China’s role in Africa is changing from resource extractor to long-term strategic partner. Djibouti is a prime example.
By François Dubé
October 05, 2016
On
April 8, 2016 China’s Ministry of Defense reported that construction of
China’s first oversea military base had begun. The naval military base –
officially a logistics support base – is located in Djibouti, a small
but highly strategic country on the Horn of Africa. The deal ensures
China’s military presence in the country up to 2026, with a contingent
of up to 10,000 soldiers.
China
and Djibouti have had diplomatic relations since January 8, 1979, but
China’s footprint in the small country has only become ubiquitous over
the last few years. Since 2012-2013, Beijing has firmly taken roots in
Djibouti through numerous multibillion infrastructure projects including
a new port, two new airports, the recently completed Ethiopia-Djibouti
railway, a bulk terminal (for potash) at Tadjourah, a salt extraction
plant at Lake Assal, water, gas, and oil pipelines, and a liquefaction
plant. The establishment of China’s first overseas military installation,
which will be located at Doraleh (next to the new port terminal) and
Obock, only further demonstrate what was economically already evident:
Beijing gives utmost importance to its relations with Djibouti.
This
large-scale footprint represents a significant departure from China’s
traditional role in Africa, often described as a mere resource
extractor. Although Beijing’s presence on the continent is everywhere to
be seen, and no African country is now without a least a few major
projects involving Chinese companies, nowhere else is this footprint so
concentrated – and in so many critical industries – as it is in
Djibouti. The sheer scale of these projects, combined with the facts
that they are concentrated on a relatively tiny territory (roughly the
combined size of Beijing and Tianjin Cities in China) and affect a small
population (810,000), make China’s presence in Djibouti unique.
Indeed,
Djibouti can be seen as a microcosm of China’s experience in Africa,
with its benefits, its drawbacks, and its controversies. It can also be
viewed as an experiment – for China as much as for Africa.
Strategic Gamble
For
Beijing, its growing presence in Djibouti is an experiment in terms of
how well the country can establish a long-term presence that is welcomed
by – and benefits – local populations. Only by securing local
communities’ support can China realize its bigger ambitions in the
region: rolling-out the “21st Century Maritime Silk Road” strategy.
Beijing envisions the Maritime Silk Road as a vast international network
of sea infrastructure aimed at securing its trade routes, ensuring the
undisturbed travel of China-bound raw materials and energy vessels, as
well as of its transformed products back to Europe through the Gulf of
Aden.
Djibouti
is at the very core of this strategy, as evidenced by the decision to
establish China’s first oversea military base in the country. This naval
base represents the “first pearl of a necklace” unfolding
along the sea route that connects China to the Middle East. “In this
context, the naval base in Djibouti should be seen as a step, albeit a
modest one, in a longer and more significant journey toward realizing
China’s national, global, and military aspirations,” says Assaf Orion, analyst at Israel’s Institute for National Security Studies.
As
Africa’s main trading partner since 2008, China is also interested in
securing a long-term “foothold” on the continent, where it is able not
only to do business, but also to ensure the security of its citizens and
companies. The military base will allow China to provide a protection
shield for its citizens in Djibouti and the greater Horn of Africa
region, which it cannot do now in other parts of Africa.
Chinese
authorities have been careful not to overemphasize the military aspect
of the base. Li Weijian, professor at the Shanghai Institute for
International Studies, explains that “the facilities in Djibouti serve
to protect China’s economic interests in Africa and to help safeguard
regional peace,” while denying the base would be used to project China’s
influence through military means in Africa.
But
Li, much like other Chinese observers on this issue, is adamant in
saying that this strategic gamble can pay off only if Beijing is able to
secure the support of local stakeholders and engage directly with local
communities – not only with unstable and unreliable political elites.
Li noted that “some Chinese firms need to improve their practices” as
they face increased criticism for what some call “resource grabbing,”
their refusal to use local workers, and other issues. This will be a
challenge for China’s bigger state companies, who are not used to
“negotiating” and sharing power with social stakeholders when their
interests are at stake.
If
Beijing is serious about expanding its role in Africa, it must give
precedence to local interests and make sure to positively engage and
share profits with local communities. This is true for Chinese interests
in Djibouti as much as for its overall presence in Africa
Enthusiasm for Investments
As
of today, China appears to have won hands down the battle for public
opinion in Djibouti. Indeed, there is an undeniable enthusiasm for
Beijing’s investments among stakeholders and professionals in different
key industries in Djibouti. These investments are viewed as a lifeline
that could lift Djibouti out of its present situation.
This
is not surprising considering that, as the least populous country on
the Horn of Africa, Djibouti has so far been unable to truly transform
its strategic position into real benefits for its population. According
to UNICEF, the country remains plagued by a high poverty rate (over
40 percent of the population is under the poverty line), a catastrophic
unemployment rate (over 60 percent) and risk of famine threatening
almost 25 percent of the population.
Among
proponents of more Chinese involvement is Ali Elmi Ahmed, the CEO of
MCA Djibouti SARL, one of Djibouti’s premier construction material
companies. Ahmed believes Chinese investments’ biggest contribution is
the significant improvement of road and railroad linkages with Ethiopia,
Djibouti’s bigger neighbor and main target market of local companies.
