ADDIS ABABA, BLOOMBERG -- Djibouti’s government will embrace greater Chinese involvement in the nation’s ports and sees no reasons for U.S. concern that its strategic interests may be threatened, Finance Minister Ilyas Dawaleh said.
The Horn of Africa country is embroiled in a dispute with DP World Ltd. over the running of the Doraleh Container Terminal and has struck a deal to boost cargo trade with a company working with Chinese state-owned enterprises. It would be “ridiculous” to imagine that China could restrict or deny U.S. access to Doraleh as a result of the deal, Dawaleh said.
“Djibouti’s development needs all its friends and strategic partners,” he said. “At the same time, no one can dictate to us who we should deal with.”
Situated on a global shipping choke-point that links the Red Sea and Suez Canal, Djibouti has become increasingly important to regional and world powers. Smaller than the state of Massachusetts, it hosts the largest U.S. military base in Africa and China’s first such overseas facility, which was inaugurated in August, also in the Doraleh area.
U.S. Africa Command General Thomas Waldhauser warned last week that a Chinese takeover of Doraleh could have “significant” consequences if there were restrictions on the U.S.’s ability to use the facility.
Djiboutian officials assured the American ambassador there’s “no intention to eventually give this over to China,” Waldhauser said at a House Armed Services Committee hearing before a visit by former Secretary of State Rex Tillerson to Djibouti March 9. “We’ll have to wait and see. The key at that point is who owns the company and how it works.”
Societe de Gestion du Terminal a Conteneurs de Doraleh, a state-owned company created to take over the operations of DCT, signed an agreement March 5 with Singapore-based Pacific International Lines Pte Ltd. to boost cargo traffic, according to a statement by Djibouti’s permanent mission to the United Nations. The deal came a fortnight after a presidential decree terminated DP World’s management of the port.
The Djiboutian government is seeking guidance from DP World on what the company plans to do with its one-third stake in DCT, Foreign Minister Mahamoud Ali Youssouf said in a March 1 interview that. The United Arab Emirates government denounced the “illegal seizure” and said state-owned DP World has begun arbitration proceedings to protect its rights.
“Other similar strategic players have already expressed their desire to be involved in the expansion of DCT,” the Djiboutian mission to the UN said. While the government is currently only dealing with the management transition, if DPW “would like to sell, then Djibouti’s government has the exclusive right to buy,” Dawaleh said.
PIL has described a memorandum of understanding it signed with China Merchants Port Holdings Co. in August as a “strategic alliance” and “another result” of Chinese President Xi Jinping’s Belt & Road Initiative, a ports and infrastructure project aimed at forging new links between Europe, Asia and Africa.
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State-owned China Merchants already has a stake in the DCT through Port de Djibouti SA, a holding company that owns a two-thirds stake in the container terminal, Dawaleh said.