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Red Sea .. How to re-form hostilities and alliances in the Horn of Africa?

Posted by: Berhane.Habtemariam59@web.de

Date: Friday, 17 August 2018

Aug 16, 2018
 

This report, entitled “Harbor Policies in the Horn of Africa: Paths of War, Peace and Competition for Influence  the Red Sea,” is the second in a series of articles published by the African Arigemnet website, which focuses on understanding the current changes in the Red Sea region. The report seeks to explore the impact of national, regional and international competition on ports in the Horn of Africa, and the role of competition in the formation of hostilities and political alliances in the Red Sea region.

Over the last 21 years, the maritime strategy pursued in the Red Sea and Gulf of Aden region has remained stable, including aspects related to port development. In this period, Eritrea has abandoned itself and ignored its coastline, while Djibouti has flourished in this area as a result of its embrace of lucrative Ethiopian trade and the flow of foreign investment in addition to hosting foreign military bases on its territory. On the Somali side, the beaches became a hotbed of piracy, prompting Western and Asian countries to undertake naval maneuvers on these shores, in order to safeguard their interests by ensuring the safety of sea passage to the Suez Canal. However, these conditions are now in the process of change, especially after the ports of the Horn of Africa suddenly become in the spotlight.  

It should be noted in this context that the Ethiopian Prime Minister during his quick presidential trip to neighboring countries such as Somalia, Sudan and Djibouti stressed in his remarks the importance of the development of ports for his country. In the same context, the recent rapprochement between Ethiopia and Eritrea is likely to contribute to the rehabilitation of the suspended Eritrean ports in Assab and Massawa. The same is true for Yemen. The war, which is 25 kilometers from African ports, gave geo-strategic importance to these ports.

Understanding these developments calls for three main questions:

First, why do the countries of the Horn of Africa develop so many new ports?

Second: Who will finance these projects?

Third: Is control of ports in the Horn of Africa a relationship to the ongoing war in Yemen?  

Why so many new ports?

This question is the most obvious and direct one of the above. It may simply be answered because the Horn of Africa needs to improve the status of ports and infrastructure so that it can cope with the current pace of Ethiopian economic growth, on which the pillars of regional integration and regional prosperity depend. For this reason, the issue of ports has become one of the priorities of Ethiopian Prime Minister Abe Ahmed on his foreign visits. During his visit to Djibouti, he called for joint investments in the ports of the country, and the same happened in his visit to Sudan, where he discussed with President Omar al-Bashir plans to modernize Port Sudan. In Somalia, Abe Ahmed announced that his country would work with Mogadishu on a route to modernize four Somali ports.   

It is clear that Ethiopia as a landlocked country seeks to get out of the heavy dependence on Djibouti, whose ports have guaranteed 90% of Ethiopian foreign trade since the outbreak of the 1998 border war with Eritrea. However, we must realize that Ethiopia does not seek In order to limit the use of Djibouti ports, but wants to diversify their access to the sea, thereby reducing shipping costs by increasing the spirit of competitiveness in this market. This is consistent with expectations, as the volume of trade between the two countries will continue to rise, especially as the Ethiopian, Chinese and Djiboutian authorities have invested heavily in modernizing and strengthening infrastructure capacities in all Djibouti waterways.     

The focus of this strategy is based on a railway project linking Addis Ababa to Djibouti, with a length of 750 kilometers, which cost about 3.4 billion dollars, and is funded by China, construction and management, and the project entered into full implementation earlier this year. The advantages of this project have been to reduce the cost and time spent in transporting containers between the Ethiopian capital and the emerging industries in the country and between Djibouti, through which these products will be exported. In addition, the expected oil and gas projects in the Ogaden region of Ethiopia and in the neighboring Somali regions, which will also be exported through Djibouti, reaffirm the centrality of this country to regional growth and integration.  

For all of the above, the continuation of this economic relationship is critical for both Djibouti and Ethiopia. As port resources are the mainstay of the State Treasury, Djibouti has invested heavily in the development of infrastructure. New container and cargo facilities have been established as a multi-purpose Port Authority in Doralia, with a total cost of about $ 590 million. In the same context, Djibouti has built and developed small ports such as the port of Tajora, which will be equipped with facilities that have livestock and natural gas export facilities.  

