China closing in on
China’s grip on Djibouti is expected to tighten in the coming months as Beijing moves to take over the small African country’s most strategic asset – its port.
Since the illegal expropriation of the Doraleh Container Terminal (DCT) from UAE port operator DP World in February, speculation has been rife that it is only a matter of time before the Chinese move in on the largest source of revenue and biggest employer in the country.
Djibouti has already signed a short-term deal with Pacific International Lines – a Singapore-based company run by a Chinese billionaire and with close commercial ties to state-owned China Ocean Shipping Company (Cosco) – to run the port. Analysts expect China Merchant Holdings, another para-statal company, to ultimately step in and take over the port’s operations.
The Djiboutian government has denied that this is their intention – but it may not have much of a choice.
China’s has long had a clear and strategic approach to Djibouti. Over some years, Beijing has made its investment, aid and loans critical to the functioning of the country and the despotic regime of President Ismail Omar Guelleh, a leader China has backed despite his horrendous record on human rights and democracy.
Although Djibouti may look to be the beneficiary of this Chinese largesse, Beijing is in fact slowly reeling the country into its clutches. The most recent IMF assessment on Djibouti stresses the extremely risky nature of its borrowing program, noting that in just two years, public external debt has increased from 50 to 85 percent of GDP, the highest of any low-income country. Much of the debt consists of government-guaranteed public enterprise debt and is owed to China Exim Bank. According to multiple reports, China has provided nearly $1.4 billion of funding for Djibouti’s major investment projects, like the major Ethiopia-Djibouti rail link, equivalent to 75 percent of Djibouti’s GDP.
Having secured its economic hold over Djibouti, in August 2017 China opened its first ever overseas base in Djibouti. Analysts view this Chinese move as a demonstration of its belief that it holds total sway in the tiny country.
The new Chinese base is located a few miles away from Camp Lemonnier, the largest US base on the continent and the home to AFRICOM. China’s presence so close to such an important US facility has long been a concern to politicians in Washington DC, who question the allegiance of the Djiboutian president and have even recently suggested moving the base out of Djibouti entirely, so unreliable is Guelleh viewed.
Claims that China may take control of the port, which supplies Camp Lemonnier, has worried US generals and politicians alike. General Thomas Waldhauser, head of AFRICOM, said as much before the House Armed Services Committee last week, stating that they are concerned by the unilateral eviction of DP World and the ramifications that a Chinese take-over would have on US military operations.
It appears nothing can stop the rise of China in Djibouti. Meanwhile Guelleh, the autocratic president, has thrown his towel in with Beijing, to the detriment of Washington and its allies in the region. Chinese control over Doraleh port – and therefore full control of the country – will soon be a reality; all eyes are now on Washington DC to see how it will react.