The scramble for Djibouti
20/8/18 14:44![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
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talkpoliticsWe all know how the Economic Hit Man scenario works. We have talked about this many times here. We have also mentioned that the US has brought this art to perfection, although it may not be a US invention.
Well, meet Djibouti, a tiny African country at the edge of the Horn of Africa, and located at a key position in the straits between Africa and the Gulf states. Djibouti is now having some difficulties, actually similar ones to Sri Lanka, a country located 4000 km away. The problem is, they have borrowed more money from China than they could pay back. Sound familiar?
The similarity is that in both cases the local government has invested borrowed money in infrastructure projects under the New Silk Road initiative. Sri Lanka took 8 billion dollars from Chinese banks at a 7% interest rate, and they have had difficulties paying it back ever since. Once they realised that most of their national revenue was going for only serving the interest, Sri Lanka were compelled to give 70% of the property of the newly built Hambantota port to China. It's starting to sound very, very familiar at this point, I'm sure.
Well, Djibouti's debt is 88% of the country's GDP, which is 1,72 billion dollars. And this could force the country to give up some key assets to China.
Since Xi Jinping keeps giving huge loans to developing countries, an increasing number of voices are expressing concern about the fate of smaller countries who take a bite too big to chew, as well as the strategic opportunities that this is opening for China geostrategically.
The New Silk Road initiative, whose aim, as it is claimed, is to revive and expand the ancient trade Silk Road route (both by land and sea), has become the core of China's new geopolitical strategy. It is the thing that is most frequently discussed in China. In reality, many of these projects are still frozen at the planning stage, their cost still unclear.
What's more important, many of the affected countries are lured by the promise of huge infrastructure projects, even if those might undermine their financial stability. 8 out of the 68 countries involved in the initiative are now facing dangerously high debt levels (including Pakistan and the Maldives).
Despite its obvious vulnerability, Djibouti does insist on working with China. Together with the same state company that took control of that port in Sri Lanka, China Merchants Ports Holdings Company, last year the country finished the port of Doraleh. And earlier this month the president Gelle described the 3.5 billion dollar facility as a ray of hope for thousands of people who are looking for jobs.
More importantly (for the US), apart from the port in Djibouti, China has also started building a military base, insisting that its sole purpose is logistical: to serve as a re-fueling point for their military ships taking part in humanitarian missions along the Yemeni and Somalian coasts. Right now, Djibouti hosts the only permanent US base in Africa, with 4000 troops. A number of US diplomats and generals have expressed concerns that China's new base would give them control over the Bab el-Mandeb strait, a key bottleneck that is crucial for world trade. 4% of the global oil trade passes from there every year.
Gen. Thomas Waldhauser, commander of the US base in Djibouti, has testified before the Defense Committee that the US are carefully monitoring the Chinese advance in the region. The tensions between the two superpowers have increased this year because of this new competition, each side complaining about the other. China is claiming their facility would only be a logistical hub in their fight against the Somali pirates, for humanitarian aid or for emergency evacuations. They say the testing of ammo at the base are a legitimate part of their fight against terrorism - which seems to be the new go-to story in excuse for anything these days.
Naturally, the US military intelligence has come up with satellite images of the Chinese base, claiming to reveal quite a different function of the base, A retired Indian general said last year that there are at least a dozen facilities on those 200 acres of land, describing it more like a fortress that could host thousands of troops.
Nowhere in the world is the US military located in such proximity to the presence of a strategic competitor like this, and the main concern here is that Djibouti, now ensnared in the trap of an ever increasing debt and the growing dependence on China that comes with it, would be pressured to strip the US of its control in the region, and handle it to America's rival, China.
In a letter to Congress, John Bolton wrote in May that president Gelle seems prepared to sell his country off to China and turn his back to the US. Now Djibouti is among those countries who are in great debt risk, and this is a threat to the US geopolitical interests too. What the US should do to counter this threat is to first institutionalise the meeting of the African leaders with the US which happened back in 2014 (organised by president Obama), and then stimulate investment in the private sector in the region in order to provide viable competition to the state-sponsored investment from China. But with Trump's "America First" approach and his proneness to leave former allies to cope on their own, this seems very unlikely to happen. Which means that China's advance will probably remain unchecked for the time being.
