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LUCA PUDDU

A contested financial frontier: Banking and empire building in Eritrea, c.1952-73

Abstract

This article provides an account of the relationship between imperial Ethiopia and Eritrea in the realm of banking governance from the start of the federation to the last years of the imperial regime. It looks in particular at the relationship between the Ethiopian administrations and an Italian bank, Banco di Roma, which had its headquarters in Eritrea from 1948 to 1967 before moving to Addis Ababa. The struggle for control of the economic flows generated by the Italian bank is an index of the changes in centre-periphery linkages between Addis Ababa and the sub-regional centre of Asmara. Archival evidence highlights the multifaced nature of Ethiopian governance and the role performed by the Italian institution in providing alternative sources of diplomatic leverage and wealth accumulation to the Eritrean elite. It is argued that the extraterritorial status enjoyed by Banco di Roma until 1967 was actively tolerated by a section of the Ethiopian establishment, which resorted to an established pattern of imperial governance based on flexibility in return for tribute. This centre-periphery arrangement was harshly opposed by prominent Ethiopian officials from the Ministry of Finance and the National Bank of Ethiopia, who struggled to enforce tighter government control over capital flows within and across the country's borders. The National Bank's final success in the quest for financial centralization drained significant resources out of Eritrea, with adverse effects on the preservation of the pax aethiopica in the former Italian colony.