In addition, Fiji has an ambitious national development plan known as Vision 2030, which sees ports as a key center providing services to the entire region, including shipping services related to Asia. In this context, the development of such a large number of ports and free trade areas with Chinese partners would make Djibouti a very important country for Ethiopia and the region as a pillar for improving the prospects for economic integration in the region, regardless of any future development in Eritrea or Somalia . For this reason, Djibouti, for its part, seeks to maintain its competitiveness, especially with the Kenyan “Lapist” corridor, which aims to link Kenya’s coastline in the Lamo region with southern Sudan and Ethiopia.

Who pays?

The second question raised by this debate on ports relates to who is funding these projects. For Ethiopia and Djibouti, the main source of finance is China. It is known that most infrastructure projects in Djibouti are funded and managed by Chinese companies. For example, the multi-purpose port, valued at millions of dollars in Durale, is managed and partly owned by China’s Meritshen. The company, based in Hong Kong, owns 23.5 percent of the free trade area and Djibouti port. In early 2017, it purchased a minority stake in Ethiopian shipping lines, of which Djibouti is the main operator.

      For all of this, Meritshen is one of the most active companies in many of the port activities on China’s Silk Road linking the waterways with the Beijing Project known as Belt and Road. As Thierry Biolault has pointed out, the role of Mirchen in Djibouti is similar to the rest of China’s similar activities elsewhere in Africa, whether in ports or logistics. However, the experience of Djibouti is unique for two reasons: first, because it is the center of convergence of telecommunications, and is the convergence point of intercontinental fiber-optic cables. Second, since 2017, Djibouti has been home to China’s first permanent naval base overseas, located approximately 12 kilometers from the US AFRICOM base at Camp Lemonier.

In addition, Chinese companies have large holdings in Ethiopian oil and gas fields in the Ogaden region. In 2017, the two countries reached an oil pipeline from the Ogaden region to Djibouti and proposed the construction of a LNG refinery in the Damarjog area.

The second and most effective port issue is the United Arab Emirates. All Ethiopian shipping containers were transported through the Durale Container Terminal before the opening of the multi-purpose port, which has been run by China since last year in Djibouti. It has been operated by Dubai Ports World since 2008 and is partly owned by Djibouti. In February this year, Djibouti ended its contract unilaterally and completed its 33% stake. This escalation in the relationship between the two parties came after a fierce legal battle lasted six years.

Currently, DP World is seeking compensation for its lost assets from Djibouti. Until the case is settled in a court in London, the government of Djibouti will face difficulty in selling legally held shares. However, Ethiopia is likely to enter the scene and gain a minority stake in the Durale container terminal, especially given Abe Ahmed’s sudden proposal, in which the idea of ​​Ethiopia and Djibouti owning stakes in ports and telecommunications bodies in both countries. Of course, this could happen in a deal involving Chinese loans. If so, China’s Meritshen will gain a larger share of the Djibouti Ports and Free Zones Authority.

Although this latest dispute has led to a decline in the UAE's long partnership with Djibouti, DP has also managed to remedy this, expanding its presence in neighboring ports in other countries. In May 2016, the company signed a 30-year $ 440 million deal to develop the Berbera port in Somaliland / Somaliland, the self-declared territory of Somalia. However, in March 2018, DP World announced that Ethiopia would receive 19% of the project along with its 51% stake and the 30% share of the Somaliland government. At the same time, the company is investing in a highway project linking the port of Berbera with the Ethiopian border. Under the agreement, the UAE, which is now playing an increasingly central role in the war in Yemen, has made it possible to develop a naval base close to the port of Berbera.

The DP deal is the first major international agreement by the Somaliland / Somaliland government since it became autonomous. The agreement has angered the federal government in Somalia, especially since it does not recognize the sovereignty of the Somaliland / Somaliland government on the port of Berbera. On the other hand, this agreement led to a political row between Somalia and the UAE, resulting in the withdrawal of Abu Dhabi supplies and military advisers and the closure of a hospital funded by Mogadishu. Moreover, the row between the two countries has increased accusations that the Somali government is being exploited by Qatar and Turkey, especially after reports that Qatar has reportedly financed President Mohamed Faramago’s campaign. The accusation against Turkey came against the backdrop of being the main economic partner of the current Somali government.

