No Door Closed: Period of Transition, Uncertainty an Opportunity for Stronger relations Between Ethiopia, Djibouti


Djibouti and Ethiopia remain closer than ever and Djibouti’s Ambassador to Ethiopia says this means that periods of transition and uncertainty are only opportunities for further growth. Ambassador Mohammed Idriss Farah sat down and spoke with Capital’s Teguest Yilma about the nation’s recent parliamentary elections, their take on Ethiopia’s current political situation and what really happened with DP World.

Capital: Djibouti’s ruling party (UMP) won a land slide in parliamentary elections recently; do you think this could narrow the political space and lead to volatility like Ethiopia is facing now?

Ambassador Mohammed Idriss Farah: No, I don’t think so. This election has gone veryambassador-mohamed-idriss-1 well. We were happy to see our people rally peacefully and as a result of this election 25% of our parliamentarians are female. 16 new female parliamentarians were elected out of 65 members, mostly young people coming into office. This is very important because we need to involve the youth in the decision making process.

As you know in Djibouti we have a lot of young people, they represent almost 70% of the population and it is really important to see them playing a role in key decision making processes. We are also really happy to involve the women who have an important role to play in Djibouti.

The opposition is also becoming part of the parliament and the constitutional court has delivered the results; so maybe next week we will see the newly elected parliament starting work.

And of course we know very well the situation in Ethiopia and we are working at a political level to help our brothers and sisters as we are in the same boat. If something happens in Ethiopia, it also happens to Djibouti and if something happens in Djibouti it automatically happens to Ethiopia, so we hope to see the people in Ethiopia find a solution very soon and we appeal to the Ethiopian citizens to settle everything peacefully. This is really imperative for the Ethiopian people, for our region and for Africa as Ethiopia is the capital of Africa. It is indeed very important to see political decisions coming from Ethiopia, I know people are working very hard; the EPRDF is working together, so we will see maybe just after this week, something coming.

Capital: You have spoken in support of the Ethiopian Government’s recent State of emergency decree despite others, western allies opposing it. Why is that?

Idriss Farah: Because we know Ethiopia very well, more than other people. The first and most important thing for the country now is security. So with the state of emergency it will be very important to stabilize the country and of course when the new PM is elected and the new cabinet comes, it will be up to Ethiopia to remove the state of emergency. But at that crucial time it was really important to stabilize the country; and we know the mind-set in Ethiopia, we know the outlook because we have the same outlook and we understand of course this decision. The western world and others that are saying otherwise is a dangerous course.

Capital: They say that it stifles the democratic process and people will not be able to freely express their disagreement or dissatisfaction.

Idriss Farah: The West is always talking about democracy; but before democracy we need peace in Africa and democracy has to come after peace. Democracy is really important but I think the first very important thing is peace in the country and this state of emergency decree is part of the peace process.

Capital: Djibouti’s government has recently cut ties with DP World; before that, you have been asking to review your contract with DP World since 2012. What were the points of contention? Why did you want to revise the contract? ambassador-mohamed-idriss-1

Idriss Farah: Since 2012, we have tried to find a solution with DPWorld, that we considered then to be a reliable partner and to whom we entrusted Doraleh’s port management; but what people don’t know, is that DP World has only 33% of the shares; Djibouti owns 67%, which is the major part of the investment, representing something like USD 400 million. In fact that USD 400 million guarantee was made by Djibouti; DP world’s investment is not as important as some people say. So we trusted a partner that we considered serious and reliable, we signed this agreement that was actually completely unbalanced. Unbalanced in the management; as we were a minority in the board of directors, and we could not make decisions, whatever the nature of the decision was, without the agreement of the UAE and DP World when the majority of the shares were held by Djiboutians.

For instance, it was impossible to build other ports, which is something that was absolutely necessary for the development of the Djiboutian corridor and hub. We asked our partners to re-examine the question and rebalance the board of directors since 2012. Recently, on January 28th, the board of directors meeting was held in Dubai. The Djiboutian delegation was led by the Minister of Transport and the UAE’s by the CEO of DP World. During this meeting, we informed the Emiratis that we wanted them to continue working with us; at no time did we want them to leave and offer their shares to others; we wanted to work with them, progress with them and that, not only for the good of Djibouti, but also for Ethiopia and all the region. At the meeting they informed us that they were ready to sell their shares.

