The Beijing Horse

20th September 2019

Why Chinese Investment in Djibouti Matters to the United States (with special thanks to Charles L. Hall

“I fear the Danaans, even those bearing gifts.”

~ Virgil, The Aeneid

United States AFRICOM commander United States Marine Corps General Thomas D. Waldhauser told the U.S. Senate Committee on Armed Services on 7 February, 2019 that “Africa is an enduring interest for the United States.” (1) The Department of Defense currently sponsors nine ongoing exercises to train and bolster national militaries across northern Africa and the Sahel region, and the United States military directly participates in a broad range of security programs aimed primarily at combating Boko Haram, ISIS, and Red Sea pirates. AFRICOM’s military missions, along with several humanitarian aid missions including AIDS relief operations, have garnered over 500 million USD in annual support for the last ten years. (2) All of these operations are based out of the United States’ only enduring operating base on the entire African continent: Camp Lemonnier in Djibouti. It follows that, if what General Waldhauser said is true, the preservation of Camp Lemonnier should be a premier security interest for the United States. However, Camp Lemonnier finds itself more at risk now than ever before – not from terrorists or pirates, but from investors.

The Chinese economic influence in Djibouti poses an indirect threat to Camp Lemonnier. Events in 2004 provide further context for the issue; the Djiboutian government signed an exclusive 30-year contract with Dubai Ports (DP) World for the development and operation of the Doraleh Container Terminal (DCT). Almost immediately, the Djiboutian government began contesting aspects of the contract and attempted to take the issue to the High Court of England and Wales, but Djiboutian claims of bribery and corruption were dismissed by the court. Over the next decade, Djibouti discretely began seeking other sources of foreign investment and found a massive trade partner in China. In 2013, much to the chagrin of DP World, Djibouti sold over a third of its stake in the DCT to Chinese state-owned China Merchant Port Holdings (CMPH), giving the Chinese company a 23.5% share in the DCT compared to DP World’s 33.33%. (3) By 2018, Djibouti’s foreign debt had raised to 102.87% of its own GDP – 77% of that debt was and is owned by the Chinese government or Chinese state-owned companies. ($) By 2018, China’s Exim Bank had loaned the Djiboutian government over 737 million USD for infrastructure projects, including the construction of the Doraleh Multipurpose Port (DMP), which violated the exclusivity agreement between Djibouti and DP World. (5) In February of 2018, the Djiboutian government terminated their contract with DP World and handed over the DCT to their state-owned Port de Djibouti SA, which has been operating the port since then.

Chinese investment in Djibouti is a threat to Camp Lemonnier and to United States interest, as evidenced by events in Sri Lanka. In the late 2000’s, China handled 85% of the 1.4 billion USD bill for Sri Lanka’s Magampura Mahinda Rajapaksa Port in Hambantoto. Sri Lanka, a country struggling economically, was a prime investment opportunity for China’s Belt and Road Initiative (BRI) through most of the 2010’s, leading to massive Chinese-owned debt. In 2017, when Sri Lanka could not pay its bills, it granted the Hambantoto port (on a 99-year lease) and 15,000 surrounding acres to none other than CMPH. (6) If Djibouti falls victim to this ‘debt-trap’, it will surely be the DCT and DMT, already partially owned and almost wholly funded by Chinese subsidiaries and banks, which fall into Chinese control.

The DCT is vital to the resupply and refueling of United States forces in Africa. General Waldhauser has stated that, “[The United States’] continued access and unimpeded usage to [the DCT] is critical to our logistical efforts in East Africa”. (7) If China should seize control of the DCT, as it did the Hambantoto port, it could restrict access for its own interests. This would disrupt Camp Lemonnier and United States Navy supply and fuel lines, as well as American trade access to the Suez Canal – where China already has one BRI port in Greece. (8) The benefit to China is twofold: firstly, they gain full access to the Suez with less American competition; secondly, they can begin using the DCT and DMP as supply lines for their new naval base in Djibouti and further military operations on the African continent. The predicted Chinese involvement in the region would effectively strangle Lemonnier, forcing the United States to cut back resources from all AFRICOM exercises and missions. While the Djiboutian government claims they have no intention of letting the DCT go, they would not have a choice if China wanted to recall its loans. Djibouti has welcomed the proverbial Trojan horse, and it could be the United States that pays the price.

(1) General Waldhauser, Thomas D. Statement Before the Senate Committee on Armed Services. February 7, 2019.

(2) United States Africa Command. Accessed July 21, 2019. https://www.africom.mil/what-we-do.

(3) Dahir, Abdi Latif. “A Legal Tussle over a Strategic African Port Sets up a Challenge for China’s Belt and Road Plan.” Quartz Africa. February 28, 2019. Accessed July 20, 2019.

(4) “Total External Debt for Djibouti.” FRED. May 07, 2019. Accessed July 21, 2019. https://fred.stlouisfed.org/series/DJIDGDPGDPPT; Eom, Janet, Deborah Brautigam, and Lina Benabdallah. China-Africa Research Initiative. “The Path Ahead: The 7th Forum on China-Africa Cooperation.” Briefing Paper no. 1, 2018.

(5) Chen, Yunnan. China-Africa Research Initiative. “Silk Road to the Sahel: African ambitions in China’s Belt and Road Initiative.” Briefing Paper no. 23, 2018.

(6) Zhou, Laura. “Sri Lanka Rejects Fears of China’s ‘debt-trap Diplomacy’.” South China Morning Post. April 23, 2019. Accessed July 20, 2019. https://www.scmp.com/news/china/diplomacy/article/3007175/sri-lanka-rejects-fears-chinas-debt-trap-diplomacy-belt-and.

(7) General Waldhauser, Thomas D. Statement Before the Senate Committee on Armed Services. February 7, 2019.

(8) Hosken, Andrew, and Albana Kasapi. “Why Is China Investing Heavily in South-east Europe?” BBC News. October 17, 2017. Accessed July 20, 2019. https://www.bbc.com/news/world-europe-41654346.