ANALYSIS-Eritrea set to avoid harsh sanctions, still mistrusted

* Asmara facing sanctions on mining, remittances

* Country already hit with assets freeze, arms and travel embargo

* Red Sea state says Ethiopia dirtying its name

By Aaron Maasho

ADDIS ABABA, Nov 18 (Reuters) - Eritrea has a strong chance of heading off new sanctions that could cripple the Red Sea state's economy even though it remains far from persuading its neighbours and the United Nations that it is not a destabilising force in the volatile Horn of Africa.

The United Nations is mulling more punitive measures against the secretive government of President Isaias Afewerki that include sanctions on the impoverished country's nascent mining sector and remittances sent from abroad -- both key sources of foreign exchange.

But Western nations see those sanctions hurting the population more than the government, while analysts say others including China and Russia typically oppose sanctions on African nations.

Asmara is long accused of arming and bankrolling al Qaeda-linked Islamist militants fighting to topple Somalia's Western-backed government and is now squaring up to Kenya after it deployed forces into it lawless neighbour five weeks ago.

Championing the new sanctions is Eritrea's neighbour and arch foe Ethiopia.