China’s Engagement in Djibouti

China’s Engagement in Djibouti

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September 4, 2019
China’s Engagement in Djibouti
Overview
Waldhauser estimated in early 2018 that Djibouti owed at
least $1.2 billion to China. The debt has raised concerns
Djibouti is pursuing an ambitious agenda to transform itself
among U.S. officials that the country may be increasingly
into a commercial trade hub for the Horn of Africa region.
vulnerable to Chinese influence or manipulation. Some
This effort is being financed largely by the People’s
Djiboutians have also expressed alarm about the lack of
Republic of China (PRC), which is playing a growing role
transparency around Chinese loans.
in the tiny country. China’s engagement is multi-faceted,
ranging from major infrastructure investments to the
China reportedly has provided nearly $1.5 billion in
establishment of its first overseas military base in the
financing for major infrastructure projects in Djibouti since
country. China considers Djibouti part of its Belt and Road
2000. Among the projects being built by Chinese firms is a
Initiative; in late 2017 the two countries declared that they
$3.5 billion free-trade zone (FTZ), expected to be Africa’s
had established a “strategic partnership.” U.S. policymakers
largest. The first phase was completed in 2018, and is
have raised concern about China’s role in Djibouti, given
expected to create 200,000 new jobs and handle over $7
U.S. strategic interests in the region and the proximity of
billion in trade from 2018 to 2020. Three Chinese
China’s base to U.S. military facilities there.
companies have stakes in the FTZ, alongside Djibouti’s
port authority.
Djibouti is strategically located on the Bab el Mandeb strait
(Figure 1), a chokepoint between the Red Sea and the Gulf
Other Chinese-backed investment projects include the
of Aden. It has become a hub for foreign militaries in the
development of port facilities and related infrastructure,
past decade, hosting bases for the United States, France,
including a railway and two airports (a $420 million
Japan, Italy, and, most recently, China. Djibouti’s economy
contract) and a pipeline to supply Djibouti with water from
depends heavily on trade through its busy international port
neighboring Ethiopia (a $320 million contract). Ethiopia, a
complex, and profits from shipping and land leases are
landlocked country of over 100 million people, relies on
important revenues source for the government. For more on
Djibouti for the transit of 90% of its formal trade, recently
the country, see CRS IF11303, Djibouti.
facilitated by a new rail line between the two countries. The
line was built and is operated by two Chinese companies,
China’s engagement in Djibouti is emblematic of its
and financed in part by China’s Export-Import Bank.
broader shift toward a more expansive foreign policy,
including in Africa, under Chinese Communist Party
A division of Chinese technology company Huawei,
General Secretary and State President Xi Jinping. In 2015,
Huawei Marine, is linking Djibouti with Pakistan via an
Xi pledged $100 million in military aid to the African
undersea fiber-optic cable that is part of the company’s new
Union to support regional peacekeeping initiatives over a
7,500-mile Asia-Africa-Europe cable, financed by China
five-year period. China’s role as a peacekeeping troop
Construction Bank. In Pakistan, the cable would connect to
contributor has grown. It now has the largest number of
a land-based link to China. U.S. officials have expressed
peacekeepers deployed—roughly 2,500, a majority of them
concern that data carried by these cables may be vulnerable
in Africa—of the five permanent members of the U.N.
to espionage. Huawei reportedly is considering plans to sell
Security Council. China hosted its first China-Africa
Huawei Marine Networks to other buyers in China.
Defense and Security Forum in 2018, a sign of its interest in
Figure 1. Djibouti
expanding security relationships on the continent. At its
2018 Forum on China-Africa Cooperation (FOCAC), China
announced a China-Africa Peace and Security Fund and
pledged to support programs on law and order,
peacekeeping, anti-piracy, and counterterrorism. China’s
naval presence in the Gulf of Aden, where it has played a
prominent role in multinational efforts to counter Somali
piracy, dates back a decade. Djibouti has been a key
resupply node for those operations.
China’s Economic Investment in Djibouti
Djibouti has expanded its economic ties with China, to
which it owes a growing amount of sovereign debt.
According to the International Monetary Fund (IMF),
Djibouti’s public external debt is estimated to have risen

from 50% of GDP in 2016 to 104% by the end of 2018,
Source: CRS, using ESRI and U.S. State Department data.
much of it based on Chinese lending. Former U.S. Africa
Command (AFRICOM) Commander General Thomas D.
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China’s Engagement in Djibouti
Figure 2. Ports and Foreign Military Bases in Djibouti
China’s performance of missions, such as escorting, peace-
keeping and humanitarian aid in Africa and west Asia,” as
well as joint exercises, evacuation and rescue operations,
and multinational efforts to maintain the security of
strategic international seaways. Chinese military personnel
first deployed to the base in July 2017, and in late 2017
they conducted their first live-fire exercise in the country.
DOD officials announced in May 2018 that the United
States had delivered a demarche to China over several
incidents in which lasers were pointed from the Chinese
base at U.S. military aircraft, reportedly causing minor eye
injuries to at least two pilots. China denies the allegations.
U.S. Concerns

