Eritrea and Djibouti agreed to normalise ties a decade after a border dispute led to brief military clashes, officials said after a regional summit.
Fighting erupted along the disputed Dumeira area after Djibouti accused Asmara of sending troops across the border. The Red Sea neighbours have been at odds ever since.
“After a long period of separation, Eritrea and Djibouti agreed to restore ties,” Ethiopia’s Foreign Minister Workneh Gebeyehu said on his Facebook page.
He spoke after delegations from Ethiopia, Somalia and Eritrea met in Djibouti, where they held discussions with President Ismail Guelleh.
On Twitter, Eritrea Information Minister Yemane Gebremeskal said Guelleh told ministers: “Djibouti is ready for reconciliation and formalisation of ties with Eritrea.”
The rapproachment follows a thaw in relations between Ethiopia and Eritrea, which declared an end to their state of war in July and agreed to open embassies, develop ports and resume flights after decades of hostilities.
Eritrea was subjected to a UN arms embargo since 2009 over allegations it provided support to militants in Somalia and failed to pull troops out of disputed territory with Djibouti. Asmara denies accusations it backed Somali insurgents.
Djibouti Foreign Minister Mahmoud Ali Youssouf said: “With the truthful willingness demonstrated by Eritrea and Djibouti to make peace, all other pending issues will find their way to resolution.”
Ethiopia reopened its embassy in Eritrean capital Asmara on Thursday.
Ethiopia Prime Minister Abiy Ahmed, who presided over widespread reforms since his appointment in April, earlier met Eritrean President Isaias Afwerki for his second face-to-face meeting since the July accord.
A day earlier, an Ethiopian ship docked in an Eritrean port for the first time in two decades and Eritrea announced plans to upgrade a road to its neighbour.