Eritrea’s Economy: Ideology and Opportunity

. . . [I]nternational attempts to improve the living conditions of Eritreans are more likely to succeed . . . through engagement that starts with where the country is now, not where outside actors think it ought to be.

Eritrea’s Economy
Eritrea can and should pursue economic growth on its own terms. But the PFDJ needs to more flexibly interpret its ideological emphasis on self-reliance … and find a way to exploit foreign partnerships as a vehicle for empowerment, rather than as a threat to self-sufficiency.

By Seth Kaplan | for Atlantic Council,

Eritrea is often in the news for all the wrong reasons: its high rates of migration to Europe (it has sent more refugees to Europe in recent years than any other African nation), its conflicts with neighboring Ethiopia and Djibouti, and controversy over its mandatory and indefinite national service conscription program. Human rights activists, in particular, have long singled out the country for criticism, calling it “the North Korea of Africa.” The inappropriateness of that comparison is increasingly recognized—but misunderstandings about the nature of the Eritrean regime continue to abound.

A substantive comparative analysis of Eritrea and other socialist nations will dispel many of the myths of Eritrean “exceptionalism,” in the worst sense of the word. For all its idiosyncrasies—and it is a unique country in many ways— Eritrea today looks a great deal like pre-reform China, Vietnam during the 1980s, and the pre-1989 communist countries of Eastern Europe. If Eritrea’s political and socioeconomic model resembles any existing today, it is that of Cuba, not North Korea.



Like Cuba, Eritrea is not, and does not desire to become, a democracy. The experience of the three-decade liberation struggle has led the country instead to embrace a highly egalitarian, statist model. Like any other system, this model involves trade-offs: It reduces extreme poverty and promotes national unity, but greatly limits civil liberties, international engagement, and economic growth prospects.

As a result of this system of government, Eritrea shows no signs of the violent ethnic conflict that has battered other countries in the Horn of Africa (such as South Sudan, Somalia, and Ethiopia). Nor has jihadism found a foothold in the country. Nonetheless, Eritreans have suffered greatly from human rights abuses and the lack of economic opportunity. These factors are driving many young people to leave the country or to express hopelessness about the future.

Given this context, international attempts to improve the living conditions of Eritreans are more likely to succeed if they are conducted in the same way as they are in Cuba: through engagement that starts with where the country is now, not where outside actors think it ought to be.[1] The purpose of this report, therefore, is to explore a pragmatic way forward for the Eritrean economy given the leadership’s current worldview.

At present, Eritrea’s most urgent economic priorities include boosting state revenue and increasing employment.[2] The latter is essential if Asmara is to continue updating its national service program.

eritrea-engageNational service plays a major role in building social cohesion and throughout the period of “no peace, no war” has effectively replaced a large chunk of the labor market (many of Eritrea’s civil servants, teachers, waiters, and construction workers, as well as soldiers, are national service conscripts).

However, national service is also the font of international criticism of the country and the primary driver of migration. The Eritrean government has recognized the need to normalize the national service program by raising salaries and setting a finite term of service, but has dragged its feet on implementing these reforms[3] over concerns about social stability and maintaining the country’s independence. (Reducing the term of service to eighteen months would release tens of thousands of youth into the labor market with few options for employment —a recipe for social unrest.)

Given these concerns, the sequencing of economic restructuring will be crucial but should also be conducted in a way that satisfies the population’s expectations, which have changed significantly in one generation.[4]

Eritrea can learn much from the successful reform processes undertaken by countries with similar ideologies—such as Rwanda and China—and this report will include those comparative analyses.

Eritrea, in many ways, is further along in its economic evolution than Cuba is today, and bears some resemblance to China early in its reform era (late 1980s to early 1990s) as well as Hungary in the 1970s and 1980s. These countries all sought to open up in ways that promoted social cohesion, self-reliance, and national strength; all prioritized nation-building and saw economic inclusiveness as essential to the process; and all sought local solutions and models to guide their decision-making processes and policies.

In the face of myriad challenges, they all recognized the need for pragmatism and all asserted that the Western way was not the only way.[5] To move forward, Eritrea would do well to study the strategies undertaken by those states. READ FULL REPORT >>>





  • interesting

    Glad the author recognizes national service does promote social cohesion. Interesting that he advises Eritrea to be more like China and Rwanda and not Cuba. Although, he thinks Eritrea is like all 3 countries (China, Rwanda, Cuba).