Djibouti, which has an automatic right, as a partner, offered to buy their shares but they refused stating that Djibouti had no first hand right to benefit from such an offer and that they would sell their shares to whomever they saw fit. Yet, any first year law student knows that there is the right of priority to partners before selling to somebody else. So given their unwillingness and their behaviour, and most of all, given the strategic vision of the country for it to become a hub, and for sovereignty reasons we decided to get the management back, based on our law of November 8, 2017.  Of course it is not a nationalisation, but simply a repossession of the management, with, of course, the possibility, at any given time, to pay back the equivalent of 33% of indemnities to our former partner DP World. Djibouti does not take what is not its own and we are now waiting for the reaction and the will of DP World to come and collect what is due to them.
This is the reason why we have taken back the management of the port, and of course we can now build what we want, which is exactly what we are doing with DMP (Doraleh Multipurpose Port) and Tadjourah. Can you imagine that Tadjourah port, that is supposed to link with Mekelle, Tigray region, was not going to be permitted to be constructed by the Emiratis, but we have done it because it is of the interest of both our countries.
We have seen through DP World’s strategy, after some thought, and realised that taking shares in Djibouti’s ports enabled them to penalize us and instead benefit Jebel Ali’s port. This first phase port has 1.6 million TEU capacity even though we never went above 900,000 TEU and they were telling partners like PIL or CGMA, a French company, that it was impossible to unload in Djibouti as the port was saturated, and that they should go to Jebel Ali. The strategy was to asphyxiate us; they did the same in Yemen, they were thrown out, they did the same in Saudi Arabia, they also left Saudi Arabia, and this is what we are doing now too. We want to develop our port, we want to increase the capacity from 3 to 10 million containers and be the main port of Africa, this is Djibouti’s objective, and this is something they do not want. The port of Djibouti has a better location than Jebel Ali and they know that, it had been their strategy all along when we thought it was their will to help a fellow brother Arab, Muslim country, but it was not the case.

Capital: Previously the dispute was taken to London’s court where you presented your case and Djibouti lost as the court ruled in favour of DP World; how come?

Idriss Farah: That case was different, what we challenged at that time was the intermediate Abdourahman Boreh, who was the then president of the Port’s authority and also  had stakes in DP World. This is what we disputed; the court of justice in Britain only observed the commercial law and decided that we were wrong. That was a different issue; now we are talking about a management issue; we are talking about making a partner leave, because of our laws. This is a matter of sovereignty of a country, so it is not debatable. And of course what is due to DP World will be paid, but the most important thing is that there will be no impact between the departure of DP World and the new Djiboutian company that is taking over and operates 100% under the Djiboutian law and serves our clients, the most important one, Ethiopia.

Capital: How did the period of transition between DP World and the new management company under Djibouti Port Authority affect the port activity; if at all?

Idriss Farah: The same day the contract was suspended, this new company took over and the new leading team was working within the hour. By the way DP World was represented in Djibouti by four management staff only; all the remaining port activity was managed by Djiboutians. So there was no impact, on the contrary the activities have increased, which is rather a good thing on that side for Ethiopia. I want to reassure Ethiopian clients here who work on the corridor that the impact will only be positive.

Capital: Speaking of compensation to DP World, (whose contract was for 30 years) what kind of indemnities is Djibouti planning on giving them?

Idriss Farah: It is for the lawyers to decide. We know what DP World has invested at first, it is written, and they know what we have invested as well; the 400 million dollars that I mentioned earlier, whose guarantee was given by the Djiboutian state, has already been paid back a few years ago anyway. So we know the numbers, and on the basis of the indemnities, the lawyers on both sides will work together and surely find a solution.

Capital: While discussing selling DP World’s share, not to Djibouti but to other companies, did you deliberate on the amount?

Idriss Farah: Unfortunately no, because they knew they did not want to sell to us, the strategy was that. We were ready to discuss it with them, even set up a committee of lawyers to determine the amount, but it was all biased as they did not want to go towards that direction.

Capital: What’s the share of DCT (Doraleh Container Terminal) in terms of Port service handling in relation to all the Ports in Djibouti?

Idriss Farah: DCT represents yearly something like 900,000 containers now. Djibouti’s port, as you know, works only on bulk merchandise, and DMP the new multipurpose port is getting ready to be the port that takes over Djibouti’s port. Djibouti’s port will be transformed into something different. So in terms of capacity of service with the capability to double in this first phase and with the Singapore company PIL, that already signed up to transit 300,000 containers per year, we will already go up to 1.2 million containers and others are also willing to work with us.

Capital: So the recent contract signed with the Singapore based Pacific International Lines (PIL) is in terms of service, meaning they will transit 300,000 containers via Djibouti?

Idriss Farah: Yes it’s on the use of the port to transit up to 300,000 containers per year. DP World had actually told PIL at the time that Djibouti’s port was saturated and they need to transit through Jebel Ali. It is a waste of time for them, as we are talking about business here, to go to Jebel Ali and back is not necessary or useful. So now they have decided to transit through Djibouti, and now that the port will have a normal rhythm, it will be a direct competition between Djibouti and Jebel Ali; and this is what DP World always tried to avoid.

Capital: Now that DCT is fully managed by the Djibouti government will the port handling tariff be reduced like it has occurred with other ports?

Idriss Farah: Of course, because the decision of 50% decrease was not made by DP World but by the Djiboutian government, now a Djiboutian state owned company has taken over so there is nothing to worry about on that matter as it is a sovereign decision that will be enforced for all users and clients of the port.

Capital: The new railway line from central Ethiopia to Ports in Djibouti began operating a couple of months ago. Do you think it is an advantage for Djibouti’s port and that this is what makes Djibouti ports ideal for Ethiopia as opposed to other ports in the region?

