Following a successful independence struggle and a referendum in 1993, Germany established bilateral relations with Eritrea. Eritrea’s initially democratic development was halted by the Ethiopian-Eritrean border war (1998-2000). The recognition of borders and demarcation agreed in the Algiers Agreement (2000) was not implemented. The potential for closer bilateral relations between Germany and Eritrea was not fully exploited.

Following the signing of the peace agreement between Eritrea and Ethiopia in July 2018, the German Government endeavoured to intensify relations with Eritrea again. For example, Government representatives and members of the German Bundestag visited the country. This stage of relations drew to a close after the end of the reconciliation process in 2019 and with the resulting exacerbation of the internal political situation as well as Eritrea's military intervention in the intra-Ethiopian Tigray conflict. Bilateral relations have been strained ever since.

There is little economic exchange between Germany and Eritrea. The focus is on visits by members of the Eritrean diaspora to Eritrea. There is currently no official cooperation in the fields of culture and civil society. The private Eritro-German Association runs German language courses in the Eritro-German Center in Asmara, which has a German library. Today, more than 80,000 Eritrean nationals and other people of Eritrean descent live in Germany.

Eritrea is opposed to bilateral development cooperation due to ideological reservations. The charitable organisations Hammer Forum and ARCHEMED are examples of German civil-society organisations that have been working successfully for years with medical teams on the ground. With the help of the African Development Bank, fresh impetus is also being provided in the fields of renewable energy sources and the blue economy.