Djibouti has broken the UAE’s trust

The government of Djibouti has illegally seized control of the Doraleh Container Terminal, which was designed, built and operated by DP World for nearly a decade. It is a blatant breach of trust and cooperation, to say the least, and a crude tactic by the Djibouti government to renegotiate the contract. Or, may be, it wants to exploit a contest among countries that are eager to pay and gain a larger footprint in the east African nation. DP World is among the largest port operators globally, and had the first mover advantage to the region. It has inked several deals in the region, including the pact with the government of Djibouti, which was signed in 2006 to operate the port. DP World was duly granted a concession for 30 years, which is now being unfairly contested by the Djibouti government. The project has been quite a success and immensely benefitted Djibouti’s economy. The state-of-the-art terminal is the largest employer and the biggest source of revenue for the Djibouti government, and has been a port of entry into the land-locked and resource rich nations in East Africa. This partly explains the growing tussle to gain larger control of the platform.

Over the past few years, the east African region, particularly near the Horn of Africa, has gained geopolitical and commercial importance. It is now being seen as a strategic military outpost by various countries looking to expand their influence in the Red Sea and adjoining areas. China is building its first overseas base in Doraleh. The US reportedly has its largest African military base in Djibouti, and France has a large base. Geographically, the location has been a commercial success because of its proximity to busy seaborne trade lanes. However, the country remains impoverished and needs partnerships to develop further. DP World has been making significant investments but such breach of trust doesn’t bode well for its relations with the UAE and development that Djibouti aims for. Such flagrant violation of international agreements would also discourage serious players from making investments in the country. The latest row has set a bad precedent.