Djibouti, with its population of just under one million, holds a crucial geopolitical position at the entrance of the Red Sea, near the Bab-el-Mandeb Strait, connecting the Red Sea to the Gulf of Aden and the Indian Ocean. This location plays a pivotal role in global trade, facilitating nearly 10% of world commerce. Its proximity to key maritime routes has made it central to China’s Belt and Road Initiative (BRI), leading to significant investments in infrastructure and the country’s economy.
However, Djibouti faces a mounting debt crisis, with more than 70% of its public debt owed to China. The country’s reliance on Chinese loans has resulted in economic dependency, raising concerns about the erosion of its sovereignty. Djibouti’s limited natural resources and revenue sources have forced it to turn to external creditors, most notably China, to fund large-scale infrastructure projects such as the Addis Ababa-Djibouti Railway and the Doraleh Multipurpose Port.
China’s investments in Djibouti are not only aimed at enhancing trade routes but also securing strategic assets like the Doraleh port, which was leased to China in 2018. These projects are aligned with China’s broader economic and military objectives in the region, particularly its growing presence in the Horn of Africa. The Chinese military base in Djibouti, which supports Beijing’s foreign policy, has further complicated the country’s political landscape, as it now finds itself balancing the interests of both Eastern and Western powers.
As Djibouti’s external debt soars, the government continues to borrow more to service its loans, pushing its debt-to-GDP ratio to approximately 76% by 2023. Critics argue that China’s loan practices, including opaque terms and high-interest rates, have exacerbated the country’s debt cycle. In extreme cases, failure to repay loans could result in Djibouti losing control over its critical assets.
Djibouti also hosts multiple foreign military bases, including those of the U.S., France, and Japan. While these bases bring economic benefits through revenue and employment, they also pose a risk to the country’s sovereignty, as Djibouti must carefully manage its relations with these powers to avoid becoming a point of contention in global geopolitical rivalries.
Looking ahead, Djibouti’s future depends on diversifying its sources of funding and reducing its reliance on China. Seeking support from institutions like the African Development Bank and the European Union could help create a more balanced development approach. The challenge lies in ensuring that foreign partnerships do not compromise Djibouti’s ability to maintain control over its own destiny while navigating the complexities of global geopolitics.