Italy’s Lucrative Relationship with Eritrea

Recent revelations have shed light on Italy’s long-standing diplomatic efforts to increase its influence in Eritrea through financial means. The establishment of Banco di Roma, an Italian bank, in the former colony has significant implications for the region’s economy and politics.

A Strategic Move by Italy

According to sources, the bank’s presence in Eritrea was not only a commercial venture but also a strategic move by Italy to reduce its dependence on the United States and the United Kingdom for access to hard currency. The Italian government’s business policy allowed the Ethiopians to bypass strict regulations imposed by US governors and British auditors at the State Bank of Ethiopia.

Informal Payments and Tribute

The relationship between Banco di Roma and the Eritrean government was marked by informal payments disguised as commercial loans to local associates. These transactions were seen as a form of tribute, similar to those paid by other semi-independent enclaves across the country.

Maintaining Privileges

Despite the dissolution of the federal arrangement in 1962, which led to Eritrea’s incorporation into the Ethiopian Empire, Banco di Roma was able to maintain its privileges through diplomatic intervention by the Italian government. The bank was exempted from adapting to the new banking law and was placed in a direct relationship with the Crown.

Exceptional Arrangement

The arrangement created an exception that suspended ordinary law for the benefit of Banco di Roma. In return, the Italian bank made informal payments to the Crown and its local associates. This development has sparked questions about the nature of Italy’s influence in Eritrea and its implications for the region’s economy and politics.

Semi-Independent Enclaves

The findings have also raised concerns about the role of semi-independent enclaves in Ethiopia’s economic system. The existence of these entities has been linked to the country’s historical practice of granting special privileges to certain regions or groups.

Implications and Future Development

As the situation continues to unfold, it remains to be seen how Italy’s relationship with Eritrea will evolve and what implications this may have for the region’s future development.