    • Hizbawi

      Why is the USA making 180 degree turn? USA is the one that has been pursuing a miss guided policy on Eritrea and the Horn of Africa. Why the change of heart now? Is it to be trusted? As Eritreans, we should be open for business. However, we should not let our guards down. God bless Eritrea and the USA. Lets hope for bright future. USA and Eritrea working together could bring positive change in the entire horn of Africa.

  • ERI FIRST

    ERITREANS need no outsider advise, they perfectly know what they are doing and their future
    is brighter than the Bisha gold. (outsiders be ready for reverse immigration)

    • Aoura

      I agree! Mr.Seth Kaplan probably never set his foot on Eritrea and now his treating Eritrea as a company not as country. He must be “CONSULTANT” for Western companies that have a business ties in Africa or South America.

      • [1] This report is based on a combination of desk research and a visit to the country in March 2016.

        • Aoura

          Thank you for your clarification and hope Mr. Seth Kaplan was on a visit to Eritrea.

  • Follow the hashtag #RethinkingEritrea on twitter for more updates and discussions.

  • CIA agent Don Connel on the #RethinkingEritrea event …

    https://www.facebook.com/wedy.mahary/videos/245254275888411/

  • Hagerawuyan hunting down regime change agents at the #RethinkingEritrea event …

    https://www.facebook.com/1147254747/videos/10211283079689908/

  • “The US should make it clear to Asmara […] that the door is open for a better relationship” says @BronwynBruton at #RethinkingEritrea

    https://twitter.com/ACEventsLive/status/806865064426926080

  • Forceful opening by @BronwynBruton at #RethinkingEritrea: “The U.S. government’s “policies in Eritrea have been a barrier to progress.”

    https://twitter.com/bstouttt/status/806864640064032768

  • Dan Connell: the key to engagement with Eritrea is settling the border dispute with Ethiopia ….#RethinkingEritrea

    https://twitter.com/ACAfricaCenter/status/806873706664525824

    • Aoura

      Thank you Tesfanews for sharing this tweet. Is Mr. Dan Connell in Eritrea now?

      • He is persona non grata to Eritrea.

    • ኣሌክ – Alec you

      Yep we beat that Tokla’s behind real good????

      So nothing to do but to save face. LOL… “if you can’t beat them, join them” comes to mind. ????.. This tug he even tried the ethnic card on Eritrea. Because Shaebia didn’t accept him in the Gedli times, he can’t let go his grudge till he die. I’m pretty sure he will work hard against Shaebia in the shadows.. he can’t be trusted. A snake is always a snake.

  • Kaplan: Despite the problems, Eritrea has great opportunity, especially given its geography & resources … #RethinkingEritrea

    https://twitter.com/ACAfricaCenter/status/806867903077294080

  • Bronwyn Bruton’s analysis of the US-Eritrea relationship is available here → https://www.atlanticcouncil.org/images/publications/Eritrea_Coming_In_from_the_Cold_web_1207.pdf

    Recommendations

    These multiple grievances cannot be rectified overnight. However, a couple of key actions could quickly put US
    relations with Eritrea on a positive trajectory.

    1) Lift the UN sanctions on Eritrea
    2) Reject Ethiopian irredentist claims on Eritrea
    3) De-personalize US policy toward Eritrea
    4) Let Europe lead
    5) Insist on improvements in the human rights situation in Eritrea—but do not single out Eritrea for criticism

    Conclusion

    Washington has a strategic interest in repairing relations with Asmara, and the upcoming change in administration offers a convenient opportunity for a reset in relations. Nevertheless, Eritrea has already pivoted successfully toward new alliances in the Gulf and a new economic partnership with China, and its leaders are reluctant to invest scarce diplomatic resources in a hopeless cause. In order to improve relations, a strong signal needs to be sent from Washington to Asmara.

    President Isaias and his advisers will not swivel back toward Washington unless they have good reason to do so. However, numerous conversations and meetings in Asmara lead to the conviction that President Isaias would very much like to put his relations with Washington on a more constructive footing. Given the high stakes in the Horn of Africa, and very low level of effort that would be required to set the stage for a much better relationship in the future, it is surely in Washington’s interest to try.

