Eritrea and Ethiopia remain stalemated, and the longer the deadlock continues the greater is the risk that an isolated incident could unravel a truce that ended a fierce border war four years ago, Secretary-General Kofi Annan warns in his latest report on the two Horn of Africa countries.”While both parties stress that they have no desire to unleash an armed conflict, they reportedly continue to arm themselves and state they would not hesitate to react if provoked,” Mr. Annan says in the report, which calls on both sides to reappraise their stands over border demarcation and recommends a six-month extension of the UN Mission in Ethiopia and Eritrea (UNMEE).In particular Mr. Annan urges Ethiopia to rethink its opposition to significant parts of the Boundary Commission’s binding demarcation decision of 2002. At the same time he calls on Eritrea to reconsider its refusal to meet with his Special Envoy Lloyd Axworthy before completion of the demarcation process.”The concern expressed in the past remains that continued military stability cannot be guaranteed as long as there is no progress in the political process,” Mr. Annan warns, although a palpable improvement in cooperation of both sides with UNMEE has had a positive effect on the overall security environment.He cites a decline in Eritrean restrictions on UNMEE patrols although its government has said it will again close a key supply route for mission troops in the western sector that it had only just reopened last month after a nearly five-month closure. He also notes continuing satisfactory cooperation between UNMEE and the Ethiopian military.Mr. Annan calls on the Security Council and the witnesses of the Algiers accords of 2000, which ended the two-year border war, to intensify their efforts to help the two countries conclude the peace process without further hesitation, warning: “The political will to move decisively to implement the Algiers Agreement is still lacking.”The Security Council set up UNMEE in 2000 with a maximum deployment of 4,200 military personnel to monitor the cessation of hostilities and help ensure the observance of security commitments. At present it has 3,875 military personnel, including 3,660 on the ground. The mission also includes 233 international civilians and 262 local civiliansOther points in the report include:Landmines and unexploded ordnance continue to claim victims in border areas.The response to persistent humanitarian needs in both countries, especially with regard to the effects of drought on food crops, continues to be of concern.UNMEE continued its HIV/AIDS capacity-building activities through awareness programmes, training and the promotion of confidential counselling.The mission continued to follow up with local civilian and security officials on both sides of reports of individuals of the other nationality being arrested or reported missing in the border areas.