The panel said the high-level defections including three senior air force pilots, a top geologist and the minister of information "are taking place amid continuing waves of emigration of Eritrea's youth as well as defections from the ranks of national service conscripts, a vast number of which are required to serve indefinitely."
In addition, the panel said, senior government officials "have started to manifest open dissent to military and economic policy decision-making."
Eritrea previously coordinated much of the financing of Somali armed groups and other illicit activity from its embassy in Nairobi, Kenya but the panel said it "has now shifted and diversified such operations to Sudan, South Sudan, Uganda and Yemen in addition to fronting a number of business operations in these locations."
These intelligence and business networks "represent a significant external power base for president Afwerki to exploit," and enable the government "to execute any policy of regional destabilization, including providing support and assistance to al-Shabab," the panel said.
The report cited contacts between Eritrean officials and Somali warlords and al-Shabab leaders as well as violations of the arms embargo, including the government's purchase of a large number of decommissioned military vehicles and employment of foreign technical experts to maintain the country's key logistics base.
"The government of Eritrea has also imported civilian aircraft that have subsequently been used for military purposes," it said.
In a separate report on Somalia, the panel said al-Shabab remains the principal threat to peace and security in Somalia, with an approximately 5,000-strong force controlling most of the country's central and southern areas and earning millions of dollars from exporting charcoal in defiance of U.N. sanctions.
The Eritrean government has strongly denied any links to al-Shabab or playing a negative role in Somalia and has called for U.N. sanctions to be lifted. A call to Eritrea's U.N. Mission seeking comment was not immediately returned.
Russia has blocked publication of the panel's annual report by the Security Council, U.N. diplomats said, speaking on condition of anonymity because consultations were private.The panel said it "has obtained concrete evidence of dual-use equipment imported into Eritrea from China."