Country Risk

Likely sovereignty dispute resolution with Eritrea reduces war risks but undermines Djibouti’s capacity to deleverage infrastructure-related debts

Chris Suckling and Jordan Anderson - IHS Jane's Intelligence Weekly

05 September 2018

Djiboutian President Ismail Omar Guelleh reacts after his speech during the inauguration ceremony of Djibouti International Free Trade Zone on 5 July. Source: FP/Yasuyoshi Chiba/Getty Images

Key Points

Successful UN mediation in the sovereignty dispute would reduce interstate war risks between Djibouti and Eritrea, despite the presence of domestic spoilers.
Temporary escalation to violent conflict between Djibouti and Eritrea to intimidate and posture is unlikely during the mediation process.
Increased use of Eritrean ports for Ethiopian exports would undermine Djibouti’s continued ability to capture in-land trade, in turn reducing its budgetary capacity to deleverage its large external debt-burden.

Event

In a joint news conference with Eritrean Foreign Minister Osman Saleh on 31 August, Russian Foreign Minister Sergey Lavrov called for the UN Security Council to begin lifting sanctions against Eritrea, and for improved relations between Eritrea and Djibouti.

The United Nations Security Council, of which Russia is a permanent member, will discuss the sanctions against Eritrea in November. IHS Markit assesses that the sanctions are likely to be lifted. On 30 July, the chair of the UN Sanctions Committee on Somalia and Eritrea delivered an interim report welcoming Eritrea’s restoration of relations with Ethiopia and Somalia. The Committee, however, still has not been permitted to enter Eritrea to assess the situation on the ground, and more particularly the Doumeira border region over which Djibouti and Eritrea have a long-standing sovereignty dispute. Djibouti’s UN representative, Mohamed Siad Doualeh, in July described Eritrea’s refusal to permit the UN Sanctions Committee to inspect Doumeira as an “intolerable pattern of behaviour characterised by obstruction and obfuscation”. This forms one of Djibouti’s key conditions for supporting the lifting of sanctions; the others being the release of alleged Djiboutian war prisoners by Eritrea, held since a three-day border conflict in 2008, and acceptance of a mutually acceptable dispute settlement procedure, in conformity with the UN Charter. Consequently, unlike his Ethiopian and Somalian counterparts, Djiboutian President Ismael Omar Guelleh has declined to visit the Eritrean capital, Asmara, until the border issue is resolved.

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