On May 6th 1998 war erupted between Ethiopia and Eritrea. There were a variety of reasons that this conflict began, and today we will go through the major factors.
Financial tension was one of the factors in the war. Currency problems were substantiating. Eritrea had constantly requested that Ethiopia allowed the new Eritrean currency to be also used within Ethiopia. This request was deemed illogical, and was quite rightly refused by Ethiopia. Eritrea had also stated that Ethiopia should convert Eritrea's remaining "Birr' into American Dollars. Of course this demand was also refused. They represented no value, as Eritrea had already their value into account their value when developing the new Eritrean currency. This example of currency fraud would have left Eritrea approximately US$ 200 million dollars richer.
Trade problems were also a contributing factor. Ethiopia accounts for 67% of Eritrea's export industry. Even after the end of the common currency arrangement, Eritrea was still expecting to have preferential access to the Ethiopian market. Ethiopia stated that Eritrea would simply have to use hard currency to trade instead, as this is how trade is conducted with all of Ethiopia's other trade partners, and throughout the rest of the world. The Eritrean president vigorously opposed this arrangement, but slowly some Eritrean companies are begin to comply, and are trading with Ethiopia.
Because Eritrea previously had the common currency agreement with Ethiopia, all it's economic strategies are based on the preferential access to the Ethiopian market. However now that the agreement has been terminated, and Ethiopia's export and manufacturing plans have changed, Eritrea has had their tactics ruined.
The main reason though, was because Eritrea announced claim on territory currently under Ethiopia's peaceful administration. Eritrea then launched a large-scale military operation on the 12th of May 1998, to invade Ethiopian territory. International law forbids force to be used in case where the claimed areas are peacefully being administered by another country. This was the result of an earlier attack on Eritrea on May 6th 1998. The exact location of this attack is quite debatable as both sides have different statements. The Ethiopians press that it was in Badme, where Eritrean's should not have been any way, how Eritrea state that is was well within Eritrean territory.
The area in dispute was the Badme region. Eritrea claimed that old Italian maps dated from 1907 to 1935 displayed that infact the Badme region should be included on their side of the border. The unilateral Italian maps are somewhat different to the border set out in The Treaty 1902, the document in which the official border treaty regarding this area can be found. The Italian maps on which Eritrea bases it's claim defy The Treaty of 1902 by advancing the borders into what the Treaty declared as Ethiopian territory. This same border issue had been previously disputed between Ethiopia and Eritrea when under the rule of Italian Mussolini's Fascist party, and although Ethiopia attempted to peacefully resolve the problem, the issue resulted in the invasion of Ethiopia by the Italians.
Eritrea tried to persuade authorities that because Italy is a European country, it's maps and rules should have supremacy over those developed by African countries and parties. This was clearly wrong because Ethiopia is a member of the League of Nations. Their rights are no less significant or important than those of European countries such as Italy.
The Organisation of African Unity (OAU) requires that borders declared at the time of independence be kept. Eritrea was granted independence in 1993, yet by printing incorrect maps, claiming more territory, Eritrea is thought to have violated this OAU statement. Eritrea is in possession of the Italian maps but only released one. They are also in possession of Italian maps prior to 1935, but these maps actually contradict their case, and would hard their stance on the issue.
The war, in which over 80,000 people were killed most being soldiers, continued for 2 1/2 years, with Ethiopia holding the upper hand after a strategically planned attack resulting in the capture of a significant amount of Eritrean territory. An interim peace deal was compiled and signed in June 2000, as Eritrea could go on no longer, and both sides wanted peace. Because of its military upper hand, Ethiopia stood in a good bargaining position and Ethiopia demanded that their supremacy in the war be inserted into the deal before they would withdraw from Eritrea. A United Nations peacekeeping mission was declared, and the controversial area on the border was patrolled and secured by UN forces.
An Ethiopia – Eritrea Border Commission was formed and in 2002 a new border was drawn up. Both countries accepted the ruling, but tension remained over the town of Badme. The new border has since been released, and as expected Ethiopia has had most of its original requirements met. It has secured many influential towns including what is seems to be Badme (a town which appears to have no certain recorded location as it varies on different maps), but Eritrea has gained a reasonable amount of territory in the west, just above Badme.
There is still some doubt over whether the signing was genuine on both sides. As yet no severe violations of the peace deal have been recorded, but its ability to secure lasting peace will be a trial of time.