By Peter Martell
BBC News, Asmara
Western governments once held Eritrea up as a beacon of hope for Africa.
Eritrea is accused of supplying weapons to Somali militant groups
Fiercely self-reliant, the continent's youngest nation was hailed at its independence in 1993 for its determination to rebuild after its devastating 30-year liberation war from arch-foe Ethiopia.
It developed close links with the west.
Asmara swiftly offered support in 2001 to the United States to tackle international terrorism, while Eritrean President Isaias Afewerki was called a "renaissance leader" by then US President Bill Clinton.
Relations have soured between Eritrea and Western nations - especially the US - further than ever before, analysts say.
US Assistant Secretary of State Jendayi Frazer on Saturday repeated warnings Washington could add Eritrea to its list of rogue states, alongside countries such as Iran, North Korea and Cuba.
The US argues Eritrea is destabilising the Horn of Africa by backing rebels as proxies to fight Ethiopia, with whom it remains in a tense border stand-off.
Asmara rejects such accusations, dismissing as "lies" claims by Washington - as well as by United Nations experts - of shipping weapons and cash for Islamist militants fighting Ethiopian troops in Somalia.
But Washington angrily seized on the appearance this week at a Somali opposition conference in Asmara of Sheikh Hassan Dahir Aweys, an exiled Somali Islamist leader accused of links to al-Qaeda.
It is evidence, Washington says, that Eritrea gives sanctuary to terrorists.
Ms Frazer has said that the gathering of further intelligence could lead to Eritrea being named as a "state sponsor of terrorism" - followed by tough financial sanctions.
But Eritrea categorically denies any wrongdoing, arguing it is working only to encourage peace in Somalia - as it did with eastern Sudanese rebels.
Eritrean officials were therefore furious at the media attention focused on Mr Aweys' appearance at the Asmara conference.
The renegade Somali leaders insist Eritrean support is based "on purely humanitarian grounds".
Some Asmara residents fear a US invasion
Much of Eritrea's anger with the US stems from what it sees as Washington's failure to pressurise Ethiopia to implement a five-year old border ruling following their 1998-2000 conflict, in which some 70,000 died in World War I-style trench warfare.
Eritrea views Washington's support of Ethiopia as a strategic ally in the region as a threat, believing that a US-Ethiopian coalition is using terrorism accusations as a pretext for invasion.
Asmara argues that aggressive US foreign policy is fuelling conflict in the volatile region, pointing to Washington's support for Ethiopia's military intervention to topple Islamist forces in Somalia late last year.
That drove relations between the super-power and the small but defiant Red Sea state from awkward to downright icy.
Each side has since engaged in tit-for-tat diplomatic restrictions.
The US embassy withdrew consulate services after it accused Asmara of demanding to inspect confidential diplomatic pouches.
Washington then imposed travel restrictions on Eritrean diplomats following comparable restrictions on US staff, and has also ordered the closure of Eritrea's Californian consulate.
Sheikh Aweys is on a US list of terror suspects
Eritrea's domestic policies have also drawn US criticism, with Washington regularly accusing the government of gross human rights violations, including the arrest of critics, religious persecution and the closure of all independent media.
These are all charges denied by Asmara, which believes Washington wants to use democracy and the promotion of minority religious groups as a scheme to splinter ethnically diverse Eritrea into rival factions.
Relations have - at least not yet - reached crisis point.
"There's always a chance for Eritrea to stop what it's doing," Ms Frazer warned.
However, Mr Isaias was in no mood for compromise in a recent vitriolic interview broadcast on state-television criticising US policy.
"If the US wants to undermine our national interests and disrupt regional peace, they can hardly expect us to encourage them," he raged.
With Asmara protesting it has done nothing wrong, it is unlikely to concede to demands by Washington anytime soon.
If relations worsen further, many fear the potential consequences for the already troubled Horn of Africa.