This February, the small African nation of Djibouti took control of the Red Sea container port of Doraleh from DP World, completing what it considers the final act in a lengthy wrangle with the Dubai-based ports operator. Djibouti has accused the international ports company, which had operated Doraleh since 2006, of deliberately underusing the facilities in favor of other terminals along the Red Sea.
“It is obvious they want to control the whole sea transport from Singapore to the Suez Canal,” says Aboubaker Omar Hadi, chairman of Djibouti Ports and Free Zones Authority. He adds that DP World also operated Jeddah port in Saudi Arabia and Berbera in the unrecognized state of Somaliland.
In July, Djibouti started the first phase of a $3.5 billion free trade zone in which China Merchants Group and Dalian Port Authority hold a stake, a development that DP World says violates its 30-year exclusive concession. The Dubai company has vigorously contested Djibouti’s version of events, pointing to a ruling by the London Court of International Arbitration — dismissed as “inconsequential” by Djibouti — that DP World’s contract cannot be revoked.
“We will take every action to protect the rights of the shareholders,” says Sultan Ahmed bin Sulayem, DP World chairman and CEO. “The action actually has hurt Africa as a whole. Anyone that builds a port or an infrastructure project and goes to borrow money, the banks will ask for more interest because the possibility of takeover by government becomes real.” The tussle over Doraleh is a microcosm of a much larger struggle for influence on the Red Sea and the Gulf of Aden that has sucked in not only Gulf and Middle Eastern powers but also the likes of China, the U.S. and France.
Those three countries, together with Japan and Saudi Arabia, have military bases in Djibouti, ostensibly for fighting near-endemic piracy — most of it off the Somali coast. The proximity of these major powers, particularly China, in tiny Djibouti adds another dimension to what is already a multifaceted battle for the military as well as economic clout in the region. Some argue that there need to be as many as 10 ports serving the Horn of Africa, which is dominated by Ethiopia, a landlocked, fast-growing country of 105 million people whose economy has expanded more than tenfold over the past 15 years to some $80 billion.