    • Kaleab B

      I agree with all recomm except #4, i.e. Let Europe lead. History tells us that every time Europe leads (usually means UK or France) in Africa, disaster follows. Libya and Mali come to mind.

    • handover

      the US should demand the junta hand power over to the people. Anything short is not good enough.

      • forto sawa

        Dan Connell gave up, why not you do the same?

        • handover

          Dan is a tegadalay and a true friend of Eritrea. In his youth times, he put his life on the line to introduce Eritrean cause to the world when no one dared to do so.
          After the demise of the junta, he will be honored with State Medal.

          • tmbt

            Hi Dawit
            ናትካ ነገር ዘኢትነገር ….

          • forto sawa

            AdiA gedyFa haTn’A keybeleka Mr. Dan Connell, medal si nAka dehan.

        • Raee

          ዘይቐብጽ ሰላዪ
          =========

          ዳን ኮኔል ሰላዪ መሰሪ
          ተጻባኢ ኤርትራ ክብሪ
          መሓረና
          ክንሰስን ክንዓቢ

          ንዕንወት ንጥፍኣት ተቖጺርካ
          ሃሱሳት ሓቢልካ ሰሪዕካ
          ምስ ወያነ ኢድን ጓንትን ኴንካ
          ህዝቢ ኤርትራ ክትጎድእ ኣንቂድካ
          ፈሊጥናዮ ቀደም፡ ሱዉር ዕላማኻ

          እስኻ ክትኣልም ክትብድል
          ኤርትራ ክትዓቢ ክትስጉም
          ተረባረብ ኮይኑ ዓመታት ይበርር

          ኣይትሃውትት ኣለናላ ደቃ
          ንሓልፈላ ንኸፍለላ ዋጋ
          ንዓመጽቲ ዝጻብኡ ክብራ
          ደመኛታት ከማኻ ጒሒላ

          • B.Adal

            Raee, Just Beautiful !!!
            Love your writing.

          • forto sawa

            Beautiful as usual, kem tsehai b’Raq anetseRa terEy!

      • Ebay-Asmara

        Didn’t you hear what madam Brownyn told you, knucklehead? DEMANDING- doesn’t work with Eritrea.

      • B.Adal

        You should re-name yourself as hangover 🙂

    • Raee

      Bronwyn Bruton said ….”5) Insist on improvements in the human rights situation in Eritrea”

      በየናይ ሞራል በየናይ መዐቀኒ
      ኣመሪካ ክትሕለቕ ብመሰል ኤርትራዊ
      ናይ ስቓይና መንቂ ሎሚ ይኹን ትማሊ
      ደምና ዘዛረየት ብሕቡእ ብግልጺ

  • Kaleab B

    This idea that Eritrea a socialist nation should be debunked quickly. Our culture encourages individuals and to reward them based on hard work and innovation. I am certain there is no room of such bad economic system in our culture. I cant believe TN continues to encourage this nonsense. In my view this is part of the defamation against Eritrea to discourage international bankers and investors.

    • Ebay-Asmara

      Yeah. Let’s call it shaebianism! Although the simple explanation of socialism, can be collective- thinking rather than individualism. Meaning, thinking for the best for the whole society in general. But I agree, all isms, tend to be abused at the end.

  • Eritrea: Coming In from the Cold

    By BRONWYN BRUTON

    Introduction

    The Horn of Africa, long recognized as one of the world’s most unstable regions, is undergoing a round of seismic shifts. Massive and sustained anti-government demonstrations in Ethiopia have laid bare the fundamental brutality and instability of the ruling Ethiopian People’s Revolutionary Democratic Front, which is Washington’s major security partner in the region. Tiny Somaliland and Djibouti are on high alert, bracing for a tide of Ethiopian refugees that—particularly in the midst of drought—could easily overwhelm those territories. South Sudan, the youngest nation on earth, has become a killing eld. And the Western- funded peacekeeping coalition in Somalia, which has been fighting the al-Qaeda linked terror group al-Shabaab since 2007, is critically fatigued and losing ground. These multiple nodes of instability pose a significant and immediate threat to US interests in the region.

