With a land mass just larger than SA’s Kruger National Park and a population of 1-million, Djibouti punches well above its weight politically. The Horn of Africa country controls the mouth of the Red Sea and, with that, access to the Suez Canal, one of the busiest shipping lanes in the world. As a result, it hosts US, French, Italian, Chinese and Japanese military bases; a Saudi base is also in the works.
But the government’s seizure of an Emirati-run container terminal — a move allegedly provoked by China — suggests it is looking to leverage its strategic status.
Back in 2006, Djibouti’s president, Omar Guelleh, signed a 30-year deal with Dubai-based DP World — one of the largest port management companies in the world — to build, manage and operate the Doraleh container terminal. The terminal opened in 2009 as a joint venture between DP World, with a 33% stake, and the Djibouti port authority, the PDSA, with 67%. Then, in 2013, Hong Kong-listed China Merchants Port Holdings Company (CMPort), checked a subsidiary of the state-owned China Merchants Group, took a 23.5% holding in PDSA.
The port "proved to be a tremendous success, generating annual profits worth tens of millions of US dollars", according to a report in Global News.
But relations between Djibouti and the United Arab Emirates (UAE) are said to have soured in 2015, after Djibouti refused to lease ground to the UAE for military operations.
A year later, DP World signed a 30-year agreement with authorities in the unrecognised but de facto independent state of Somaliland to develop and manage the port of Berbera.
In February, Djibouti unilaterally terminated the Doraleh concession, claiming in court papers that its sovereignty was under threat and that the terminal contract was "seriously prejudicial to the country’s development imperatives and to the control of its most strategic infrastructure", according to Forbes. This, it said, made taking control of the terminal "necessary and unavoidable [and] in accordance with international public law". It then gave operational control of the terminal to CMPort.