Ethiopia is unhappy about the decision to hand over Badme

The US State Department cautions that both countries risk sanctions unless a boundary commission ruling is honoured.

Ethiopia refuses to accept the symbolic village of Badme is in Eritrea.

The international community has stepped up its efforts to end the stalemate over the Ethiopia-Eritrea border dispute, but with little success.

Stalemate

"Renewed hostilities between Ethiopia and Eritrea would have dire consequences for the people of the two countries in relations and programmes with the United States," said spokesman Adam Ereli.

Germany and Britain this week urged Ethiopia to accept the boundary commission ruling to allow the border's physical demarcation to proceed.

Early this month, Eritrea rejected a UN envoy charged with the task of breaking the stalemate between the two countries.

Eritrean presidential spokesman Yemane Gebremeskel said they viewed the appointment of Canadian foreign minister Lloyd Axworthy as an envoy as an alternative mechanism to demarcating the border.