Eritrea Defaults on a $286mn Loan From Qatar’s National Bank

First Djibouti breaks its contract with DP World and doesn’t pay its dues after loosing the court battle and now Eritrea defaults on loans from Qatar and doesn’t pay up. Not looking good for these authoritarian nutters!

(Bloomberg) – Qatar National Bank QPSC, the Middle East’s biggest lender, asked a U.S. court to order Eritrea to pay nearly $300 million of debt after the Horn of Africa nation refused to participate in two lawsuits.

The Doha-based bank requested a judgment by default from a federal court in Washington on Friday after Eritrea failed to respond to the bank’s claim seeking to enforce a U.K. ruling in 2019. QNB alleges that President Isaias Afwerki’s government went to drastic lengths to avoid being served with key documents.

A decision in its favor will help the Qatari bank identify and seize Eritrea’s overseas assets, according to the complaint it filed in the U.S. court in February. The legal battle may further discourage investment in the African country, which currently stands second from last among 190 economies in the World Bank’s Ease of Doing Business rankings.

The quarrel centers on $200 million that Eritrea borrowed from QNB in 2009 and 2010. The bank claims Afwerki’s government reneged on the debt in May 2012 after repaying about $45 million. That prompted the lender in 2018 to seek legal recourse in the U.K., as permitted under the loan agreement. The following year a judge directed Eritrea to pay its creditor $253 million plus interest.

Eritrea ignored the ruling, according to QNB. The bank then turned toward the U.S. court in February in a bid to enforce the judgment. Eritrea has chosen not to defend itself in either case.

Staff at the Eritrean embassy in London “responded with extraordinary efforts to frustrate” the U.K. proceedings, QNB said in its complaint to the U.S. court.

Embassy officials locked one of the bank’s lawyers in the building until he agreed to leave without delivering the court documents, while another representative was “physically assaulted,” according to QNB’s filings.

Documents on the Pavement

On one occasion, “the receptionist physically knocked the documents out of a process server’s hands and threw them on the pavement outside the embassy’s front door,” the complaint said. A British judge eventually allowed the bank to send paperwork by email or post.