Djibouti: From Island of Stability to Agent of Chaos?

Djibouti’s regional monopoly and economic leverage is coming under threat from peace between Eritrea and Ethiopia
Djibouti’s regional monopoly and economic leverage are coming under threat from “peace” between Eritrea and its only client Ethiopia. Could Guelleh and his government have any other choice than playing the villain?


For the past decade, Djibouti has been a tiny haven in the Horn of Africa, mostly free from the tension simmering elsewhere in the region. This has produced an influx of investment that has turned Djibouti into one of Africa’s most important trade and military hubs.

Bordered by Eritrea on one side and Somaliland on the other, Djibouti offered some of the only Red Sea real estate secure enough for investors and major powers. Its geographical location and the regional environment made it a high-demand destination by default. Global powers including both the United States and China have built military bases, funded port developments and invested in infrastructure projects.

All of this could now change, thanks to Ethiopia’s recent rapprochement with neighbouring Eritrea and Somali calls for sanctions to be lifted against [Eritrea]. Djibouti’s regional monopoly is coming under threat, not from war but instead from peace. In its drive to protect its own interests, could this longtime beacon of peace in the Horn of Africa become the thorn in the side of new efforts to end regional conflict?

How Djibouti gains from tension in the Horn of Africa

For decades, Djibouti has benefited from the border conflict between Ethiopia and Eritrea. Landlocked Ethiopia needs access to the Gulf of Aden, which sits on the other side of Eritrea, Djibouti, and Somalia. With ties between Ethiopia and Eritrea cut and Somalia torn by internal conflict, Djibouti was for a long time the only viable option left for Ethiopia (one of the world’s fastest-growing economies) as it connected its trade ambitions to the wider world.

Currently, 95% of Ethiopia’s $2.9 billion foreign trade passes through Djibouti, accounting for roughly 70% of cargo passing through Port of Djibouti heading in or out of Ethiopia.

Similarly, Somalia’s internal problems with al-Shabaab and piracy along its coastline posed a serious threat to global trade. The Gulf of Aden and the Red Sea connect the Indian Ocean to the Mediterranean, meaning they sit on one of the most important trade routes on the planet, which one-third of the world’s commercial ships transit. To protect this route, American, European, and Japanese forces built military installations in Djibouti and used it as a base to ensure the safety of these waters.

Djibouti has also benefited greatly from the “War on Terror” and serves as home to one of the US’ most strategically important military bases, Camp Lemonnier, which has been in operation since 2001.

The American military has used Djibouti to stage counterterrorism operations in both Yemen and Somalia over much of the past twenty years. Djibouti also hosts Japan’s only overseas military base, while France hosts German and Spanish troops at its own facility in the country. Italy operates a base as well.

Last year, China opened its first overseas military base in Djibouti – sparking serious concern on the part of the US, Japan, India, and others. At the Pentagon and on Capitol Hill, American lawmakers and military planners have become increasingly vocal about the threat China’s economic clout and political influence poses to their own position in the country.

Radical moves on the part of Djibouti’s government, such as the February seizure of the Doraleh Container Terminal from contractor DP World, have raised fears that the Djiboutian government of President Ismail Omar Guelleh is willing to forcibly sideline other international partners to China’s exclusive benefit.

A decision by the London International Court of Arbitration earlier this month ruled Djibouti cannot terminate its contract with DP World, though the government has shown no intention of returning the port to the company’s management.

Two weeks after the Doraleh port seizure, US AFRICOM commander Gen. Thomas Waldhauser told the House Armed Services Committee that a Chinese takeover of the Doraleh port would pose “significant consequences” for the American military presence in the country.

After the hearing, Congressman and committee member Bradley Byrne wrote to Secretary of Defense James Mattis to communicate his concerns regarding Chinese influence over Djibouti and the proximity of China’s 10,000-man installation to the American Camp Lemonnier.

Peace in the Horn of Africa is bad news for Djibouti

Before the Ethiopia-Eritrea peace agreement, Djibouti enjoyed a relatively free hand in taking such decisions because of its monopoly over Red Sea real estate. Peace between Ethiopia and Eritrea puts all of this at risk.

Ethiopia has made it clear that developing ports in Eritrea and building new trade routes is a key factor in recent peace efforts, especially as the country aims to reduce its reliance on Djibouti.

Ethiopia isn’t the only country looking to restore ties with Eritrea. The UN placed an arms embargo and economic sanctions on Eritrea in 2009 over its alleged support for militant group al-Shabaab, which continues to wreak havoc in Somalia. Now, Somali president Mohamed Abdullahi Mohamed is urging the UN to lift these sanctions. Somalia and Eritrea reached a deal to restore bilateral ties at the end of last month.

Djibouti hasn’t been particularly enthusiastic about Somalia’s new stance. Djibouti has its own border dispute with Eritrea and contributes troops to AMISOM, the African Union peacekeeping mission in Somalia attempting to defeat the militant group Eritrea was previously accused of supporting.

It’s still an open question as to whether this opening will impact human rights violations in Eritrea, including the system of indefinite compulsory military service programme which was driven by the border conflict with Ethiopia and now seems unnecessary.

The opportunity to shrug off UN sanctions and pursue the same opportunities that have transformed Djibouti into a hub could be too much for the secretive nation to resist. The ongoing DP World dispute has already pushed the United Arab Emirates to explore port investment opportunities in Eritrea. Separately, both the UAE and Ethiopia are working to develop the Berbera port in Somaliland.

It seems Djibouti’s position as the Horn of Africa’s darling nation has already been overshadowed. As it lobbies its neighbours against their rapid reconciliation with Eritrea, could Djibouti wind up becoming the villain in this otherwise buoyant story? With its key selling points for investors being diluted and its economic leverage under threat, Guelleh and his government may have no other choice.