Despite an announcement by Prime Minister Meles Zenawi that his country would accept "in principle" a border ruling by an independent commission on Ethiopia's border with Eritrea, the year 2004 ended without a resolution of the dispute.
Meles made the announcement in November. However he insisted that the April 2002 ruling on the 1,000-km frontier with Eritrea, which sparked a bloody two-year war in 1998, was still "illegal and unjust".
His announcement was welcomed by the Africa Union and the European Union. However the reaction from Eritrea called for "full and unconditional respect for the Algiers agreement". A statement issued by the Foreign Ministry in Asmara accused Ethiopia of "intransigence", adding that Eritrea would not "accommodate Ethiopia's forcible occupation of our territory".
UN special envoy to the Horn of Africa Lloyd Axworthy was cautious as he reflected on the new development. "I am not jumping up and down, but at least there is more traction there than there was," he told IRIN.
"It could be the beginning of a new chapter for peace, but there has to be another step, which is how the two countries begin engagement," he added.
Ethiopia and Eritrea went to war over the border between May 1998 and December 2000. Tens of thousands of people were killed in the conflict. As part of a deal to end the war, the two countries agreed to form an independent boundary commission whose decision would be final and binding.
The commission, made up of five lawyers appointed by both countries, drew up a new border on maps and the physical demarcation should have been completed a year later. However, while Eritrea accepted the April 2002 decision, Ethiopia refused to accept it.
Throughout 2004, there were calls for the two neighbours to resolve the issue - including from UN Secretary-General Kofi Annan, the Security Council and various world leaders.
In May, the Council urged Eritrea to end restrictions imposed on UN peacekeepers in the region - including limits on their freedom of movement.
DROUGHT INCREASING HARDSHIP
The border dispute has had a widespread impact, prompting relief agencies to appeal in November for nearly US $157.2 million to fund humanitarian activities in Eritrea in 2005. The country, they said, had continued to endure the aftermath of war, five years later, including destroyed homes, mined villages, shattered livelihoods, hunger and malnutrition.
In July, UNICEF warned that hundreds of thousands of Eritrean children were living in extreme poverty due to prolonged drought, the aftermath of the border conflict and its impact on the country's economy.
It said an estimated 425,000 children under 14 years of age were affected, mostly those living in families that were largely dependent on and headed by women, and that malnutrition rates were high.
According to the UN, 1.9 million war-affected people including internally displaced persons and their hosts, returning refugees and expellees, would need humanitarian assistance in 2005.
Food security has also proved to be a major challenge to Ethiopia this year. In August, the government disaster commission warned that the number of people in need of food aid had risen to more than 7.6 million as a result of crop failure and lack of pasture following poor or erratic long rains earlier in the year.