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Port deal underscores Djibouti’s reliance on Ethiopia

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When Djibouti makes international headlines, it is usually in connection with the many superpowers that have built military bases on its shore. France, the United States, China, Italy and Japan all have a major military presence in the tiny East African nation. But for Djibouti’s government, there is another major power that is even more important: Ethiopia.

It is difficult to overstate just how dependent Djibouti’s economy is on its much larger neighbour. There is almost no fresh water in Djibouti, so it must import water from Ethiopia. Most of its electricity comes from Ethiopia too. Little grows in Djibouti’s arid desert landscape, so fresh fruits, vegetables and grains are trucked across the Ethiopian border every day.

Economically, by far Djibouti’s most valuable assets are its ports. But these too are almost entirely reliant on a healthy trading relationship with Ethiopia, which, being landlocked, requires an outlet to the sea.

More than a century ago, when the old Port of Djibouti was built by the French colonisers, it was connected with a railway that linked Addis Ababa to Djibouti City. Given the size differences of the two countries – today Ethiopia’s population is more than 100 million, while Djibouti’s is less than 1 million – the port was never about trade with Djibouti, but trade with Ethiopia. It is no coincidence that today, the new Doraleh Container Terminal is the end of the line for the new Chinese-built Addis-Djibouti standard gauge railway.
If trade from Ethiopia dries up, ships will no longer be queuing at sea for their turn to dock at these ports. This is significant because there are two separate situations that threaten the trading relationship between Ethiopia and Djibouti. The first is the brewing political crisis in Ethiopia.

In February, Prime Minister Hailemariam Desalegn unexpectedly submitted his resignation. Immediately, the ruling party declared a state of emergency, which was recently ratified by Parliament. Despite this, the widespread anti-government protests continue, especially in the Oromia region which surrounds the capital Addis Ababa, as well as in Amhara Region. At the same time, a power vacuum within the ruling coalition has created uncertainty about Ethiopia’s political future, prompting fears of further instability. A new prime minister is expected to be announced soon.

This is potentially very bad news for Djibouti. Any disruption to Ethiopia’s economy will have a knock-on effect on Djibouti, while a political crisis may precipitate a humanitarian emergency that would result in an increase of refugees across the border. Although Djibouti has recently reformed its refugee laws, earning praise from the United Nations Refugee Agency, it remains ill-equipped to deal with a major refugee influx.

Ethiopia is considered an anchor in the Horn of Africa, so any disruption will have knock-on effects. ‘Unrest in Ethiopia has serious implications for regional stability,’ says Emily Estelle, a senior analyst for the Critical Threats Project at the American Enterprise Institute.

The second situation of some concern to Djibouti’s government is Ethiopia’s recent acquisition of a 19% stake in the Port of Berbera in neighbouring Somaliland. Berbera is positioning itself as a rival to Djibouti, and is clearly making a major play to handle more Ethiopian freight. Somaliland is also in the process of building the Berbera trade corridor, which will eventually link Berbera to Addis Ababa by road.

Historically, one of Djibouti’s strategic advantages has been its stability. In an inherently unstable part of the world – its other neighbours include Eritrea, Somalia and Yemen – Djibouti represents a relatively low-risk investment destination. But Somaliland is providing competition on this front.

The self-declared republic operates entirely independently of Somalia proper, even though this independence is not formally recognised by anyone else. Nonetheless, Somaliland has successfully established a peaceful democracy marked by regular transitions of power – in marked contrast to President Ismaïl Omar Guelleh’s long rule in Djibouti (19 years and counting).

Therefore Somaliland too is becoming an attractive investment destination on the coast of the Horn of Africa – and Ethiopia, in acquiring its Berbera stake, clearly agrees. What does this mean for Djibouti? Will Ethiopia incentivise local freight traffic to run through the port in which it retains a financial interest? Or is there enough cargo to go around?

That’s the view of port operator DP World’s chairman and CEO Sultan Ahmed bin Sulayem. ‘I am so excited about the prospects of working with the Ethiopian government. Ethiopia is home to approximately 110 million people. The ports of Berbera and Doraleh will provide significant capacity to the region. Both these ports and more capacity will be needed to serve the region’s growth potential in the future,’ he said.

Sulayem’s comments came even after DP World suffered a dramatic setback in Djibouti. Until recently, DP World operated both the Berbera port and the Doraleh Container Terminal in Djibouti. But in February the Djibouti government unilaterally cancelled the DP World contract and seized its stake in the port, claiming that DP World had obtained the contract in a corrupt manner – a charge the company denies.