Idriss Farah: Yes of course. First of all Djibouti’s port has a lot of advantages compared to other ports in the region; the first one is the distance between the port and Ethiopia, whether it is Mojo, Galafi, Dire Dawa or Addis Ababa, compared to others, I am referring to the port of Kenya that is under construction and the one in Berbera, on which there now have been agreements. Second it is more secured, safety and security have not been fully reached on the other ports of the region. Third, the railway is indeed a crucial element as on the one hand it helps connect the people, and on the other hand to the port of Djibouti. The railway goes from Addis Ababa to the sea; there is no other sea access in the other mentioned new ports of the region; so that is an advantage.
The other element is the fact that Djibouti and Ethiopia have worked hand in hand for centuries, we know each other, we know the Ethiopian administration and Ethiopians know the Djiboutian administration, so the work methods are there on all aspects which is really an advantage Djibouti’s ports have. Also the modernity of the ports of Djibouti which have nothing to do with the new ports currently under construction elsewhere; and as we are in the meantime continuously modernizing we will always be a step ahead.
Another most important thing is the relationship between Ethiopia and Djibouti that are extraordinarily good and have been since a long time. So I have no worries on that matter and the fact that there are other ports in the region is a good thing for our eastern African populations. It is a good thing that Berbera and Kenya are developing a port. In comparison to Western Africa, there are just a few ports and Djibouti cannot absorb by itself the millions of containers yearly; so it is a good thing we can be active all together between Djibouti, Berbera and Lamu. I don’t see an unhealthy competition, on the contrary.

Capital: What do you think about the current purchase agreement of Ethiopia to buy a stake at Berbera port? Berbera would be another Port destination for Ethiopia; do you think that is a threat for Djibouti? What about DP World handling the Port services in Berbera; would that be a threat?

Idriss Farah: No, Djibouti and Ethiopia have known each other for a long time. We have had good and bad times but this element cannot disturb the relationships that are multiple, as there is not only this aspect in the relationship between our two countries. We are working together on numerous matters, just to name one, peace and security. We fight together, we die together on the field, so even if tomorrow a new leader came, one cannot make things go back because our relationship is tight; so there is nothing to be worried about.

Ethiopia is a sovereign country to sign any agreement and we recognize that it is normal, as we ourselves are sovereign, what surprised us was the timing of the decision, when we suspended our relations with DP world, Ethiopia signed an agreement with them then, but we are by no means bothered by the decision. Ethiopia is, once again, sovereign and this will not disturb our relations. The negotiations were also started more than two years ago and we know that.

Capital: Ethiopia represents 90% of the traffic of Djibouti’s port’s services, so if there is an agreement with other ports that will mean that a certain percentage of this business will be handled elsewhere; and at the same time Djibouti is currently building three new ports. Won’t that affect the development of these ports?

Idriss Farah: No, you know it all depends on the angle that it is taken. What we want, outside of Ethiopia who is our main partner, is to develop Djibouti ports transhipment service, trying to deliver to all the countries of the region. So if we have this strategy and we do, we are not bothered by the fact that there are other competing ports like I was saying earlier, it will enable those countries to make a living out of their activities which is something normal, and besides our aim is higher than that, the transhipment ports are what we are working on, of course, giving priority to Ethiopia.

Capital: The fact that DP world is developing itself there is not bothering you?
Idriss Farah: It is an additional competition, unhealthy from their side but not from the Ethiopian or Somaliland side and we know it.
Capital: What is the status of the three new ambitious port constructions launched recently?

Idriss Farah: They are under construction. There is the one at Damerjog for livestock export, another port at Lac Assal, Goubet for mineral export, and Tadjourah that is ready and operational. We are also working on a gas project coming from Ethiopia to export abroad through Damerjog. I think that within the next two years, they will all be ready.
The more important project is the 48 hectares of free-zone construction that is being finalized, being built very fast by a Chinese company that will enable Chinese businesses to bring their plants to Africa. That is something that will enable our youth, Ethiopia’s and Djibouti’s as well as the others from this region to find jobs; which is fundamentally crucial because when we are talking about integration and development we talk for our youth. So we hope to go fast and complete these 48 Hectares of free zone construction by next year.

Capital: Speaking of the Chinese, western countries, especially the Americans, seem anxious that you have broken your relations with DP world to offer the contracts to the Chinese, is this true?

Idriss Farah: No it has never been true, Djibouti has always been an open country, multicultural, we call it the country of gathering and exchanges; so on the contrary we are expecting the westerners  to come, Americans, Europeans; they are the ones who have been a bit skittish to come. This is the reason why DP World came in first but afterwards the Chinese also came. We are expecting them with our arms open and it is up to these countries to come to Djibouti and if they do, they will receive a warm welcome.

Capital: Will Djibouti be interested to sell shares in the new ports it is building to Ethiopia, if Ethiopia is interested to buy a stake?

Idriss Farah: The first primary country is of course Ethiopia in regards to our relationships, we always wanted Ethiopia to join us in the construction of the ports, unfortunately it didn’t happen until now, but now if we have to have a partner, we might as well have one we know well, so no door is closed to Ethiopia.

By Teguest Yilma


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