Date: Sunday, 17 January 2021
Ismail Omar Guelleh, president of the small but strategically vital country of Djibouti in the Horn of Africa, announced in late December he would be running for a fifth term in presidential elections this April. Taking advantage of the media attention surrounding the Intergovernmental Authority on Development (IGAD) summit, which took place in Djibouti last month, Guelleh declared his commitment to “keep working to realize the aspirations of [Djibouti’s] youth for a better future.”
The announcement carried no small amount of irony, coming at a forum which featured not only Ethiopia’s young prime minister Abiy Ahmed, but also Sudan’s post-revolutionary premier Abdalla Hamdok. Guelleh, who has served as his country’s leader since 1999 and succeeded his uncle as only Djibouti’s second president since 1977, is practically assured of re-election, especially as the Djiboutian opposition is forced to contend with a harshly authoritarian security apparatus that killed at least 27 people ahead of the previous round of presidential elections in 2016.
Global powers compete for Red Sea real estate
While electoral competition in the Horn of Africa’s smallest country is all but non-existent, the same cannot be said of Djiboutian real estate. The country is a key staging ground for both the United States, which uses Camp Lemmonier on the outskirts of Djibouti’s capital as an operating base for 4,000 US and allied personnel, and China, which chose the country to host its first overseas military installation in 2017. From a US perspective, Djibouti is ideally located for conducting missions in the Middle East and East Africa; for Beijing, a military presence in Djibouti helps secure its substantial East African investments.
Up until China’s dramatic arrival on the scene, Guelleh’s government discreetly catered simultaneously to contingents from the US, France, Italy, Spain, Germany, and Japan. Now, US-China competition has made Djibouti a focus of international attention in East Africa, as has the deepwater Port of Djibouti, which has served as landlocked Ethiopia’s primary gateway to the global economy for the past twenty years.
Debt fears aside, Djibouti’s strategic location and Ethiopia’s rapid economic expansion have helped Guelleh string together a relatively strong record of GDP growth prior to COVID-19, underpinning his electoral promises to “the youth” of his country. And yet, a number of regional developments are now threatening to break the Port of Djibouti’s monopoly over maritime trade in the Horn of Africa, helped along by Guelleh’s own flippant attitudes towards foreign investment and international law.
Guelleh and Djibouti bank on Beijing
Even though the 350,000 ten-foot equivalent units (TEUs) of cargo handled per year by the Port of Djibouti is approximately one-tenth the volume handled by Morocco’s Tangier Med, Africa’s busiest port, Djibouti’s port infrastructure is overloaded. The 1,500 trucks carrying the vast majority of goods transiting to and from Ethiopia on a daily basis, combined with the poor state of the roads connecting the two countries, have caused congestion and delays and encouraged Ethiopia to look for alternatives.
To alleviate these backups, China has invested $3.4 billion in a 750-km rail line connecting Djibouti and Addis Ababa. Chinese firms are investing several million more in expanding Djibouti’s ports; in 2017, for example, Guelleh inaugurated the Doraleh Multipurpose Port, whose $580 million cost was financed with a subsidized loan from China’s ExIm Bank. Djibouti’s rapidly growing debts to the Chinese firms funding and carrying out these projects, and the country’s starring role in the African leg of “Belt and Road” more broadly, has put both partner governments and other investors on edge. The political machinations surrounding these projects have only amplified those concerns.
Competition from DP World, Berbera, and Eritrea
In February 2018, Guelleh’s government provocatively seized control of the Doraleh Container Terminal from DP World, which had designed and built the facility starting in 2006 and operated it under the terms of a concession from Djibouti. Given the circumstances of the seizure of the terminal, in which Beijing’s state-controlled China Merchants Port Holdings now holds a 23.5% stake, some observers suggest the facility is being used as “payment in-kind” on Djibouti’s substantial Chinese-held debt.
The contract being under English law, DP World has taken Djibouti to the London Court of International Arbitration (LCIA), winning no fewer than six judgements against the country. Guelleh has refused to abide by those decisions, and Djibouti has turned to its own Supreme Court to nullify the ruling from the LCIA. Guelleh claimed last November his country’s former partners want to “wield geopolitical control” and insisted “Djibouti isn’t just another square on a chessboard,” Djibouti’s unsustainable levels of Chinese debt notwithstanding. Such blatant disregard for the ruling of an international arbitration court should raise concerns among foreign investors considering business opportunities in Djibouti.
In the same interview, Guelleh spoke disparagingly of the Port of Berbera in neighboring Somaliland, now being developed by DP World as a joint venture with the breakaway region’s government as well as Ethiopia.
For all his bluster, Berbera represents a serious threat to Guelleh’s primary source of revenue. Officials in Somaliland expect to cut significantly into Djibouti’s share of the Ethiopian market once road links between Berbera and Ethiopia come online, and Abiy Ahmed’s government is clearly eager to secure alternatives that will allow the country to break free of Djibouti’s monopoly. That desire to diversify motivated Abiy’s Nobel Prize-winning reconciliation with neighboring Eritrea, with the 2018 peace deal negotiated by Abiy allowing Ethiopian commercial shipping access to Eritrean ports for the first time in two full decades.
Between Somaliland and Eritrea, it should be readily apparent to Guelleh that Djibouti’s stranglehold over Ethiopian trade will soon be coming to an end. By abandoning what had been a careful balancing act and alienating his country’s other international partners in favor of China, Guelleh primarily has himself to blame for this reversal of fortune, especially now that COVID-19 has upended the status of African debts to Chinese creditors.
As such, even if his immediate political future may hold few surprises, Guelleh’s promises to the “youth” regarding Djibouti’s long-term economic prospects are looking increasingly empty.