If all goes according to plan, Sulayem is right – a rising Ethiopia should provide more than enough trade to keep both Berbera and Doraleh busy, and fill the coffers of both the Djibouti and Somaliland governments. But against a background of increasing political instability in Ethiopia, there can be no guarantees that the plan is going to work – and tiny Djibouti may pay the price for hitching its wagon so close to Ethiopia’s train.

Briefing Room

Diplomatic leaks: UAE dissatisfied with Saudi policies

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AL JAZEERA — Abu Dhabi Crown Prince Mohammed bin Zayed (MbZ) is working on breaking up Saudi Arabia, leaked documents obtained by Lebanese newspaper Al Akhbar revealed.

Al Akhbar said that the leaked documents contained secret diplomatic briefings sent by UAE and Jordanian ambassadors in Beirut to their respective governments.

One of the documents, issued on September 20, 2017, disclosed the outcome of a meeting between Jordan’s ambassador to Lebanon Nabil Masarwa and his Kuwaiti counterpart Abdel-Al al-Qenaie.

“The Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed is working on breaking up the Kingdom of Saudi Arabia,” the Jordanian envoy quoted the Kuwait ambassador as saying.

A second document, issued on September 28, 2017, reveals meeting minutes between the Jordanian ambassador and his UAE counterpart Hamad bin Saeed al-Shamsi.

The document said the Jordanian ambassador informed his government that UAE believes that “Saudi policies are failing both domestically and abroad, especially in Lebanon”.

“The UAE is dissatisfied with Saudi policies,” the Jordanian envoy said.

The Qatar vote
According to the leaks, UAE ambassador claims that Lebanon voted for Qatar’s Hamad bin Abdulaziz al-Kawari in his bid to become head of UNESCO in October 2017.

“[Lebanese Prime Minister Saad] Hariri knew Lebanon was voting for Qatar,” the UAE ambassador said in a cable sent to his government on October 18, 2017.

In November last year, Hariri announced his shock resignation from the Saudi capital Riyadh.

He later deferred his decision, blaming Iran and its Lebanese ally in Lebanon, Hezbollah, for his initial resignation. He also said he feared an assassination attempt.

Officials in Lebanon alleged that Hariri was held hostage by Saudi authorities, an allegation Hariri denied in his first public statement following his resignation speech.

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Somalia’s Puntland region asks UAE to stay as Gulf split deepens

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BOSASO, Somalia (Reuters) – Somalia’s semi-autonomous Puntland region urged the United Arab Emirates not to close its security operations in the country after a dispute with the central government, saying the Gulf power was a key ally in the fight against Islamist militants.

The dispute goes to the heart of an increasingly troubled relationship between Gulf states – divided by their own disputes – and fractured Somalia, whose coastline sits close to key shipping routes and across the water from Yemen.

Analysts have said the complex standoff risks exacerbating an already explosive security situation on both sides of the Gulf of Aden, where militant groups launch regular attacks.

The central Somali government said on Wednesday it was taking over a military training program run by the UAE.

Days later the UAE announced it was pulling out, accusing Mogadishu of seizing millions of dollars from a plane, money it said was meant to pay soldiers.

“We ask our UAE friends, not only to stay, but to redouble their efforts in helping Somalia stand on its feet,” said the office of the president of Puntland, a territory that sits on the tip of the Horn of Africa looking out over the Gulf of Aden.

Ending UAE support, “will only help our enemy, particularly Al Shabaab and ISIS (Islamic State),” it added late on Monday.

SUSPICION, RESENTMENT

The UAE is one of a number of Gulf powers that have opened bases along the coast of the Horn of Africa and promised investment and donations as they compete for influence in the insecure but strategically important region.

That competition has been exacerbated by a diplomatic rift between Qatar and a bloc including the UAE. In turn, those splits have worsened divisions in Somalia.

Puntland, which has said it wants independence, has sought to woo the UAE which runs an anti-piracy training center there and is developing the main port. The central government in Mogadishu last year criticized Puntland for taking sides in the Gulf dispute. Qatar’s ally Turkey is one of Somalia’s biggest investors.

One Somali government official said last week Mogadishu had decided to take over the UAE operation because the Gulf state’s contract to run it had expired. Another official said the government was investigating the money taken from the plane.

The competition among Gulf states in Somalia has fueled accusations of foreign interference and resentment in many corners of Somali society.

The loss of the UAE program could have a destabilizing effect, said one security analyst, speaking on condition of anonymity.

“The value of the UAE trained forces was two-fold – they were relatively well trained but, most importantly, they were paid on time,” unlike other parts of the security forces, the analyst told Reuters.

Somalia has been mired in conflict since 1991.

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Puntland President calls UAE continue its mission in Somalia

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