As it boosts aid to Somalia's weak interim government to fight an Al-Qaeda-linked militia, the Obama administration is grasping for ways to cut off what it says is one of the militant group's main supply lines: the tiny Red Sea state of Eritrea. The enigmatic nation has emerged as a principle player in the conflict in lawless Somalia, where the enfeebled government is struggling for survival against the extremist Al-Shabab faction. US, UN and other investigators say the Eritrean government is funneling money, weapons and other supplies to Al-Shabab, which Western intelligence agencies regard as a growing regional and international threat bent on using Somalia as a base to export terrorism abroad. Eritrea emerged out of internecine conflict, seceding from Ethiopia in 1993 after a 30-year guerrilla war. Eritrea, a Somalia neighbor about the size of Pennsylvania with a population of only 3.6 million, has consistently denied the charges. Its accusers are equally adamant. The United States, in particular, has been warning the country that it will face sanctions if it doesn't stop supporting the extremists. The African Union has also called for sanctions to be imposed. After pledging last week to expand US support, including military aid, to the beleaguered Somali government and an undermanned and under-equipped African peacekeeping force protecting it, US Secretary of State Hillary Rodham Clinton issued a stern new warning to Eritrea. “It is long past time for Eritrea to cease and desist its support for Al-Shabab,” she said at a news conference with Somali President Sheik Sharif Sheik Ahmed. “We are making it very clear that their actions are unacceptable. We intend to take action if they do not cease.” Yet despite similar tough talk dating back to the administration of President George W. Bush, the US has rarely followed up on its warnings to Eritrea. In 2008, the Bush administration found that Eritrea was not fully cooperating in the war on terrorism and slapped an arms embargo on Eritrea. But the United States has stopped short of more punitive steps, including designating Eritrea a “state sponsor of terrorism,” a move that would impose a wide range of additional sanctions. A senior US official said an Obama administration review of whether Eritrea's activities in Somalia meet the legal requirements for such a designation is still underway and could be completed soon. Washington's seeming reluctance thus far to take more than token measures against Eritrea is unclear but appears partly rooted in a desire to woo the country away from supporting Al-Shabab. US Ambassador to the United Nations Susan Rice told Congress last month that Eritrea's backing for Al-Shabab is “unacceptable and we will not tolerate it.” At the same time, she said the United States wants to engage Eritrea and was hopeful the isolated African nation would respond to American entreaties. But so far, Eritrea has flatly rejected US allegations of support for extremists and has ignored the administration's offers of better relations. “That's totally untrue, baseless,” Eritrea's information minister, Ali Abdu, said when asked about Clinton's assertion that his country is arming Al-Shabab. Abdu also denounced the US involvement with the Somali government and said Somalis should “decide their own destiny and future.” Although it denies helping the extremists, Eritrea sheltered one hardline Somali leader, Sheik Hassan Dahir Aweys, for months in self-exile before he returned to Mogadishu in April. Aweys is on US and UN lists of individuals with links to Al-Qaeda. Aweys denies ties with Al-Qaeda but said in June he is working to unite his Islamic Party with Al-Shabab, which the US says is harboring at least two Al-Qaeda operatives involved in the 1998 bombings of the American embassies in Kenya and Tanzania. In her comments in Kenya, Clinton maintained that Al-Shabab wants to expand and sees “Somalia as a future haven for global terrorism.” She noted the recent arrests of four men allegedly linked to the group who are suspected of plotting attacks in Australia. While it refutes allegations of supporting the militia, Eritrea ridiculed the arrests in Australia, calling them an invention of the CIA intended to confuse “the gullible and naive.” “The objective: to justify the prevailing acts of intervention and domination in the Horn of Africa as well as link the Somali people's popular resistance with ‘global terrorism',” ahead of Clinton's visit, Eritrea's foreign ministry said in a commentary posted to its Web site on Aug 5. Eritrea has also made clear its disdain for the Somali government, which is not only backed by the United Nations, the United States and the African Union but by Eritrea's longtime enemy – Ethiopia. Many believe that Eritrea and Ethiopia – who have been feuding over their border since Eritrea gained independence from Ethiopia – are fighting a proxy war in Somalia. Ethiopia invaded Eritrea in 2005 to dislodge Al-Shabab's predecessor, the Islamic Courts Union, from power. “We think that solving a problem with another problem is not right, and this is what Eritrea is doing,” Ahmed, the Somali president, said in Nairobi with Clinton. “Because Eritrea is having problems with one of its neighbors, it is not right to solve this problem through Somalia.”