“I sincerely believe that China can bring a lot to Djibouti, by enabling
it to meet the growing demand of our neighbor Ethiopia, and other
countries in the region without access to [the] sea,” he said.
Indeed,
for the most part, local producers and logistics companies have few
opportunities to benefit directly from China-sponsored infrastructure
projects – for example, by supplying Chinese companies established in
Djibouti or targeting the Chinese market. They hope rather to benefit
indirectly from the regional integration resulting from improvements in
the logistics industry, the backbone of the Djibouti economy.
Ahmed,
like many other business leaders in its field, believes that this
new-found friendship between China and Djibouti will ultimately have a
positive impact on both: “This geopolitical strategy coupled with
China’s economy is a win-win approach for both countries.”
This
enthusiasm among industrialists does not surprise Charmarke
Abdoulkader, a Djiboutian now living in Shanghai, where he is a
consultant for China’s Ministry of Foreign Affairs and also secretary
general of the Association for China-Djibouti Friendship. A staunch
supporter of Chinese involvement in his country, he does not hesitate to
praise the “win-win” partnership between the two countries.
For
him, the Chinese presence is an opportunity for young people in
Djibouti, and a possible solution to the omnipresent unemployment that
awaits graduates of the country. Abdoulkader has developed expertise in
this area through his work for the China-Africa Summit, where he
oversees hiring modes and contracts by Chinese companies in Djibouti.
“The companies involved in these projects are answering young people’s
needs by creating jobs,” he said.
According
to Abdoulkader, far from putting all Djibouti’s eggs in one basket,
this Chinese preponderance will have long-term beneficial impacts,
thanks to the direction set by the current authorities of Djibouti. “Due
to its geostrategic situation, everyone wants a share of the pie in
Djibouti, which explains these loans and investments. The Djibouti
government is committed to ensure sustainable development for its people
in the long term,” said Abdoulkader. Much like the actual Djibouti
administration, he argues that infrastructure is a prerequisite for
development, and Chinese involvement in the region may be the key to
long-term growth.
Fear of Dependence
But
others disagree, arguing that for Djibouti, letting China play such a
major role in all key aspects of its national economy – its military,
naval, airport, road, and railroad industries – can also be viewed as a
kind of gamble. Experts warn that by relying too much on China’s
infrastructure projects, Djibouti could become trapped and enter a state
of quasi-dependence on Beijing.
Philippe
Danieau, General Manager of CMA CGM Djibouti S.A., one of the biggest
logistics companies and an ex-high ranking official in the French
military, argues that too great a Chinese presence may result in
overdependence problems in the future.
This
is due to the fact that Djibouti’s economy itself is dependent on port
activities. Over 80 percent of port traffic already comes from Ethiopia,
which has no coastline. Chinese investments, including the
commissioning of the railway between Addis Ababa and Djibouti, will
strengthen the position of Djibouti as Ethiopia’s number one logistics
gateway.
“These
new facilities will actually allow Djibouti to remain competitive in
the face of Berbera, in Somaliland, where DPWorld has just signed an
agreement with Somaliland and Ethiopian governments to build a new
container terminal, aimed mainly at the Ethiopian logistics flow,”
Danieau said.
By
significantly increasing the share of port activities in Djibouti’s
economy, Chinese projects will increase Djibouti’s vulnerability. A
slowdown in Ethiopia’s growth and a reduced demand for logistics
services could have catastrophic consequences for the country.
Moreover,
this dependence on China may strengthen the country’s debt, which could
reach 80 percent in 2017, according to the IMF. If Djibouti was
previously able to rely on relatively diversified funding sources
(namely from the U.A.E., Saudi Arabia, Kuwait, Europe, and Turkey), it
is no longer the case today. China has become the sole player able to
cover the country’s financial needs.
“Unfortunately,
with the Chinese grip on all investment projects due to its financial
conditions and near unbeatable implementation costs, alternative funding
sources are drying up,” Danieau deplored. “The risk is great that, [if
Djibouti is] unable to repay loans on time, infrastructure ownership
will fall into Chinese hands, together with the income generated.”
Chinese
military presence in the country – far from being just another base
among others – reinforces and ‘locks down’ the relationship with
Beijing. “The coming Chinese military presence with the naval base is
bound to influence Djibouti’s foreign policy,” warns Danieau.
Looking Forward
Is
China’s presence a key that could open the door leading to long-term
sustainable growth, or is it just another dead end, or worse, a path to
long-term overdependence and loss of sovereignty? These questions are
acutely relevant not only for Djibouti, but for Africa as a whole.
Reports from the ground clearly point to a grey picture, where different
stakeholders have radically different point of view as to Beijing’s
impact.
Whatever
the outcome will be, Djibouti’s experience teaches that China’s
diplomacy in Africa is inseparable from how local communities view their
own interests in dealing with Beijing. This, in its turn, will have
significant consequences for the future of China’s “Maritime Silk Road”
strategy, and for its broader presence in Africa.
François Dubé is a Journalist at ChinAfrica Magazine, based in Beijing, China