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Tuesday, May 21, 2024

Strategic importance of Djibouti

Djibouti occupies a very strategic maritime location at the mouth of the Red Sea and serves as an important transshipment location for goods entering and leaving the east African highlands. It is strategically positioned near the world's busiest shipping lanes and acts as a refueling and transshipment center.

Djibouti, the French Territory of the Afars and the Issas became Djibouti in 1977. It is located in the Horn of Africa and is the third smallest state after Swaziland (second smallest) and Gambia (smallest) in Africa with around a million population. It covers a land area of only 23,200 km2 and is located at the crossroads of Africa, the Middle East and the Indian Ocean. It is a member of the African Union, the Arab League and La-Francophonie. That makes it almost within the Arab World.

It shares borders with Ethiopia to the Southwest, Eritrea to the north and Somalia to the South and the Gulf of Eden and the Red Sea to the east. It is a low-middle-income country and is expected to reach a GDP of USD3.50 Billion by the end of 2022 with a current per capita income of USD3,425. The poverty rate stands at 79 percent, with 42 percent of the population living in extreme poverty but still is one of the stable and secure countries in the African region.

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But here the question arises: what is Djibouti famous for?

Djibouti does not offer precious resources but its geographic position is its biggest asset. Djibouti is known as the Pearl of the Gulf of Tadjoura due to its location. The ancient Greeks regarded the gulf as one of the most important parts of the Erythraean Sea. Djibouti is positioned on a plain known as the Afar Triple Junction where three divergent segments of the Earth’s crust – the African, Somalian, and Arabian plates – are tearing away from each other.

Djibouti occupies a very strategic maritime location at the mouth of the Red Sea and serves as an important transshipment location for goods entering and leaving the east African highlands. It is strategically positioned near the world’s busiest shipping lanes and acts as a refueling and transshipment center. The Port of Djibouti is the principal maritime port for imports to and exports from neighboring Ethiopia.

When it comes to maritime affairs, straits of the world are used by commercial shipping to travel from one sea or exclusive economic zone to another and they are of immense strategic and commercial importance. If we explore the world’s top straits, the strait of Malacca is of utmost significance. The Malacca and Singapore Straits are within the territorial waters of Indonesia, Malaysia, and Singapore. As per the UN Convention on the Law of the Sea, which took effect in 1994, the straits’ safety administration, including the maintenance of navigational aids, is the responsibility of these three countries.

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The Straits of Malacca are crucial to the flow of global trade and strategically and commercially significant for several reasons. It is the shortest sea route between the Indian Ocean and the Pacific Ocean and over one-third shorter than the closest alternative sea-based route. On the other hand, the Strait of Hormuz is the world’s most important oil chokepoint because of the large volumes of oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption.


But does Djibouti provide an alternative to the above straits and why is it important to BRI/CPEC?

Due to its strategic location, Djibouti plays a pivotal role in the BRI/CPEC project. The Gulf of Tadjoura in Djibouti is at the junction of the Bab-el-Mandeb strait and the Arabian Sea. The strait of Bab-el-Mandeb on the north-east edge of Africa is another important port, where 30% of the world’s shipping passes on its way to the Suez Canal. Djibouti is also one of the connecting triangles that provide an alternate shortest maritime route to connect Asia with Europe, Africa, South East Asia, the Pacific and across from the Chinese Port of Mawei to the Strait of Malacca via Hambantota to Gwadar and Djibouti.

It connects the Suez Canal and the Strait of Malacca with the shortest alternate routes to achieve the desired goals. In this environment Gwadar, Hambantota and Djibouti play an important role in the successful implementation of the BRI project and in providing the shortest alternate maritime routes. It becomes an important triangle within a bigger triangle: Strait of Hormuz, Strait of Malacca and Suez Canal.

It is crucial in terms of reducing the distance among various straits and seaports. Such as the distance between Hambantota and Djibouti is 4,272 km; from Gwadar to Djibouti is 2,824 km; from Hambantota to the strait of Malacca is 2,045 km; while the existing distance from the strait of Malacca to the strait of Hormuz is 5,175 km and the distance from Malacca to Suez Canal is 7,562 km. Under the CPEC project, Gwadar port provides the shortest distance to the Strait of Malacca which is 4,570 km.

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But, how important is Djibouti?

Djibouti’s ports and container terminals remain amongst the most productive in the world. According to a new global container port performance index compiled by the World Bank and Information Handling Services (IHS) Markit, its port is even the most efficient in Africa measured by minutes per container move. With such efficiency, Djibouti’s goal of emulating Singapore as a leading maritime trading hub is within reach. To cement its position as the world’s future big trading hub, Djibouti recently set up a sovereign wealth fund with a view to financing about $1.5 Billion of domestic business activity over the next decade. In parallel, the country has embarked on significant infrastructure expansion with the Djibouti Damerjog Industrial Development Free Zone, echoing Singapore’s own Jurong petroleum and petrochemicals hub.

The ultimate oil complex will cover 80ha, starting with the development of 32ha consisting of 300 000 m3 storage tanks, an oil jetty and railway infrastructure connected to the Nagad Station, and from there to the Djibouti-Addis Abebe railway line. It will also include the construction of a 6 million tonnes refinery by the China Marine Bunker Co. Ltd (CHIMBUSCO) that will refine Saudi and Sudanese crude into marine fuels with a sulphur content of no more than 0.50%S, along with diesel, naphtha and LPG.

The facility would primarily meet the demand for Djibouti and Ethiopia and be followed by the construction of an onshore refinery. The industrial park will also benefit from a 150MW gas-to-power plant, starting with a 20MW hybrid power station expected to be commissioned in 2022. Such power supply will be key for all upcoming manufacturing units in the park built by Chinese investors and including steel, metal mesh, PVC pipes and glass.

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In short, Gwadar, Djibouti and Hambantota offer the shortest sea routes to the Asian, African and European international markets. But, certain powers are against it. Today we can see crippling political instability in Sri Lanka and Pakistan while in Djibouti all powers are already stationed as the US has established its only military base in Djibouti with 4000 troops on the ground. France and Japan are also there while China is busy with infrastructure projects. Djibouti has become an important strategic location for great power rivalry and the future superpower status quo.



Dr. Farah Naz is an Assistant Professor in the Department of Government and Public Policy at the National University of Sciences and Technology. The views expressed by the writers do not necessarily represent Global Village Space’s editorial policy