Eritrea says economy untouched by UN sanctions

By Jeremy Clarke

ASMARA (Reuters) - Eritrea said on Wednesday that its economy will be unaffected by the U.N. sanctions imposed on the nation, which were an international response to Asmara's alleged support of Islamist rebel groups in Somalia.

Punitive measures including an arms embargo, travel restrictions and asset freezes for some of the country's top officials raised fears the limitations may slow an economy reliant on financial and moral support from the diaspora.

Remittances from Europe, the United States, the Middle East and other African nations are Eritrea's biggest source of foreign exchange. Analysts say they continue to flow because high-ranking Eritreans travel to other countries and drum up support for the Red Sea state.

Eritrea has dismissed concerns saying sanctions would not slow development.

"The sanctions should not have any impact on investment, no impact on trade, or Eritrea's external ties with its economic partners," Yemane Ghebremeskel, director of the Eritrean president's office, told Reuters in an interview.

"Our development strategy is not really based on injections of development assistance anyway. There are still extensive development plans in place designed to enhance productivity and expand services in education and health," he said.

The country would build more than 50 new schools this year, he said.

The U.N. imposed sanctions last month because Security Council members say Eritrea has given support to Islamist insurgents in Somalia who are battling the U.N.-backed transitional government. Violence in the Horn of Africa nation has killed at least 19,000 people since the start of 2007.