    Eritrea has long been stigmatized as a “spoiler” by Washington and stands accused of supporting terrorism. In 2009, at Washington’s urging, Eritrea was sanctioned by the United Nations for supporting al-Shabaab and for refusing to settle a border dispute with Djibouti. However, years of scrutiny by the United Nations Somalia and Eritrea Monitoring Group (UNSEMG) have yielded no evidence that Eritrea continues to be involved in Somalia, and the Djibouti conflict is mediated by Qatar.

    A number of surprising developments have recently occurred in Eritrea, suggesting that the country is determined to throw o isolation for positive engagement in its foreign policy since the sanctions were applied. An engaged Eritrea would be very good news for the region at a time when Washington’s status quo approaches to Ethiopia, Somalia, and South Sudan are visibly failing.

    If the United States can encourage Eritrea on a trajectory of re-engagement, it should. But to do that, Washington must drop outdated notions about the threat that Eritrea poses. At a time when the Kenyan army has annexed parts of southern Somalia and is traffcking with al-Shabaab, when the Ugandan army is taking sides in South Sudan, and Ethiopian forces have killed hundreds and detained tens of thousands of protestors calling for government reform, Eritrea truly ranks among the least of the United States’ security concerns.

    A disordered Ethiopia will make Eritrea more important to US security interests. By virtue of its geographic position between Ethiopia and Yemen, Eritrea is bound to serve either as a bridge or a barrier to the passage of terrorists between the Persian Gulf and the Horn of Africa. Thus far, Eritrea has repelled jihadists and proven immune to radical ideologies. This is a role for which it has received little credit. But Washington cannot afford to take Eritrea’s implicit cooperation in its counter terror efforts for granted.

    If Eritrea is overwhelmed with refugees, or otherwise sucked into the Red Sea region’s growing unrest, the United States could nd itself facing instability and perhaps a terror threat on both sides of the Mandeb Strait, which is a critical chokepoint for the $700 billion dollars of trade passing annually between the European Union (EU) and Asia. Threats to this trade route have in recent years led the United States to pour millions of dollars into combating Somali piracy—an indication of the Strait’s importance to US interests.

    For these reasons, the United States ought to be concerned about its inability to project influence in Eritrea. This paper aims to assist the incoming US administration in securing US interests by offering a blueprint for improving relations with Asmara.
    https://www.atlanticcouncil.org/images/publications/Eritrea_Coming_In_from_the_Cold_web_1207.pdf

    • Ebay-Asmara

      Always when listening to Bob Marley’s lyrics, I’ve wondered about the irony that his lyrics fit perfectly to our history and stance on things, except the Haile Selassie adulation part, of course. His unbending stand for the oppressed and the mistreated and his incredible courage, makes him like a tegadalay to me. Someone fooled him for a few years about the Haile Selassie thing, but he got baptized back to Christ, before his death. What prompted me to write this, is the fact that, what miss Bruton, inadvertently,, gave the title to her speech, (coming in from the cold) is one of Bob’s songs. Eventhough, I don’t believe Eritrea was ever out in the cold. Ironic, nonetheless.

  • Eritrea: Coming In from the Cold

    [….]

    The Risk to US Interests

    Over the years, US rhetoric has helped to establish a fictional dichotomy between the “good” Ethiopia and the “spoiler” Eritrea. While this may seem expedient to US counter terror efforts in the short term, it actually creates a host of medium-term risks for Washington. The dichotomy is not supported by facts on the ground, and thus has a detrimental effect on US credibility and counter-radicalization efforts, particularly in Ethiopia, where the government has imprisoned thousands of journalists, politicians, and bloggers under the guise of counterterrorism. Washington has consistently praised Ethiopian governance despite strong evidence of government repression. (Irreversible harm was done to Washington’s credibility, for example, when President Obama visited Addis Ababa and referred to the Ethiopian government as “democratically elected,” directly after the ruling party won 100 percent of the parliamentary seats in an election.)

    US political and financial support of the Ethiopian government is also widely viewed as instrumental to the regime’s continuing stranglehold on power—a perception that may assist al-Shabaab or other jihadist actors to foment a homegrown terror movement in Ethiopia amidst the general dissatisfaction and insecurity there. Al-Shabaab has flourished in Kenya, where police and military brutality, class grievances, and the estrangement of the Muslim community have proved fertile ground for jihadist recruitment efforts. Conditions in Ethiopia are not dissimilar.

