Eritrea's leadership not only faces the problems of reconstructing a national economy but of building confidence in the government's commitment to democracy. In 1996, a draft Constitution, creating a free, multiparty system was presented. While ratified in a May 1997 referendum, it has not been entirely implemented. Elections scheduled for May 1998 were not held due to outbreak of conflict with Ethiopia along the 998-km (620-mile border). The government had announced that the National Assembly elections would take place in December 2001 but these have been postponed and new elections have not been rescheduled. In September 2001, after several months in which a number of prominent People's Front for Democracy and Justice (PFDJ) Party members had gone public with a series of grievances against the government and in which they called for implementation of the Constitution and the holding of elections, the government arrested 11 prominent dissidents (holding them without charges) and shut down the press, arresting several reporters and editors.
The effects of war have damaged Eritrea's ability to serve as the region's exporter and importer. Together with the threat of periodic droughts to agriculture, Eritrea's economy can expect to be dependent on international aid for some years to come. The economic policy of Eritrea is contained within an Emergency and Recovery Action Program that concentrates its efforts on transportation, agriculture, and industry—three areas which had historically been the basis for Eritrea's economy. Despite its socialist ideology during the war for independence, the government has pledged to pursue a mixed economy that encourages foreign investment and joint ventures.