Ties between the Horn of Africa neighbours are at their lowest since a 1998-2000 war that killed 70,000 people, analysts say. And prospects of resolving the border impasse dimmed when talks in the Hague last week broke down.

"Eritrea will do every possible thing to avoid war, but this doesn’t mean we will compromise our sovereignty or territorial integrity," Information Minister Ali Abdu told foreign journalists in Asmara.

"If the issue is only about the border then there is no single reason to go to war. But if the other side decides to go to war that will be another issue," he said.

"We have to close this chapter once and for all."

Addis Ababa and Asmara have been locked in a bitter dispute over their 1,000 km (620 mile) border since Ethiopia rejected a 2002 ruling by an independent border commission giving Eritrea the key town of Badme.

Ethiopia says it wants more talks and accuses Eritrea of sending thousands of troops into a demilitarised zone, which is entirely in Eritrean territory.

Ethiopian Foreign Minister Seyoum Mesfin said on Monday the armies were "only 70 or 80 metres apart".

A meeting at the Hague-based commission — which has set a November deadline for both parties to mark the border — broke down last week as both nations accused the other of scuppering its five-year-old ruling.

A source at the meeting said Eritrea had accepted four conditions set out by the independent commission, including lifting restrictions on a U.N. peacekeeping mission and withdrawing from a buffer zone.

But Ethiopia said Eritrea’s actions on the border had ruined the talks.

Analysts say tensions over the border are fuelling a proxy war in Somalia where Islamist insurgents, believed by Western analysts to be aided by Asmara, target Ethiopian-backed Somali government troops.

The United States says it is considering placing Eritrea on the state sponsors of terrorism list for allegedly shipping arms to Islamist insurgents in Somalia. Eritrea rejects this.

"It’s a paradox to condone the country who invaded Somalia and then condemn the country who’s hosting a peace and reconciliation conference," Ali said.

Some 400 Somali dissidents, including members of the diaspora, Islamists, civil society groups and ex-lawmakers, have flocked to Asmara in recent weeks to form a new opposition movement dedicated to getting Ethiopian troops out of Somalia.

Source: Reuters