Several Members of Congress have raised concerns about
Source: CRS, using ESRI and U.S. State Department data.
China’s growing role in Djibouti. In 2018 testimony to
The Doraleh Ports
Congress, General Waldhauser said of the prospect of
Chinese surveillance there, “we are not naïve [about it]… it
U.S. officials have raised concerns about China’s role in
just means that we have to be cautious.” He suggested,
Djibouti’s new Doraleh Multi-Purpose Port, a joint project
though, that there are also “opportunities, especially in
with state-owned China Merchants Port Holdings that is
Djibouti, where we can work together with the Chinese.” In
adjacent to new Chinese military facilities. One of the
2019, Waldhauser told Congress that U.S. military access to
port’s berths is reportedly slated for use by the PRC navy.
Djibouti’s container port was “necessary and required” for
maintaining its presence in the region, and that there could
In 2018, Djibouti terminated its partnership with Dubai’s
be “significant” consequences if China controlled the port.
DP World, which had built and run the Doraleh Container
Terminal (DCT) for almost a decade. Djibouti nationalized
The Trump Administration has placed a high priority on
its port authority’s stake in DCT, in which China Merchants
countering Chinese influence in Africa more broadly.
has a 23.5% share, and engaged a Singaporean company
National Security Advisor John Bolton has accused China
with links to China Merchants to expand the facilities.
of “targeting their investments to gain a competitive
Djiboutian officials insist they have no intention of ceding
advantage over the United States” and of “predatory
control of the port to China, as occurred with Sri Lanka’s
practices” on the continent, citing corrupt and opaque deal-
Hambantota port, but some analysts suggest this deal could
making, exploitative lending, and self-interested extractive
represent a payment in-kind on debt owed to the China and
industry activity. This echoes the 2017 National Security
affiliated state firms. DP World is challenging the takeover.
Strategy, which portrays Chinese influence as undermining
China’s Military Presence in Djibouti
African development “by corrupting elites, dominating
extractive industries, and locking countries into
Djibouti’s proximity to key global shipping lanes makes it
unsustainable and opaque debts and commitments.”
an attractive location for a country with global maritime
ambitions. China signed a defense agreement with Djibouti
China surpassed the United States as Africa’s largest
in 2014, and in 2016, it began to build “support facilities”
trading partner in 2009. Chinese firms have built
there as a base for naval rest and resupply. Djibouti’s
infrastructure projects across the continent, often financed
foreign minister announced that China had agreed to a 10-
by state loans to be repaid with commodities extracted from
year, $20 million-per-year contract to lease the site, with
host countries and tied to the use of Chinese goods, labor,
facilities that could house “a few thousand” personnel. By
and services. These activities, which are expanding under
some accounts, the base could host up to 10,000 troops, but
the BRI, help fill infrastructure gaps, but their ties to
only an estimated 250 are currently stationed there.
China’s broader commercial and strategic interests could
pose challenges for U.S. engagement and influence in the
The U.S. Department of Defense (DOD) reports that the
region. U.S. officials raise concern that, in Djibouti and
base includes barracks, an underground facility, a tarmac,
elsewhere, rising debt to China may give the latter leverage.
and eight hangars for helicopter and unmanned aerial
vehicle (UAV) operations, but does not have a runway or a
Djiboutian officials have expressed frustration with
dedicated naval berthing space. Camp Lemonnier, the only
criticism of China’s engagement in their country. “We
enduring U.S. military installation in Africa, is situated just
thank the Chinese for our infrastructure development, and
miles from the Chinese base (Figure 2). The U.S.
we want our other partners to help us—not just tell us about
ambassador to Djibouti has described managing the close
the Chinese debt trap. Maybe they think they are attacking
proximity of the facilities as “a challenge for all involved.”
China, but they are disrespecting Africans. We are mature
enough to know exactly what we are doing for our
The Chinese military’s role in the Horn has evolved since it
country,” said Djibouti’s finance minister in 2019.
first commenced counter-piracy operations off the Somali
coast in late 2008. Its efforts to evacuate Chinese citizens
Lauren Ploch Blanchard, Specialist in African Affairs
via naval frigate from Libya in 2011 and from Yemen in
Sarah R. Collins, Research Assistant
2016 may have influenced its decision to establish a base in
the region. Chinese officials say the base aims “to ensure
IF11304
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China’s Engagement in Djibouti

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https://crsreports.congress.gov | IF11304 · VERSION 1 · NEW