The Economist

The EconomistJuly 21 st 2018 33

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1

I

TSEEMED an irrational decision 20 years

ago. DP World is one of the world’s larg-

est maritime firms. From a squat office

overlooking Dubai’s bustling Jebel Ali

port it directs operations in 40 countries.

Most are in busy shipping hubs such as

London and Rotterdam. But in the 1990 s it

started making surprisingly big invest-

ments in the Horn of Africa. It built a large

portin Djibouti and isnowworkingon an-

other in Somaliland (see map). The com-

bined GDP of the two African entities is

smaller than that of Moldova. Yet the firm

sees the region as a land ofopportunity.

So do the rulers of United Arab Emir-

ates ( UAE) one ofwhose components Du-

bai owns a majoritystake in DPWorld. It is

one of several Gulf states trying to gain a

strategic foothold in east Africa through

ports. Controlling these offers commercial

and military advantages but risks exacer-

batingtensions in the region.

Executives at DP World argue that Afri-

ca needs many more ports—especially in

the Horn where conflict has stifled trade.

Ethiopia populous and fast-growing lost

its coastline when Eritrea broke away in

1991. Its 1 05m people rely on Djibouti for

95 % oftheirtrade. Fartherinland countries

such as South Sudan Uganda and Rwanda

struggle to reach markets. DP World thinks

the region from Sudan to Somalia needs

10 - 12 ports. It has just half that. “The whole

Horn ofAfrica isshortofports. It’sstifling”

Djibouti’s profile rose further after the

terrorist attacks on America of September

11 th 2001  when America opened a mili-

tary base there. France and China also

have bases; other navies patrol off its coast

to deter Somali pirates. But when the Emi-

ratis wanted to open their own naval base

they were rebuffed partly because of their

close tiesto Djibouti’s rival Eritrea (the two

states had a bloody border dispute in

2008 ). In 2015 the UAE started building a

naval base in Assab in southern Eritrea.

The base has been used in the Saudi-led

war against Houthi rebels in Yemen. It

would be the jumping-off point for a

mooted amphibious assault on Hodeida

Yemen’s main port now the focus of

heavy fighting. The UAEalso helped medi-

ate Eritrea’s peace deal with Ethiopia

signed on July 9 th ending decades of hot

and cold war. If it holds the truce could

end UN sanctions and open Eritrea to in-

vestment. Assab and another port Massa-

wa could be expanded.

In 2016 DP World won a 30 - year conces-

sion to operate the port of Berbera in So-

maliland which declared independence

in 1991 (though no foreign government re-

cognises it). Critics said the deal would

hasten the break-up of Somalia. Djibouti

was upset for different reasons. With a

planned capacity of 1. 25 m containers Ber-

bera would erode Djibouti’s monopoly on

Ethiopian cargo. Indeed Ethiopia acquired

a 19 % stake in the port earlier this year. All

this could cost Djibouti hundreds of mil-

lions in annual transit fees.

It would also cement the UAE’s place in

a strategic region. Uniquely among Arab

states it tries to project military power far

beyond its borders. The Horn ports all sit

near the Bab al-Mandab strait a vital

choke-point at the mouth of the Red Sea:

4. 8 m barrels of oil passed through it every

says one executive.

The firm’s first foray was on Djibouti’s

coast. When DP World won its first conces-

sions there in the 1990 s the Emiratis were

among the few investors interested in the

small and poor former French colony. DP

World built and operated a new container

terminal Doraleh and helped finance

roads and other infrastructure. Doraleh is

now the country’s largest employer and

the government’s biggest source of rev-

enue. It runs at nearly full capacity han-

dling 800  000 containers a year. Much of

its cargo travels along a Chinese-built rail-

way from Addis Ababa Ethiopia’s capital.

Red Sea scramble

Ports in the Horn

ABU DHABI AND DUBAI

Shipping gives the United Arab Emirates ( UAE) a foothold in east Africa. But it also

draws rivals from Qatarto China

Middle East and Africa

Also in this section

34 Djibouti’s entanglement with China

34 Turkey in Syria

35 Morocco’s new friends

35 Infertility in Nigeria

36 Slavery in Mauritania

SAUDI ARABIA

SOMALILAND

ETHIOPIA

DJIBOUTI

SOMALIA

ERITREA

SUDAN

KUWAIT

IRAN

IRAQ

YEMEN

QATAR

BAHRAIN

OMAN

UAE

I N D I A N

O C E A N

The

Gulf

Red

Sea

Gulf of Aden

Dubai

Doraleh Berbera

Hodeida

Jebel Ali

Assab

Massawa

Abu Dhabi

Addis Ababa

Bab al-Mandab

strait

500 km