no sanctions - reuters

It looks like the media reports/beat-up of possible sanctions against Eritrea will turn-out to be another sensationalism of the real situation. Unfortunately this building mountains out of molehills through exaggerated, lurid and incomplete details appears to have unsettled many investors and some decided to sell out. It’s amazing how many people tend to fall into this media driven fear trap – which is now being taken full advantage by the shorters/traders. As per previous posts and now supported by Reuters, the latest round of sanctions is highly likely to be rejected by the Security Council, or at the very most softened up significantly.
IMO, the whole idea of UN draft sanctions proposal was to send clear message/warning by the US to Eritreans to not get too close with the Chinese. Both US and Chinese engagements with Africa have been increasing significantly, especially over the last decade. As an example, US trade with Africa increased by 37% between 2001 and 2004 and the amount of oil going from West Africa to the US now exceeds that from Saudi Arabia. The US now trades more with Africa than with the Russia and the former Eastern bloc combined. As China continues to grow into the economic superpower its appetite for oil and other minerals continues to grow rapidly it is also becoming more proactive and aggressive to secure these resources. Africa now holds the balance of power as far as oil and other minerals security is concerned. It is worth noting that Erotrea holds not only huge potash resources but is also claimed to hold large oil and gas resources of the coast of Masawa.

Analysis -Eritrea set to avoid harsh sanctions, still mistrusted
Fri Nov 18, 2011 12:45pm GMT
http://uk.reuters.com/article/2011/11/18/uk-eritrea-sanctions-idUKTRE7AH12720111118
(Reuters) - Eritrea has a strong chance of heading off new sanctions that could cripple the Red Sea state's economy even though it remains far from persuading its neighbours and the United Nations that it is not a destabilising force in the volatile Horn of Africa.
The United Nations is mulling more punitive measures against the secretive government of President Isaias Afewerki that include sanctions on the impoverished country's nascent mining sector and remittances sent from abroad -- both key sources of foreign exchange.
But Western nations see those sanctions hurting the population more than the government, while analysts say others including China and Russia typically oppose sanctions on African nations.
Asmara is long accused of arming and bankrolling al Qaeda-linked Islamist militants fighting to topple Somalia's Western-backed government and is now squaring up to Kenya after it deployed forces into it lawless neighbour five weeks ago.
Championing the new sanctions is Eritrea's neighbour and arch foe Ethiopia.
The draft resolution was submitted to the United Nations Security Council in the wake of a U.N. report in July that said Eritrea plotted to attack an African Union summit in Ethiopia in January and was sending funds to the militants via its embassy in Nairobi.
Kenya this month accused Asmara of flying a cache of weapons destined for the insurgents into central Somalia. Eritrea denied the allegation and said it was neither an enemy of Kenya nor a sponsor of al Shabaab.
In spite of a widespread and deep mistrust of Eritrea's dealings in the Horn of Africa, the latest round of sanctions are likely to be rejected by the Security Council, or at the very most softened up.
"It's not that we approve of the Eritrean government, but we don't think sanctions that would hit the Eritrean people would be very helpful," a Western envoy to the U.N. Security Council told Reuters.
"Sanctioning the mining industry and remittances would hurt the Eritrean people far more than the government," he said.
The envoy said sanctions against Eritrea's main source of income would be "counterproductive" and would "probably not be approved by the council."
Further sanctions would come on top an arms embargo, travel restrictions and assets freeze imposed in 2009.
David Shinn, a former U.S. ambassador to Ethiopia said China and Russia among others were likely to push for a watered-down resolution.
Both China and Russia typically oppose sanctions on African nations, a position that left China in particular in a bind.
"While it has cordial relations with Eritrea and opposes sanctions, it has much more important ties with Ethiopia," Shinn told Reuters.