    If Ethiopia’s instability worsens, the United States may, within the next few years, be faced with a situation of multiple state failures in the Horn: a swath of instability that stretches from Somalia, through Ethiopia, across the water to Yemen, through Sudan, and onward to the Sahel. And, in this worst-case scenario, Eritrea, Djibouti, and Somaliland will be the vital buffers between that instability and the billions of dollars of trade passing every day through the Mandeb Strait.

    Furthermore, if the West does not re-engage with Eritrea, other countries will step in to ll the diplomatic void. Eritrea has already begun to form new military alliances with Gulf states and new economic partnerships with China. Prolonging the status quo does not mean that Eritrea will remain isolated, but it does mean that the United States will continue to be unable to project influence in an increasingly important region of the world. For these reasons, the United States cannot afford to continue its policy of isolating Eritrea.

    Fortunately, it is not too late to repair the relationship. Despite his many concerns about US policy and the lingering bad blood between the nations, President Isaias has stated that the relationship between the United States and Eritrea is fundamentally sound,19 and that he is convinced the two countries should—and will—be friends. However, concrete steps will need to be taken by the incoming US administration to move the relationship onto a more constructive footing.

    https://www.atlanticcouncil.org/images/publications/Eritrea_Coming_In_from_the_Cold_web_1207.pdf

  • Truth

    “Quote of the century”:

    “…..A disordered Ethiopia will make Eritrea more important to US security interests. By virtue of its geographic position between Ethiopia and Yemen, Eritrea is bound to serve either as a bridge or a barrier to the passage of terrorists between the Persian Gulf and the Horn of Africa. Thus far, Eritrea has repelled jihadists and proven immune to radical ideologies. This is a role for which it has received little credit. But Washington cannot afford to take Eritrea’s implicit cooperation in its counter terror efforts for granted.

    If Eritrea is overwhelmed with refugees, or otherwise sucked into the Red Sea region’s growing unrest, the United States could nd itself facing instability and perhaps a terror threat on both sides of the Mandeb Strait, which is a critical chokepoint for the $700 billion dollars of trade passing annually between the European Union (EU) and Asia. Threats to this trade route have in recent years led the United States to pour millions of dollars into combating Somali piracy—an indication of the Strait’s importance to US interests.

    For these reasons, the United States ought to be concerned about its inability to project influence in Eritrea. This paper aims to assist the incoming US administration in securing US interests by offering a blueprint for improving relations with Asmara”

    “Recommendations

    These multiple grievances cannot be rectified overnight. However, a couple of key actions could quickly put US
    relations with Eritrea on a positive trajectory.

    1) Lift the UN sanctions on Eritrea
    2) Reject Ethiopian irredentist claims on Eritrea
    3) De-personalize US policy toward Eritrea
    4) Let Europe lead
    5) Insist on improvements in the human rights situation in Eritrea—but do not single out Eritrea for criticism’
    .very realistic and practical and factual analysis and recommendations.

    Courtesy of Ms Bruton.

    I think this is a FACT that no one can deny or refute…..

  • wedinakfa

    “[I]nternational attempts to improve the living conditions of Eritreans are more likely to succeed . . . through engagement that starts with where the country is now, not where outside actors think it ought to be.”
    Thus Eritrea is safe and in safe hands.

  • ERITREA’S VISION

    These experiences taught the country’s leadership that its future depends on the following:

    – Strengthening self-reliance
    – Sacrificing the needs of the individual for the group and promoting social cohesion
    – Maintaining strong leadership. Unity is essential to overcoming great challenges
    – Encouraging resilience
    – Seeking local solutions

  • KEY CHALLENGES

    Eritrea’s prolonged national service and high levels of emigration are, to some extent, products of a larger economic malaise. Indeed, the country’s nancial woes have consistently hampered its broader security and development agenda. Boosting state revenue and employment opportunities are the country’s two most pressing economic problems, and they are interrelated: many of the ways to resolve one would help resolve the other.

    1) Financial Difficulties
    2) Isolation and the sanctions regime
    3) National service and political risk
    4) Poor livelihoods and emigration
    5) Poor business environment

  • ONE WAY FORWARD

    As the mining sector and key international partnerships (with the EU, United Nations Development Programme, and AfDB, for instance) show, Eritrea has the capacity to manage a small number of high profile initiatives well when it so desires. The cohesiveness and competence of its top leaders surpass those of many countries in Africa. If this senior-level competence could be applied more pragmatically to developing the economy, Eritrea could certainly grow its economy much faster.

