How ‘Blood and Bones’ in Ethiopia Could Upend Neighboring Djibouti

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The civil conflict between Abiy Ahmed’s central government in Ethiopia and the Tigray People’s Liberation Front (TPLF) is taking a dangerous turn, with the former ruling party’s forces approaching Addis Ababa amid fears a TPLF takeover would drive the entire country into civil war. The African Union is calling for an immediate ceasefire, with Kenyan president Uhuru Kenyatta traveling to Addis Ababa this past Sunday to meet with Abiy and with Ethiopian president Sahle-Work Zewde.

The situation in Ethiopia already represents a humanitarian crisis, with thousands dead, millions displaced, and the UN accusing all sides of war crimes in the year-long conflict. If Abiy’s government collapses, however, the nationwide breakdown would not only have catastrophic consequences for the multiethnic East African giant, but also for its neighbors – perhaps none more so than Djibouti, which handles 95% of landlocked Ethiopia’s maritime trade.

Indeed, Djibouti’s President Ismail Omar Guelleh seems to have pinned the whole of Djibouti’s economic future on his country’s role as the gateway to Ethiopia, attracting substantial Chinese investment to build infrastructure and alienating existing partners in the process. With Ethiopia already looking to diversify its trade routes away from Djibouti, Guelleh is likely to face significant challenges in the years ahead – even in the unlikely event that the current conflict resolves itself without further bloodshed.

Civil war on the horizon?

The TPLF ruled Ethiopia with an iron fist for decades until they were ousted by Abiy in 2018. Last November, simmering tensions between the two parties came to the boil after Abiy accused Tigrayan forces of attacking an army base and launched a retaliatory military campaign against the northern province. In the ensuing year, 400,000 people have been pushed to the brink of famine and an estimated 2.5 million have fled their homes. According to the UN, crimes against humanity have been perpetrated on all sides, but Ethiopian government forces and their Eritrean allies have been primarily to blame.

With the TPLF recording major victories over the past few weeks, Abiy declared a national state of emergency and took to social media to call on citizens of the capital to take up arms and defend their homes against the rebels. Although his post was later censored by Facebook, Abiy doubled down on that stance in a televised speech, citing the need for everyday Ethiopians to bury their enemies with their own “blood and bones”. Despite threats of economic sanctions from the US, Abiy (who won the Nobel Peace Prize just two years ago for reaching an peace accord with Eritrea) did not put forward initial terms for ceasefire talks until late last week.

Guelleh hitched Djibouti’s horse to Ethiopia’s fate

The fighting has serious repercussions for neighboring Eritrea, Sudan, and particularly the fragile Ethiopian-backed government of Somalia, but it could ultimately be Djibouti which suffers most. The tiny nation relies on the services sector for 85% of its GDP, with the same percentage of its port activities revolving around Ethiopian trade. Indeed, Guelleh has hitched his horse so firmly to Ethiopia and to China (which is heavily invested in the Horn of Africa’s largest economy) that he has shunned other partners in favor of attracting Chinese capital to fund infrastructural projects tying the country further to Addis Ababa.

In 2018, for example, the Djiboutian government tore up an agreement with shipping giants DP World, unilaterally appropriating control of the Doraleh Container Terminal (DCT) and handing a sizable stake in the venture to China Merchants Holding (CMH). DP World appealed to international courts of arbitration and received favorable verdicts several times, with the most recent ruling from the London Court of International Arbitration (LCIA) finding the Djiboutian port authority in breach of its contract.

Nonetheless, Djibouti has refused to recognize the validity of the court or pay a cent of the hundreds of millions of dollars it owes DP World in damages, including $210.2 million the company claims the Djiboutian government owes it for revenue and management fees lost between 2018 and March of this year.

Other ports imperil Djiboutian prosperity

Guelleh’s approach to that dispute has not only alienated international investors but has also driven interest towards alternative ports in the region. Berbera Port in Somaliland, for example, recently expanded its container capacity from 150,000 twenty-foot equivalent units (TEUs) to some 500,000 TEUs and plans to push that number above two million; even the UK’s government-owned CDC development finance group is now investing in Berbera alongside DP World. The rise of Berbera and other promising port options for Addis Ababa in Eritrea, Kenya, and Sudan have left Djibouti’s stranglehold on Ethiopian trade in deep trouble, irrespective of the course of its neighbors’ internal conflict.

Guelleh’s decision to cozy up to Beijing has also angered Washington, with the US warning Djibouti the tiny nation could fall into a debt trap that lets China further expand its influence and military footprint in East Africa. The Chinese, for their part, are watching events in Ethiopia closely, and given that Beijing already controls over 70% of Djiboutian debt, the Chinese government is unlikely to continue bankrolling Guelleh’s government if the Ethiopian market faces prolonged upheaval.

While the Tigray conflict is the most pressing of Guelleh’s problems and represents a clear and present danger to the $1.5-2 billion his government receives from Ethiopian port fees annually, Djibouti’s economic model is still being exposed as unsustainable even if Abiy and the TPLF do manage to come to a negotiated settlement.

Image: Gift Habeshaw/Unsplash