Eritrea says it will cut the size of its army as part of changes to a system of mandatory national service that the United Nations blames for propelling tens of thousands of people to flee to Europe and neighboring countries.

The official end to a two-decade war with neighboring Ethiopia means the country that sits on a key shipping route to the Suez Canal may be able to place some working-age people in industries such as infrastructure and agribusiness, and spur self-employment, according to government officials.

Rights groups and the UN said the conscription policy fueled a wave of migration. At its peak in 2015, Eritreans were the fourth-largest group illicitly crossing the Mediterranean, adding to Europe’s refugee crisis. Eritrea, which is about the size of the U.S. state of Pennsylvania, describes them as economic migrants.

“Definitely a small army will remain, and the others will concentrate on the developmental work as planned,” Minister for Labour and Human Welfare Luul Gebreab said in an interview in the capital, Asmara.

Eritrea’s military is the Horn of Africa nation’s oldest institution, with roots in the rebel movement that won independence from Ethiopia in 1993 after decades of struggle. A 1998-2000 conflict between the two destroyed their relations and Eritrea, citing the threat of Ethiopian aggression, indefinitely prolonged national service, which includes civilian roles, while quashing dissent. Officials wouldn’t disclose the army’s size, citing national security.

Population Discrepancy

Eritrea’s population is an estimated 3.2 million, according to a non-public labor force survey for 2015-16 by the labor ministry that Bloomberg obtained independently and Luul said was authentic. A public report by Eritrea’s foreign ministry last year cited a 2015 estimate of 3.65 million — a discrepancy of 450,000 people in two official documents that both cite Eritrea’s National Development Ministry. The survey was funded by the UN Development Programme and Eritrea’s government.

“People are saying the population is fleeing, fleeing, fleeing, but that’s the scenario not only of Eritrea: look at Chad, Somalia, Ethiopia, Sudan, Mali,” said Luul, who declined to clarify the discrepancy. A census that’s “on the verge of preparation” will detail the reasons for the different figures, she said.

Eritrea’s army partly demobilized two years after independence, only to return to a war-footing in 1998, while another attempt 10 years later had to be suspended because Ethiopia failed to implement a Hague-backed commission’s decision on the demarcation of their border, according to Luul.

‘Areas of Intervention’

July’s pact with Ethiopia to restore diplomatic, telecommunications and commercial links has changed the calculus. An adviser to President Isaias Afwerki has said the one-party state will have to respond to promises of democracy in its giant neighbor. And improved relations open the door for trade with landlocked Ethiopia, which is home to about 100 million people and has the continent’s fastest-growing economy.

Eritrea’s government is “definitely studying” the economic effects of demobilization, according to Luul. She described “potential areas of intervention” to diversify the primarily agrarian economy that include natural resources, agro-industry, fisheries, and infrastructure. Only a few foreign companies such as Nevsun Resources Ltd. of Canada and China’s Shanghai Sfeco Group operate in the country.

“Could we add value and employ a large sector of the population? At this stage, we will take it slowly, step by step,” Luul said.

Salary Reviews

Government salaries, which vary between $120 and $267 a month before automatic deductions for items such as housing, will also be reviewed this year after they were raised in 2016 for the first time since the 1998 war, Information Minister Yemane Gebremeskel said in an interview.

National service, which begins with six months of military training, has been “elongated” beyond a statutory definition of 18 months because Eritrea has been on a war-footing, Yemane said. No announcement has been made to reverse this, the officials said.

Demobilization depends on Ethiopia concluding its parts of the peace deal and withdrawing its troops from Eritrean territory, according to the officials. The countries agreed “there is no need to maintain a huge number of forces on that border area,” said presidential adviser Yemane Gebreab, who’s on a joint committee with Ethiopia to settle the issue.

“We are in the process of change and the peace agreement is in the process,” Luul said. “If this continues and solidifies, for sure the original plan of the national service will be one pillar, not the only pillar.”