By Elizabeth Blunt
BBC News, Addis Ababa
The US has issued Eritrea with its strongest warning yet over its alleged support for terrorism.
Eritrea accuses Jendayi Frazer herself of deliberate distortion
A senior US official said the presence of an exiled Somali Islamist leader in Asmara this week was further evidence Eritrea gave sanctuary to terrorists.
The gathering of further intelligence could lead to Eritrea being named as a state sponsor of terrorism - followed by sanctions, the official said.
The Eritrean government has accused the US of deliberate distortion.
A full scale war of words is now going on between Eritrea and the United States.
The US Assistant Secretary of State for African Affairs, Jendayi Frazer, said the presence of Hassan Dahir Aweys at a meeting in Asmara was further evidence that Eritrea provided sanctuary for terrorists.
The Eritrean ministry of information website has just published a 35-point condemnation of US foreign policy accusing Jendayi Frazer herself of deliberate distortion.
Speaking at the end of a visit to neighbouring Ethiopia, Miss Frazer said that Eritrea's nasty words about the US were not a significant concern.
Eritrea is accused of supplying weapons to Somali militant groups
What had got her government's attention was Eritrea's actions to destabilise other countries in the Horn of Africa and, in particular, evidence that they were harbouring terrorists.
Miss Frazer said that this was about more than just simply considering Eritrea as a rogue state in the region.
It was quite specifically Eritrea's relationship with recognised terrorists which could lead to its designation as a state sponsor of terrorism.
This, in turn, she said would bring a change in the nature of its relationship with the US and in the ability of the US and other countries to provide assistance to Eritrea's government.