Conquered by British forces in 1941, Massawa remained under British administration until the federation of Eritrea with Ethiopia in 1952. The city was badly damaged in 1990, during the war for Eritrean independence. Eritrea is bounded on the northwest by The Sudan, on the southeast by Djibouti, and on the south by Ethiopia, from which it separated in 1993. The capital is Asmera. Most of the population must continue to depend on subsistence farming.
Government revenues come from custom duties and income and sales taxes.
Road construction is a top domestic priority. Shortages persist in housing, education, and health care. Eritrea has inherited the entire coastline of Ethiopia and has long-term prospects for revenues from the development of offshore oil, offshore fishing, and tourism. Ethiopia is largely dependent on Eritrean ports for its foreign commerce.