The Ethiopian warning that it may terminate or suspend the peace accord came in a letter, written by Ethiopian Foreign Minister Seyoum Mesfin, to his Eritrean counterpart.

Foreign Minister Seyoum says Ethiopia is being forced to consider the option because of provocative actions taken by the Eritrean government in Asmara. He says they include sending Eritrean troops into what is supposed to be a 25-kilometer neutral buffer zone along their shared 1,000-kilometer border, and coordinating terrorist activities to destabilize the region.

In a telephone interview with VOA, Eritrean Presidential Spokesman Yemane Gebremeskel blamed the government in Addis Ababa for keeping tensions high.

"They occupy sovereign Eritrean territory in violation of international law," said Gebremeskel. "They continue to reject the arbitration decision. You have to address the question to Ethiopia, what do they want to achieve at the end of the day?"

The 2000 peace accord required Ethiopia and Eritrea to abide by an independent ruling on the demarcation of the border. In 2002, a U.N. boundary panel granted the flashpoint border town of Badme to Eritea, but Ethiopia refused to accept the ruling.

The panel has warned that the 2002 ruling will stand if the dispute cannot be resolved by November, when the panel is to be dissolved.

Eritrea complains that the United States has not put enough pressure on Ethiopia to accept the new border, because Washington considers Addis Ababa a strategic ally in its fight against terrorism.

Earlier this month, the top U.S. diplomat for Africa, Assistant Secretary of State Jendayi Frazer, urged both Horn of Africa leaders to do more to ease tensions in the region. But she has also been vocal in her criticism of Eritrea, which the United States and the United Nations believe is funding and arming anti-Ethiopian rebels, including Somali Islamist insurgents fighting Ethiopian forces in Mogadishu.

Eritrean presidential spokesman Gebremeskel says such accusations are lies spread by Ethiopia to isolate Eritrea.

"If you are talking about destabilization, it is Ethiopia which has invaded Somalia," he said. "Ethiopia is doing these violations because it has tacit support of major powers. They have the support of Washington. That is the main problem."

Horn of Africa observers are voicing concern that the on-going dispute between Ethiopia and Eritrea could result in another border war, which they say is likely to spill over into other parts of the region.

The border war between 1998 and 2000 killed 70,000 people in Eritrea and Ethiopia and displaced nearly 1.5 million others.

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