Horn fighting dies down

The fighting goes on but a ceasefire deal could be close

Ethiopia says fighting has now subsided along its border with Eritrea after three days of heavy clashes.

Government spokeswoman Selome Taddesse said only minor skirmishes were reported at the eastern Bure front, 37 km (23 miles) from the Eritrean Red Sea port of Assab.

There is no independent verification of the fighting in Eritrea, and no response from Asmara to recent Ethiopian claims of advances in the west which inflicted heavy casualties on Eritrean forces.

Meanwhile, Western diplomats are expressing cautiously optimism that the two sides are now close to a ceasefire deal.

According to a proposal, which still awaits final approval in Addis Ababa, the Ethiopians are to pull back from the positions they now occupy within Eritrea, but will be left in control of the village of Badme, on the western front, which lies at the heart of the dispute.

Western advance

An Ethiopian statement on Monday evening said that its troops had advanced 60 km (37 miles) recapturing Guluj near the Sudan border and proceeding north towards Tesseney following "repeated Eritrean provocations".

After a swift advance in May which led to a flood of refugees crossing into Sudan, Ethiopia began pulling back its forces to demonstrate, it said, that it had no territorial ambitions on Eritrean territory.

Ethiopia also says its Ethiopian forces remain firmly in control of Senafe on the central front "despite continuous attempts by the Eritrean army to dislodge them".

Across all three fronts, "the Eritrean army is incredibly weakened and debilitated", it added.

Deal not yet done

Under the ceasefire proposal, Ethiopia and Eritrea will have to accept the deployment of United Nations peacekeepers in a "temporary security zone" between the two sides' forces, which will remain there until the 1,000km (600 mile) border has been officially designated by international arbitrators.

Hundreds of thousands have fled the clashes

Ethiopia announced it agreed "in principle" on Sunday to the ceasefire proposal, 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 the indirect peace talks in Algiers, said it expected the two sides to sign a formal agreement within a week.

The deal is intended to end the fighting that has left tens of thousands dead over the past two years.

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

Cost of war

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.

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