Slyly Conquering East Africa

The rulers of United Arab Emirates (UAE), one of whose components, Dubai, own a majority stake in DP World, one of the world’s largest maritime firms with perations in 40 countries.It is one of several Gulf states trying to gain a strategic foothold in east Africa through ports. Controlling these offers commercial and military advantages but risks exacerbating tensions in the region…

DP World thinks the region from Sudan to Somalia needs 10-12 ports. It has just half that. The firm’s first foray was on Djibouti’s coast. When DP World won its first concessions there in the 1990s, the Emiratis were among the few investors interested in the small and poor former French colony. DP World built and operated a new container terminal, Doraleh,and helped finance roads and other infrastructure. Doraleh is now the country’s largest employer and the government’s biggest source of revenue. It runs at nearly full capacity, handling 800,000 containers a year. Much of its cargo travels along a Chinese-built railway from Addis Ababa, Ethiopia’s capital.

Djibouti’s profile rose further after the terrorist attacks on America of September 11th, 2001, when America opened a military base there. France and China also have bases; other navies patrol off its coast to deter Somali pirates. But when the Emiratis wanted to open their own naval base they were rebuffed, partly because of their close ties to Djibouti’s rival, Eritrea (the two states had a bloody border dispute in 2008). In 2015 the UAE started building a naval base in Assab, in southern Eritrea. The base has been used in the Saudi-led war against Houthi rebels in Yemen….In 2016 DP World won a 30-year concession to operate the port of Berbera in Somaliland, which declared independence in 1991 (though no foreign government recognises it). Critics said the deal would hasten the break-up of Somalia.

The Horn ports all sit near the Bab al-Mandab strait, a vital choke-point at the mouth of the Red Sea: 4.8m barrels of oil passed through it every day in 2016. Competition is getting fierce, though. Qatar and its ally, Turkey, are building ports in Sudan. Saudi Arabia is in talks to set up a naval base in Djibouti. All three Gulf states are trying to snap up farmland in east Africa, part of a broader effort to secure food supplies for their arid countries. Emirati-built ports could one day export crops from Emirati-owned farms…

Gulf states could also find themselves in competition with China…In February 2018 Djibouti seized the Doraleh port, a concession to the UAE… Shippers believe it took Doraleh as a sop to China, to which it is heavily indebted. In July 2018, Djibouti opened the first phase of a new $3.5bn free-trade zone, set to be the largest in Africa when it is finished. Built mostly by state-owned Chinese firms, it sits next to Doraleh. DP World says the project violates the terms of its concession and is threatening to sue.

Excerpts from Red Sea Scamble: Ports on the Horn, Economist, July 21, 2018, at 33

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