Well, meet Djibouti, a tiny African country at the edge of the Horn of Africa, and located at a key position in the straits between Africa and the Gulf states. Djibouti is now having some difficulties, actually similar ones to Sri Lanka, a country located 4000 km away. The problem is, they have borrowed more money from China than they could pay back. Sound familiar?
The similarity is that in both cases the local government has invested borrowed money in infrastructure projects under the New Silk Road initiative. Sri Lanka took 8 billion dollars from Chinese banks at a 7% interest rate, and they have had difficulties paying it back ever since. Once they realised that most of their national revenue was going for only serving the interest, Sri Lanka were compelled to give 70% of the property of the newly built Hambantota port to China. It's starting to sound very, very familiar at this point, I'm sure.
Well, Djibouti's debt is 88% of the country's GDP, which is 1,72 billion dollars. And this could force the country to give up some key assets to China.
Since Xi Jinping keeps giving huge loans to developing countries, an increasing number of voices are expressing concern about the fate of smaller countries who take a bite too big to chew, as well as the strategic opportunities that this is opening for China geostrategically.
The New Silk Road initiative, whose aim, as it is claimed, is to revive and expand the ancient trade Silk Road route (both by land and sea), has become the core of China's new geopolitical strategy. It is the thing that is most frequently discussed in China. In reality, many of these projects are still frozen at the planning stage, their cost still unclear.
What's more important, many of the affected countries are lured by the promise of huge infrastructure projects, even if those might undermine their financial stability. 8 out of the 68 countries involved in the initiative are now facing dangerously high debt levels (including Pakistan and the Maldives).
Despite its obvious vulnerability, Djibouti does insist on working with China. Together with the same state company that took control of that port in Sri Lanka, China Merchants Ports Holdings Company, last year the country finished the port of Doraleh. And earlier this month the president Gelle described the 3.5 billion dollar facility as a ray of hope for thousands of people who are looking for jobs.
More importantly (for the US), apart from the port in Djibouti, China has also started building a military base, insisting that its sole purpose is logistical: to serve as a re-fueling point for their military ships taking part in humanitarian missions along the Yemeni and Somalian coasts. Right now, Djibouti hosts the only permanent US base in Africa, with 4000 troops. A number of US diplomats and generals have expressed concerns that China's new base would give them control over the Bab el-Mandeb strait, a key bottleneck that is crucial for world trade. 4% of the global oil trade passes from there every year.
Gen. Thomas Waldhauser, commander of the US base in Djibouti, has testified before the Defense Committee that the US are carefully monitoring the Chinese advance in the region. The tensions between the two superpowers have increased this year because of this new competition, each side complaining about the other. China is claiming their facility would only be a logistical hub in their fight against the Somali pirates, for humanitarian aid or for emergency evacuations. They say the testing of ammo at the base are a legitimate part of their fight against terrorism - which seems to be the new go-to story in excuse for anything these days.
Naturally, the US military intelligence has come up with satellite images of the Chinese base, claiming to reveal quite a different function of the base, A retired Indian general said last year that there are at least a dozen facilities on those 200 acres of land, describing it more like a fortress that could host thousands of troops.
Nowhere in the world is the US military located in such proximity to the presence of a strategic competitor like this, and the main concern here is that Djibouti, now ensnared in the trap of an ever increasing debt and the growing dependence on China that comes with it, would be pressured to strip the US of its control in the region, and handle it to America's rival, China.
In a letter to Congress, John Bolton wrote in May that president Gelle seems prepared to sell his country off to China and turn his back to the US. Now Djibouti is among those countries who are in great debt risk, and this is a threat to the US geopolitical interests too. What the US should do to counter this threat is to first institutionalise the meeting of the African leaders with the US which happened back in 2014 (organised by president Obama), and then stimulate investment in the private sector in the region in order to provide viable competition to the state-sponsored investment from China. But with Trump's "America First" approach and his proneness to leave former allies to cope on their own, this seems very unlikely to happen. Which means that China's advance will probably remain unchecked for the time being.
(no subject)
Date: 20/8/18 11:47 (UTC)(no subject)
Date: 20/8/18 13:22 (UTC)They voted for a wall and splendid isolationism. They will get what they voted for, just as we will too.
:(
(no subject)
Date: 20/8/18 14:37 (UTC)(no subject)
Date: 20/8/18 18:01 (UTC)(no subject)
Date: 21/8/18 08:29 (UTC)