Rising from the valley floor like some vast modern cathedral, the dun-colouredbuilding towers over the flat expanse, visible for miles around. This is Mekele's giant cement factory, installed as part of a government-sponsored drive to bring industrial growth and prosperity to Tigray, making up for long decades of neglect.

But things have not gone according to plan. On streets neatly planted with young saplings, souvenir shops - mementoes of a tourism trade crushed by alarming headlines - stand empty. In the restaurant of the modern Axum hotel, uniformed staff wait for customers who never arrive. And like so many of the industrial plants built in Mekele in recent years, the cement factory is working at a fraction of capacity.

With all roads north closed by the war with Eritrea and the Red Sea ports of Massawa and Assab ruled off-limits by Addis, there is no easy export route for Tigray. As for sending cement powder south to Addis, the overland trip is so long, transport costs so high, that by the time it reaches the capital the cement has been priced out of the market.

"When you wanted to encourage investment in Mekele you used to be able to say 'the port of Massawa is close'. Now you have to say 'the nearest port is Djibouti'," says Solomon Inquai, president of the regional assembly. "The past four years have seen a really drastic slowdown in Tigray's economic development, which was booming before the war. It's only just beginning to pick up."

The Mekele cement factory's plight underlines the predicament facing the Ethiopian government with the ending of hostilities.

It also highlights a concern that has bordered on a national obsession since Emperor Haile Selassie blamed the Italian occupation on the lack of a port that would have allowed him to import arms. How, argue locals, can a country of 65m tolerate being separated from the sea by a nation of 3.5m?

Anxious not to rely on what it regards as an untrustworthy neighbour to the north, determined not to funnel business in the direction of a government it wants to see fall, landlocked Ethiopia is in search of new ports. Unfortunately, all available alternatives come with their own inbuilt handicaps.

Before the war broke out in May 1998, two-thirds of Ethiopia's merchandise passed through the port of Assab.

While Massawa served the needs of Eritrea's highland population, Assab, with its large Ethiopian population and scores of Ethiopian import-export companies, was often considered as an Ethiopian port in all but name.

Within days of the war's outbreak, Ethiopia shifted its trade - including 28,000 b/d of oil imports - to the port of Djibouti, further east along the Red Sea.

But Djibouti promptly exploited this windfall by hiking tariffs.

Since then, Ethiopians have complained of being boxed out of the freight forwarding and stevedoring business, while the Djiboutians have accused the Ethiopians of refusing to use Djibouti-based trucking companies.

An agreement signed between the two countries in April appears to have smoothed relations, with Djibouti agreeing to give Ethiopia 60 days' notice of any change in tariffs and six-monthly meetings scheduled between ministerial teams to iron out future difficulties.

So far the agreement seems to be holding. But tariffs are not the only problem posed by Assab's loss.

Despite its 30 berths, Djibouti is struggling to cope with the surge in demand from the Ethiopian hinterland.

And the road to Addis, fast disintegrating under the steady pounding of Ethiopian trucks, has become a favourite target for bandits. Earlier this year, so many drivers were being attacked that trade threatened to grind to a standstill.

The government has cited Port Sudan to the north-west and Somaliland's Berbera to the east as possible outlets for surplus trade.

Pouring funds into road improvement across the country, Prime Minister Meles Zenawi secured agreement to Ethiopian use during a visit to Sudan earlier this year and has also been importing petroleum from Sudan.

While the self-declared government of Somaliland is still struggling to win international recognition, Addis has taken a flexible line, opening a commercial office in Hargeisa. But roads through Sudan frequently become impassable during the rains, and Port Sudan's distant location means it is unlikely ever to service businesses beyond western Ethiopia. "Port Sudan is nearly three times further from the country's business centre than Assab," says an Ethiopian economic analyst. "Relations with Sudan have also occasionally been difficult, so once again the question of reliability arises."

As for Berbera, port workers have been idling since an outbreak of Rift Valley fever hit the traditional export of black-headed sheep to Saudi Arabia and more traffic would be welcome. But the deepwater port possesses only six berths and the British-built road to the sea was designed for eight-tonne trucks rather than 25-tonne monsters.

In addition, the uncertainty of doing business in unrecognised Somaliland keeps insurance rates high and means trade is paid for in cash.

At times, frustrated by such hurdles, government officials go so far as citing the Kenyan port of Mombasa - more than 1,400 km away in a direct line from Ethiopia's capital - as a solution. It is a response that has Ethiopian businessmen, aware of the corruption that has traditionally blighted operations at Mombasa and the police roadblocks that litter Kenya's overland routes, rolling their eyes.

Pragmatically, they know Ethiopia's economy can only flower when the government takes up Eritrean President Isaias Afewerki's invitation to start using Assab once again, perhaps under a scheme in which access would be guaranteed by western donor nations. But they also know such a course of action would be politically unacceptable, given the current climate of bitter recrimination.

"There's an element of cutting off your nose to spite your face. But with relations the way they are at the moment between the two countries, I don't see things changing soon," says an Addis-based diplomat.