China Comes to Djibouti

The tiny African nation of Djibouti is the unsung hero in the United States’ ongoing war against terror and piracy. A few security scares notwithstanding—the U.S. embassy was briefly closed earlier this month for unexplained reasons—the country is a rare oasis of stability in the Horn of Africa. Camp Lemonnier hosts U.S. Special Forces, fighter planes, and helicopters, and is a major base for drone operations in Yemen and Somalia. Small wonder that Washington recently renewed its lease on the base for ten years (with an option to extend for another ten), even though Djibouti President Ismail Omar Guelleh nearly doubled the rent.

The United States’ investment in Djibouti, which amounts to more than $70 million per year including economic aid, is money well spent. Washington needs Djibouti—and Guelleh knows that all too well. France, Germany, and Japan have also handed over tens of millions of dollars to the country for the right to use its strategic real estate. And lately, China has gotten in on the act too—not only for economic reasons, but also driven by apparent security considerations. Money talks, especially in small and underdeveloped states run by authoritarian governments such as Djibouti—and soon Beijing, not Washington, may have the strongest voice. 

Beijing’s interest in Africa is immense. Bilateral trade between China and the continent already exceeds $200 billion, far above Africa’s commerce with the European Union or the United States. In addition, China has long sought to strengthen its ground-level influence in places it considers strategic chokepoints. As such, it now has economic, political, and military deals with a number of African states, including Algeria (which has significant oil and gas reserves and is near the Suez Canal), and other countries rich in energy resources, including Ethiopia and Nigeria. Djibouti recently joined this list, concluding a security and defense agreement with Beijing in early 2014. The Chinese official responsible for negotiating and, presumably, executing the deal was Defense Minister Chang Wanquan, the person behind his country’s increasingly assertive conduct in the South China Sea.

Washington protested against the China–Djibouti pact and expressed concern over China’s plans to build a military base in the Obock region, but to no avail. That’s hardly surprising in light of the huge economic package that Beijing offered Guelleh. In the run-up to the deal, China Merchant Holdings, a sizable state-owned enterprise, purchased a large stake in the country’s vital Port of Djibouti, spending $185 million. To further drum up enthusiasm, Beijing threw in an offer to develop the port’s facilities—awarding the state-owned China State Construction Engineering Corporation a $420-million contract to begin this work—as well as improve the infrastructure that supports the port’s functioning, including a railway to Ethiopia and two international airports.

From China’s point of view, the move to offer commercial incentives in the hopes of gaining future strategic and military access comes from a time-tested playbook. Beijing has undertaken similar plays in Bangladesh, Myanmar (also called Burma), Pakistan, and Sri Lanka—even if they have not always borne strategic fruit. But in its approach to Djibouti, China has an even stronger strategic advantage than usual: Maritime ports are Djibouti’s only valued economic asset, apart from its military and logistical facilities. A promise to spend a fortune on developing Djibouti’s ports and infrastructure is thus an offer to bankroll the only national business plan the country has.

Beijing has also learned another lesson from its checkbook diplomacy in South Pacific: to win over corrupt authoritarian governments overseeing moribund economies, practice economic seduction at both national and personal levels. To that end, China’s investment in a given country’s infrastructure often goes hand-in-hand with personal favors: building grand residences for state leaders, as China most recently did in Sudan, or at least constructing fancy fences around them, as it has done in Fiji. This explains why Beijing treats Djiboutian government figures as leaders of global significance, hosting joint grand summits with them that would be more befitting of leaders of global power. Such gestures, designed to stroke individual egos, can go a long way when these individuals have a disproportionate and unaccountable hold over power and wealth in their countries—as Guelleh and his top aides do in Djibouti.

But the examples of the Pacific Island nations also illustrate that in return for its largess, Beijing eventually demands significant rewards. China’s economic partners throughout Asia (including Myanmar) and Africa (including Nigeria and Sudan) have already learned the hard way that the benefits of Chinese-led economic activity rarely trickle down to the local populations, and that China has little regard for the environmental and social damage left behind. But it will take time for Djibouti to acquire that wisdom, and for the moment, it is increasingly seeing not dollar but renminbi signs.

Meanwhile, the United States is not without leverage, even given Washington’s lack of attention to the country. No state would want its strategic options reduced to becoming China’s client—which is something that Washington should privately emphasize when it next talks to Guelleh. Plus the United States enjoys the advantage of collective bargaining. It should coordinate its demands with its strategic allies, including France, Germany, and Japan, and it should prepare its partners to jointly take money off the table in any future negotiations—or add more to the pile if their strategic interests so demand. If it doesn’t, Washington might find that the country hosting its only military base in sub-Saharan Africa owes more favors to China, its rising global rival, than to the United States itself.