China expands presence in Indian Ocean with massive forays into Djibouti
Taking advantage of this advantageous position, Djibouti has the potential to become one of the largest and fastest growing economies in East Africa. Besides its maritime activities, the country is also known to generate income by leasing land from several foreign armies.
China has chosen Djibouti to set up a military base under the pretext of protecting its communication cables at sea and its ships from attacks and piracy. To advance its surveillance program and block overseas and high seas maritime traffic at will, China has vigorously participated in the construction of Djibouti’s ports, railways, highways and related infrastructure. China took the logistics support base in Djibouti for a ten-year lease in January 2016 and, interestingly, in mid-2017 it completely transformed the place into a full-fledged support base for the Army. popular liberation, stressed African experts.
âIncreasing China’s naval bases in Africa is part of their long-term strategic plan to dominate the Indo-Pacific region. African countries should be wary of this plan and should not fall into the diplomacy of China’s debt trap. With its investment in Djibouti as part of the Belt and Road Initiative, Beijing holds the majority of Djibouti’s debt, or more than 70% of the African country’s GDP. African countries should learn from the example of Sri Lanka, where they ultimately had to lease the port of Hambantota to China for 99 years, âsaid Pradeep Mehta, secretary general of CUTS International (which has a significant presence in Africa ).
“With its investment in Djibouti as part of the Belt and Road initiative, Beijing holds the majority of Djibouti’s debt, or more than 70% of the African country’s GDP”
As the United States already has a fully functional base in Djibouti, China is trying to build a naval base in Bab el Mandab. To this extent, Chinese officials have met regularly with Somali intelligence officials, with speculation being rife some of these meetings were said to have taken place in Pakistan, which is a close ally of China and also has friendly ties with Somalia, according to sources.
Like many other African countries that are still in the process of establishing standards of engagement for foreign entities, Djibouti also lacked an established set of rules and regulations for foreign investment. There are hardly any restrictions on the investment methods or the areas in which investments can be made. Taking advantage, the Chinese have made investments worth more than $ 1 billion in the last decade in the country, mainly in the transport sector, with the aim of gaining access to the whole East Africa as a ready-made market and to facilitate the transport of material and natural resources to Asia and the rest of the world as the imperialist powers did in previous centuries, sources recalled.
To date, Djibouti’s debt to China has reportedly increased to more than 70 percent of its gross domestic product (GDP). According to Chinese customs statistics, the total volume of imports and exports between the two countries reached US $ 2.226 billion in 2019, with an increase of about 19.4% year-on-year. However, for Djibouti, this increase barely represented 3%.
How Djibouti has become a debt trap can be understood by the fact that the China Exim Bank continues to lend to various projects in the country valued at billions of dollars, including the Ethiopia-Djibouti railways and its electrification, Doraleh Multipurpose Port, Ethiopia-Djibouti Water Pipeline and the Port of Ghoubet. Indeed, while China directly uses these Djiboutian ports to export sugar, salt and other raw materials, Ethiopian Chinese-funded industries in landlocked Ethiopia also use the services of Djibouti ports to ship close to 90% of their products abroad.
In recent years, the proximity in commercial and economic affairs between Djiboutians and the Chinese is noticeable with a growing acceptance of Chinese standards. China has been involved in the construction of the Foreign Ministry office building, a small office building for the Presidential Palace and army barracks. Chinese business giant Huawei with links to the Chinese military, the Chinese Communist Party; and supposedly involved in espionage activities is setting up the Huawei Marine Network, funded by the China Construction Bank, to lay a fiber-optic submarine cable connecting the Asia-Africa-Europe cable network of nearly 12,070 kilometers.
Pakistan is seeking to connect Pakistan’s Gwadar and Karachi ports to Djibouti and Kenya before expanding to Egypt and South Africa as part of its Pakistan East Africa Cable Express (PEACE) initiative.
Gradually, beyond Ethiopia, China is now in the process of controlling Djibouti ports and industries, according to sources. For example, an ore terminal at the port of Ghoubet was built by China Harbor Engineering Corporation (CHEC) to export salt from mines in Lake Assal, for which the China Exim Bank provided $ 64 million as a preferential loan.
After its completion in 2015, parent company China Communications Construction Corporation (CCCC) – bought a Djiboutian salt company and obtained exploration rights on Lake Assal for 50 years. Djibouti has not just one but several ports of strategic importance. One of these ports is the Multipurpose Port of Doraleh (DMP), which is a joint venture of China Merchants and the Djibouti Ports and Free Zones Authority (DPFZA). However, although the company is a joint venture, it is the Chinese companies that qualify as owners and developers of this port, with China Merchants spending $ 185 million to acquire a 23.5% stake.
The China Exim Bank is known to have provided a loan of $ 340 million to finance the construction of the fully constructed DMP with the help of Chinese engineering. The location of the DMP is so important that the Chinese Navy requested a dedicated berth at the port.
An added advantage is that the port is not only strategically located, but also large enough to accommodate Chinese ships, including the “The Liaoning Aircraft Carrier”. China also supplied Djibouti with small quantities of weapons, an MA60 transport aircraft and five WMA-301 armored fire support vehicles manufactured by Norinco. For a while, local authorities also considered building an airport for military and commercial purposes, but eventually realized it would be an expensive proposition without proportionate returns.
The Djiboutian port company – Port of Djibouti (PDSA) has become the scapegoat for the machinations of the Chinese company China Merchants Port Holdings Company Ltd of Hong Kong, which also holds a 23.5% stake in PDSA.
It is alleged that in February 2018, on the basis of the instructions of this important Chinese shareholder, the Djibouti government illegally terminated the joint venture with the Dubai port operator “DP World”, which had originally designed, built and operated the Doraleh container terminal since 2006. Following this termination, DP World had filed a complaint with the International Arbitration Court in London against PDSA and recently won this case in which PDSA was charged with termination. / abusive breach of agreement. In fact, the court ordered PDSA to reimburse the legal costs to the tune of Â£ 1.7million to the company DP World.