Monday 07, May 2018 by Jessica Combes

Djibouti port changes hands


Following Government intervention Djibouti's crucial port on the Horn of Africa has transferred management, spurring US concerns

In mid-March Djiboutian Government officials announced that the Doraleh Container Terminal will remain in state hands as the Government looks for more investment. These comments were likely made as part of an attempt to calm US concerns over an increase in Chinese influence in the crucial East African port. The port is already partly owned by China Merchants Port Holdings, a Chinese state-owned firm, which has a 23.5 per cent stake in the port's parent company, Port de Djibouti SA. Further complicating matters, the port is adjacent to China's only overseas military base, mere miles from the only US military base on the African continent.

Dubai's DP World, one of the world's biggest port operators, had previously had the contract to run the port but Government officials ended the contract citing failure to resolve a dispute that began in 2012. DP World has stated that it considers the move an illegal seizure and that it has begun arbitration proceedings before the London Court of International Arbitration.

US concerns stem from the possibility of China imposing restrictions on the port's use. Marine General Thomas Waldhauser, the top US military commander overseeing troops in Africa, told Reuters that possible Chinese restrictions could affect US resupply efforts of its base in Djibouti and the ability of US naval ships to refuel there. "If the Chinese took over that port, then the consequences could be significant," Waldhauser said in a hearing with the US Congress Armed Services Committee. "When we talk about influence and access, this is a classic example with regards to China, of how we've got to proceed and how we've got to be careful as we move forward."

For decades the prevailing narrative on the continent has been that of Western soft power, supported by emergency relief funds, support for investment in health and education and democratic, transparent institutions. This may no longer be the case however. The fears of Washington lawmakers over Chinese influence in Djibouti represent a microcosm of an overall change on the continent.

A recent article in the Financial Times brings one striking number to mind, between 2000 and 2015 the US Eximbank made $1.7 billion in loans to Africa in comparison to China Eximbank's $63 billion. In addition, whilst the US Eximbank contributed to only five African countries, China Eximbank contributed to nearly all 54 African countries.

Indeed, Djibouti's port provides a crucial trade link to the Ethiopian market along which goods will travel on  a new China-built Addis Ababa-Djibouti railway. Overall China's investment in Africa is frequently along the lines of large infrastructure projects like these which are considerably more visible than American efforts. This trend is likely to continue with Waldhauser adding that the US will never outspend the Chinese in Africa.



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