In deep water: Djibouti risks dependence on Chinese largesse


China is remaking one of Africa’s tiniest countries with billions of dollars in loans

DJIBOUTI was the last of Europe’s African colonies. France clung to this sliver of Red Sea coast until 1977; even today it occasionally resembles occupied territory. In the black lava desert stands a hilltop garrison of the Foreign Legion. French tanks trundle along the narrow road to Ethiopia. This whiff of colonialism helps explain why many Djiboutians fret about their independence.

China is the country’s biggest investor. It plans to remake Djibouti as a staging post on President Xi Jinping’s flagship Belt and Road Initiative. In the past two years Beijing has lent Djibouti some $1.4bn, more than 75% of its GDP. In 2015 the country was Africa’s fifth-biggest recipient of Chinese credit, despite having barely 1m citizens, one of the continent’s smallest populations.

Djibouti’s experience shows how Chinese cash can transform even the smallest country. “None of this would have been possible without China,” says Mahamoud Ali Youssouf, the foreign minister. He sniffs at warnings, most recently from Rex Tillerson, a former American secretary of state, that Chinese deals could undermine sovereignty.

At the end of 2016 China owned 82% of Djibouti’s external debt. The Chinese ambassador to Djibouti has told diplomats privately that China expects to be repaid in cash or in kind. Many see the experience of Sri Lanka, whose indebted government last year handed over one of its ports to China, as a troubling precedent, though Ilyas Moussa Dawaleh, the finance minister, insists that a debt-for-equity swap of this kind would not apply to Djibouti. “Our sovereignty is non-negotiable,” he says.

But some fret that the dependency of an earlier era has been replaced by a more subtle kind. “We would really like to have more than one big partner,” admits Mr Youssouf. Rents from ports and military bases have helped keep President Ismael Omar Guelleh in power for almost 20 years. Opponents say Chinese largesse has further cemented his position. “It’s a relationship with the regime,” says Daher Ahmed Farah, an opposition leader. “Not the country.”

This article appeared in the Middle East and Africa section of the print edition under the headline”The risk of relying on Chinese cash”


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