishes since June 2008 when Djibouti said Eritrea crossed the border and began occupying its territory.

Following the Qatar-brokered deal, which has been praised by the United Nations and African Union, Djibouti announced that Eritrea had pulled out of its territory. Here are some question and answers about why Eritrea may have changed its outlook.

ARE U.N. SANCTIONS WORKING?

In December, the United Nations Security Council passed Resolution 1907, slapping sanctions on Eritrea which it accused of destabilising the volatile Horn of Africa.

The U.N. imposed the punitive measures for Eritrea's alleged support of rebel groups in nearby Somalia -- where 21,000 people have died in a three-year insurgency -- and for refusing to pursue a peaceful resolution with Djibouti.

On Monday, U.N. chief Ban Ki-moon said the border deal was a "move in the right direction" for Eritrea, and many observers have been quick to draw the link with the U.N. sanctions.