As the rapid Eritrean-Ethiopian peace process increasingly captivates observers, the long-ignored Red Sea is also being thrust back into the spotlight. The 2300 km inlet, geographically separating continental Asia and Africa, is now at the epicenter of a high-stakes geopolitical game involving old foes, close allies and shifting alliances. A large number of international actors are placing their bets in the effort to control international shipping through the Red Sea.
The Red Sea’s importance dates back to its ancient role as a link between two major bodies of water. Through the Bad el Mandeb strait, its southern tip feeds into the Indian Ocean. From the north, the Sinai Peninsula connects to the Mediterranean sea. The ancient Greeks travelled through the Red Sea to reach Asia, as did the Romans. In effect, it is the fastest route for trade between Asia and Europe. Recognizing its importance to international trade, the French, British, Portuguese and Italians all attempted to control the Red Sea, to no lasting avail. Moreover, landlocked African countries (Ethiopia and South Sudan) depend on its ports to receive and export goods. Its strategic importance cannot be underestimated: more than 5 million barrels of crude pass through it daily, with no easy alternative.
Today, the Rea Sea is at the centre of competing regional powers. To begin, Djibouti is quickly losing its position as home to the region’s busiest port, due to its dispute with the United Arab Emirates (UAE). Servicing 95 per cent of Ethiopia’s international trade with no competitor in the region, Djibouti was in a favorable position. However, following the country’s seizure of the Doraleh Container Terminal in February 2018, from Djibouti’s perspective events have spiraled downward. The terminal was managed by Dubai-based DP World. The seizure, following accusations of financial mismanagement, led to DP World successfully suing the Djiboutian government for compensation. In addition , UAE has also embarked on an ambitious and aggressive campaign to replace Djibouti as the region’s port of choice, by developing alternative ports in the region.
To Djibouti’s north, the development of Eritrea’s Assab port is creating a new alternative in the region. The UAE, along with Saudi Arabia, were heavily involved in the recent rapid peace negotiations between Eritrea and Ethiopia. Reconciliation between the two African countries provided Ethiopia with immediate, and importantly cheaper, access to the sea. UAE and Saudi have pledged significant capital to upgrade roads connecting the port city to Ethiopia’s capital and to modernize its container handling facilities. A major oil pipeline, financed by UAE, linking the Red Sea to Addis Ababa, has also been pledged. To firm up the deal, UAE provided Ethiopia’s Central Bank with a desperately-needed US$1 billion cash loan to ease Ethiopia’s foreign exchange shortage, in addition to pledging US$2 billion for other investments.
Not to be left out, Qatar has sought to find places to secure its interests in the scramble for Red Sea ports. In March, the cash-rich monarchy (and arch-rival to both UAE and Saudi Arabia) announced a US$4 billion deal with the government of Sudan to develop and manage its port of Suakin. The deal follows the Sudanese government’s agreement with Turkey (a strong Qatari ally) to establish a military base on the same territory. Egypt has pledged US$1.35 billion to upgrade its port along the Red Sea.
To Djibouti’s south, ports in Berbera and Bosaso, located in Somaliland and Puntland respectively, have awarded large contracts to DP World for modernization and management. The region’s largest economic player, Ethiopia, has guaranteed increased trade volumes through the newly-expanded Berbera port. The addition of these two ports, located where the Indian Ocean meets the Red Sea, further diminishes Djibouti’s ports’ value.
Not alone in its battle, Djibouti is strongly supported by China, both economically and militarily. The Chinese see Djibouti’s ports as an integral piece to its ambitious maritime one belt, one road plan. By acquiring strategically-important ports around the world, China is establishing itself as a formidable maritime player. The Red Sea plays a key role in its strategy to dominate maritime trade routes between Asia and Europe. Given its location, Djibouti hosts China’s only overseas military base, coincidentally only a few kilometres from an American base. Chinese companies are ever present in the newly-opened Djibouti International Free Trade Zone, Africa’s biggest free-trade zone. Further, China financed the Djibouti – Addis Ababa railway line, at a cost of over US$4 billion. The Djiboutian government has loaded up on Chinese debt, which may have reached dangerously unsustainable levels.
The United States has backed its traditional regional allies, UAE and Saudi Arabia. They have now begun an aggressive approach to lure Ethiopia away from Chinese influence, and towards Arab/Western capital.
The increase in activity coupled with the stakes involved in controlling one of the world’s busiest trade routes has observers monitoring the situation closely. Every actor involved is prepared to pay for influence as its future role in global trade may be dependent on it. The rise in foreign debt (and control) of African ports is cause for concern. Over the medium term, we should expect more developments around Red Sea ports.