The indelible link between Eritrea’s domestic and foreign policy and its impact on the evolution of the state are featured in Chapter 7: Self-Reliance and the Coupon Economy. The chapter notes the positive external environment and the outpouring of international goodwill and support that greeted the advent of independent Eritrea, appreciates the great opportunity that this offered for constructive engagement, and appraises the regime’s imprudent and counterproductive policy responses to the devastating domestic repercussions of the border war with Ethiopia. It unveils the deliberate pursuit of regime stability at the expense of the paramount national interest and bares the use of self-reliance as a euphemism for the external isolation of the country. 

Further, the chapter describes the institution and operations of the political economy of rationing in the context of a contracting economy in crisis that has delivered a declining standard of living for the people. It probes the abysmal failure to manage a national economy, or to mobilise domestic and external resources, to cater to the most basic subsistence needs of a small national population. Finally, it appraises the essential fragility of the Eritrean economy primarily as the outcome of the government’s wrong policies, gross incompetence, and wasteful management of the country’s human and material resources.