Photograph by NASA Astronauts, via Wikimedia Commons.  Accessed on 21.03.17

 

While Djibouti may not be the biggest or busiest port in the region, it is one of the most politically sensitive. Its location on the Bab-el-Mandeb strait makes it both a military and commercial strategic location. Over the past decade, Djibouti’s location – combined with its relative political and economic stability – has attracted the attention of several economic powers.

Notably, the Bab-el-Mandeb strait is one of the most important trade routes; it controls a large proportion of trade between Asia, East Africa and Europe. But this critical passage is situated in one of the least stable regions, and it is surrounded by a number of weak and sometimes hostile states, including Yemen, Eritrea and Somalia. In contrast, Djibouti presents a relatively politically stable and secure alternative in a region of such strategic and economic importance.

Djibouti’s relationship with its neighbours across the strait have traditionally been led by Dubai – the UAE’s commercial hub – and its port operator DP World. Lacking the resources to develop its ports and capitalise on its strategic location, Djibouti outsourced the entire management of the port to the Emirati operator in 2000.

While Dubai has played a major role in transforming the port into a world-class maritime facility – and has consequently been instrumental in developing Djibouti’s economy and society – Djibouti’s relationship with the Gulf has become particularly strained due to a long-running legal dispute between Dubai-based Emirati port operator DP World and the Djibouti government.

Impact Points

  • In February 2018, the Djibouti government seized control of the DP World-operated Doraleh Container Terminal (DCT) under the dubious pretext that the contract – signed in 2006 – was damaging Djibouti’s national sovereignty.
  • Notably, relations between the UAE and Djibouti have been strained as the UAE pushes to expand both its military and economic presence outside Djibouti and along the coast of the Horn of Africa,
  • Whatever the reason for the seizure, Djibouti’s ongoing dispute with DP World has damaged the country’s investment credibility. It not only highlights the government’s erratic policy environment, but also raises concerns over the sanctity of commercial contracts in the country.