    It could, for instance, develop a number of state- or ruling party–owned investment companies that would play a prominent role in developing the economy, as is the case in Rwanda, China, and Vietnam. These companies would aim to both maximize pro t and achieve certain strategic social or economic goals for the country (e.g., develop certain industries), and be completely managed by the private sector (for all hiring, promotions, technology imports, and so on).78 Such an approach would necessitate giving competitive markets a key and improved role in the economy, on the understanding that markets drive progress, but leave control over the “commanding heights of the economy” in the hands of the state.

    The country does some of this today with its myriad party- and government-owned businesses (such as the Red Sea Trading Corporation), but these operate less on private sector lines than they should; are faced with less competition; target a much smaller market; receive more favorable treatment from government regulators; and seem to be organized in a less strategic fashion than comparable entities in other countries. As such, they have not been nearly as effective in helping the country develop.

    Eritrea’s private sector, which today is limited to mostly small-scale businesses (in areas such as retail, agriculture, restaurants, and hotels), should be given more room to grow. This will require greater transparency, consistency, and efficiency in the application of rules and laws. The state should see a flourishing private sector as a crucial ally in the country’s development, and should take steps to encourage its growth with less ambivalence and inconsistency. The more Eritreans can be incentivized (rather than ordered) to develop their country, the more likely progress will become a population-wide endeavor that can catalyze people inside and outside the country to work together to build it up. This type of formula worked very well during the war years but has not been repeated since.

  • STRATEGIC OPPORTUNITIES

    Eritrea has a number of sectors that are ripe for development. Some, such as the mining and agricultural sectors, have received ample attention from the government. Others, such as tourism, trans shipping, and manufacturing, seem neglected despite rhetoric to the contrary.

    1) Agriculture
    2) Mining:
    3) Manufacturing:
    4) Tourism:
    5) Transshipment and logistics:
    6) Infrastructure:
    7) Seafood:
    8) Trade with Ethiopia:

    Reestablishing trade relations with Ethiopia would be a great boon for the country. Inarguably, there is nothing that would bene t the Eritrean people more than the resumption of the thriving cross-border trade with Ethiopia; two-thirds of Eritrea’s exports went to Ethiopia before ties were cut in 1998.95 The common culture and language shared by the elites of both countries would give Eritrea some advantage in competing with alternative routes. However, reopening the border would require the United States and Britain, among other countries, to honor their commitments to enforce the ruling of the border commission—a matter that is beyond Eritrea’s control.

  • ኣሌክ – Alec you

    When it comes to Eritrea, demanding doesn’t work! Lah tebahailna and we won.. cuz we did it for the love of our ppl and country!! And now look at the barking dogs like ‘Dan Connell’ changing colors. This snake worked hard to destroy our country with the beggars TPLF regime, but like always failed miserably. Just like in the past, he didn’t deliver the mission that was given to him by the CIA => to make Shaebia – mercenary of the US. But, his former wife ‘Gayle Smith’ delivered her mission =>> bringing the beggars TPLF to be the serpents of white-America. And that made him angry.. he felt humiliated by Shaebia, and that is why we saw him spitting venom against Eritrean government. It’s based on Grudge. And again like always failed miserably!! ????

    Awet n’Hafash!!✊????????????????????????????????????

  • ኣሌክ – Alec you

    “In the face of myriad challenges, they all recognized the need for pragmatism and all asserted that the Western way was not the only way.”

    Yep, we have our African/Eritrean way!! And Eritrea’s ideology was never like Cuba’s, but it was u that made it seem like that. Eritrean government doesn’t want to be isolated, again u made it seem like that. Our government said we don’t want to be puppets and do what we’ve been told.. Our stance is to work for our interest????????. Nothing more nothing less.

    And relations with the US is the worst nightmare for the chifra TPLF. So in-order to build our country in peace its necessary. and the little dogs in the south they are going to disappear without a trace.. and all the western media will start to change their tunes. Sometimes u have to distract ur enemies in-order to get what u want. And this is a good way to start.

  • #RethinkingEritrea – Official Video

    https://youtu.be/m9UQthg2IWc

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