What are UAE plans for Yemen and the Horn of Africa?

There is no doubt that the UAE’s arrival in Berbera has helped establish a naval base there. This leads us to ask our third question: What is the relationship between the competition over the new container projects and shipping ports in the Horn of Africa in the war in Yemen?

Of course this is a difficult question to answer, but it is clear that the more the war in Yemen increases, the greater the UAE presence in the Horn of Africa. As a result, in 2015, the UAE mobilized its troops and naval equipment near the Eritrean port of Assab, establishing secret training facilities and prisons. The same applies to the rest of the regions, where the UAE forces have presence in both Somaliland / Somaliland, and on the island of Socotra and the southern coasts of Yemen.

The question is whether war is a reason for these efforts, which have shown the UAE as if it is working fervently to invest in diplomatic peace initiatives between Ethiopia and Eritrea. In this context, we recall Prime Minister Abe Ahmed’s visit to the UAE last May and the visit of the Crown Prince of Abu Dhabi to Addis Ababa last June, during which the UAE’s de facto ruler announced the granting of an emergency loan worth Billion dollars to ease Ethiopia’s acute foreign exchange shortage, and promised more foreign direct investment.

The plane that took the Eritrean delegation to Addis Ababa on 26 June was actually an Emirati plane. The UAE hosted the Eritrean President in Abu Dhabi prior to Abe Ahmed’s historic visit to Asmara on July 8, The impressive peace initiative. There are recent signals from Saudi Arabia and the UAE that the two countries are supporting the recent Ethiopian / Eritrean rapprochement with considerable funds. Some analysts claim that these funds will be used first in the rehabilitation and rehabilitation of Eritrean ports in Asab and Massawa. At a later stage, infrastructure projects linking the port of Assab to Addis Ababa will be financed. Not only that, they want to link the port of Massawa in the city of Meghli, the capital of the Tigray region of Ethiopia. This may be wishful thinking, but it is certain that Ethiopia has long-term ambitious and cost-effective infrastructure plans, including the development of railways and the development of various roads, land, air and sea. If so, the issue of encouraging Arab and Chinese investors to compete for their share of the expected profit from linking Eritrea’s ports and integrating them into Addis Ababa’s long-term infrastructure development plans seems feasible. However, it is uncertain whether the Eritrean authorities will be able to undertake economic reforms at the local level that will facilitate competitive bidding on ports and maritime services while meeting their obligations to the UAE. If so, the issue of encouraging Arab and Chinese investors to compete for their share of the expected profit from linking Eritrea’s ports and integrating them into Addis Ababa’s long-term infrastructure development plans seems feasible. However, it is uncertain whether the Eritrean authorities will be able to undertake economic reforms at the local level that will facilitate competitive bidding on ports and maritime services while meeting their obligations to the UAE. If so, the issue of encouraging Arab and Chinese investors to compete for their share of the expected profit from linking Eritrea’s ports and integrating them into Addis Ababa’s long-term infrastructure development plans seems feasible. However, it is uncertain whether the Eritrean authorities will be able to undertake economic reforms at the local level that will facilitate competitive bidding on ports and maritime services while meeting their obligations to the UAE.

Moreover, it is not yet clear how realistic the predictions are that Arab money is behind the recent peace deal between Ethiopia and Eritrea. It is also difficult to know whether the recent diplomatic fervor of the UAE in the Horn of Africa truly reflects a political strategy or is it just an opportunistic reaction to the changes taking place in the Horn of Africa? Just a temporary tactic resorted to because of the stalemate prevailing in the ongoing bloody war in Yemen. In other words, does the UAE have a coordinated and coordinated plan to operate in the Horn of Africa? Do you expect the transfer of its military lease in the port of Assab to Dubai Ports Company as soon as the Huthis surrendered in the war in Yemen?

It is too early to predict what will happen, but it has become clear that ports in the Horn of Africa are becoming increasingly important for competing investors from China and the Arabs. Port policies have become a major focus of political alliances and enmity throughout the region. –

Source: EriGazette.org

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