Buffer force for Horn

Despite ceasefire hopes the fighting goes on

The ceasefire proposal accepted by Eritrea and Ethiopia positions United Nations peacekeepers in a security zone within Eritrean territory.

The BBC has learnt that the deal allows Ethiopian forces to pull back to the postions they held before the two-year border war and pushes Eritrean forces back into Eritrea a further 25km.

We gave the two parties a one week deadline to attend a ceremony to sign the cessation of hostilities in Algiers

OAU mediator Ahmed Ouyahia

In a copy of the proposal obtained by the BBC, UN peacekeepers under the auspices of the OAU are then to be deployed in the "temporary security zone" between the two sides' forces until international arbitrators demarcate the 1,000-km (600-mile) border.

With clashes reported to be continuing on the western front, Ethiopia announced it agreed "in principle" on Sunday to the ceasefire plan, but would defer a formal decision to its parliament and cabinet. Eritrea accepted the plan last week.

The Organisation of African Unity, which is brokering indirect peace talks in Algiers, said it expected the two sides to sign a formal agreement within a week.

Diplomats believe that the current plan is sufficiently balanced, and that it is in the interests of both sides to accept it - but they have warned that the process has encountered obstacles in the past, and could do so again.

Meanwhile, UN refugee agency chief Sadako Ogata is to assess at first hand the conditions of tens of thousands of Eritreans who have fled their country's border war with Ethiopia.

Mrs Ogata is visiting the Sudanese town of Kassala on Monday for a tour of camps near the border with Eritrea, where refugees are continuing to arrive.

UNHCR praises Sudan

The Eritrean authorities have appealed to the United Nations High Commissioner for Refugees to help with the repatriation of many of the refugees.

Sadako Ogata will consider whether it is safe to send refugees home

Mrs Ogata earlier praised the Sudanese authorities for taking in an estimated 70,000 Eritreans who have fled the fighting over the past month, as well as 500,000 refugees who moved into Sudan since the conflict first began.

Sudan has complained that its appeals for aid have been largely ignored, and says the refugees are suffering from acute shortages of food, water and shelter.

She said her organisation had already sent four plane loads of non-food relief to the area, and that a fifth was on its way.

I came to say thank you, and to see what steps can be taken to help the refugees

Sadako Ogata, UNHCR

Mr Ogata is on a six-nation tour of Eastern and Central Africa to assess the impact of regional wars, and will also visit Kenya, Rwanda, Uganda and the Democratic Republic of Congo.

Economic impact

Meanwhile, an international report on Ethiopia's economic prospects says the war is severely affecting its development.

Diplomats estimate the conflict is costing Ethiopia - one of the poorest countries in the world - about $1m a day.

The draft report, prepared by the International Monetary Fund and international donors, says that while defence spending has risen, funding for health and education has declined.

There is no money for essential projects, such as alleviating the chronic drought which is affecting millions of people.

Correspondents say Ethiopia's economic difficulties have been compounded by the refusal of many western donors to offer funds to a nation at war.