Djibouti autonomy at risk due to China's investment strategy: Report
China brought Djibouti into its economic orbit through the Belt and Road Initiative but Djibouti now finds itself in a situation of such economic dependence that it "risks threatening its autonomy".
The relationship between Djibouti and China is a case study on how Beijing is using its global infrastructure investment strategy, the Belt and Road Initiative, to aggrandise its economic influence and strengthen its position as the top investor in Africa.
The present scenario, however, illustrates the limitations of China's vast investment and loans project as it is drying up, reported France24.
In accepting vast inflows of Chinese capital and loans, Djibouti now finds itself in a situation of such economic dependence that it "risks threatening its autonomy", Sonia Le Gouriellec, a Horn of Africa specialist at the Catholic University of Lille, wrote in the Revue de Defense Nationale (National Defence Review).
Djibouti, a small African country located in the Horn of Africa, devoid of natural resources, has opened itself to international powers in order to profit from its strategic location at the entrance to the Red Sea.
Much of the international discourse about the country focuses on China bringing it into its economic orbit through the Belt and Road Initiative.
China might not have played a major role in Djibouti for as long as President Ismail Omar Guelleh, who is running for a fifth term, has held office, but it is expected to maintain its economic grip on the east African state after the election.
{{/usCountry}}China might not have played a major role in Djibouti for as long as President Ismail Omar Guelleh, who is running for a fifth term, has held office, but it is expected to maintain its economic grip on the east African state after the election.
{{/usCountry}}Beijing already had its sights set on Djibouti in the early 2000s - investing in the construction of schools and stadiums and renovating roads and official buildings, including the foreign ministry.
{{/usCountry}}Beijing already had its sights set on Djibouti in the early 2000s - investing in the construction of schools and stadiums and renovating roads and official buildings, including the foreign ministry.
{{/usCountry}}Chinese investment intensified after President Xi Jinping took power in 2012 and inaugurated the Belt and Road Initiative the following year.
{{/usCountry}}Chinese investment intensified after President Xi Jinping took power in 2012 and inaugurated the Belt and Road Initiative the following year.
{{/usCountry}}The three flagship achievements under Xi are the large multipurpose Doraleh port, the railway line between Djibouti and Ethiopia and the gas pipeline between the two countries. Djibouti also hosts the Chinese-built International Free Trade Zone, where businesses can operate without paying income tax, property tax, dividend taxes or VAT. In total, China has spent USD 14 billion (Euro 11.8 billion) on investments and loans for Djibouti between 2012 and 2020, reported France24.
{{/usCountry}}The three flagship achievements under Xi are the large multipurpose Doraleh port, the railway line between Djibouti and Ethiopia and the gas pipeline between the two countries. Djibouti also hosts the Chinese-built International Free Trade Zone, where businesses can operate without paying income tax, property tax, dividend taxes or VAT. In total, China has spent USD 14 billion (Euro 11.8 billion) on investments and loans for Djibouti between 2012 and 2020, reported France24.
{{/usCountry}}The reason Beijing has invested so much in Djibouti is because it "gives China an African component in its large network of so-called 'maritime Silk Roads', in one of the region's few politically stable countries", said a British expert on the Horn of Africa who asked to remain anonymous.
Djibouti saw obvious benefits in the influx of Chinese investment and loans. The country had a clear need for funding and "there was no one else to turn to", said Thierry Pairault, an expert on Sino-African relations at Paris's CNRS think tank.
But the Sino-Djiboutian relationship has "cooled over recent years; it's like a slowly unravelling marriage", said Gerard Prunier, a historian at the Institut des Mondes Africains (Institute of African Worlds).
Debt is a major issue. China holds more than 70 percent of Djibouti's debt, which some observers say threatens the African country's sovereignty. They fear that Djibouti will suffer the same fate as Sri Lanka, which had to cede control of a port to Chinese companies because it could not repay the loans it had signed with China, reported France24.
The problem is that the benefits to Djibouti of the Chinese investments and loans are looking doubtful. The port at Doraleh, for example, seems "mainly outward-looking", Pairault said: It has done little for local employment; it is mainly Chinese companies that have profited from it.
It looks unlikely that this cooling of the relationship will prompt China to completely disengage from Djibouti. "It remains an important part of the Belt and Road Initiative," said an anonymous British expert.
The opening of China's military base in Djibouti in 2017 - the People's Liberation Army's only permanent base outside of China - provides a clear sign of the strong ties between the two countries.
It could lead to closer ties between Djibouti and other international players such as France. "No other country could do what China is doing in terms of lending money, but it is plausible that Djibouti will deepen its ties to other countries," Pairault said. (ANI)
