Table of Contents
CHINA’S 1 ST PERMANENT MILITARY PRESENCE BEYOND ITS BORDERS
- In 2017, China established a naval base in Djibouti.
- The two countries also agreed to establish a strategic partnership to strengthen all-round cooperation in the same year, ushering in a new era in China-Djibouti relations.
CHINA 1ST PERMANENT MILITARY PRESENCE BEYOND ITS BORDERS
- Sino-Djibouti strategic partnership is much more than establishing a naval base.
CHINA’S AMBITION: MORE THAN NAVAL BASE
- First, Djibouti’s strategic location is the most critical asset for Chinese economic interests, being located at the crossroads of one of the busiest shipping lanes in the world.
- Beijing’s trade with the European Union: Over $1 billion a day, passes through the Gulf of Aden
- Oil Imports: 40 percent of China’s total oil imports pass through the Indian Ocean.
- Djibouti controls access to both the Red Sea and the Indian Ocean, and links Europe, the Asia-Pacific, the Horn of Africa, and the Persian Gulf.
- Its geographical location at the mouth of the Red Sea mouth makes Djibouti an ideal transshipment hub for cargo in and out of the MENA (Middle East and North Africa region) region
- It offers long-term growth potential as the economic momentum in the proximity intensifies over time.
2 ND REASON: BRI
- Since the launch of the Belt and Road Initiative(BRI) in 2013, Djibouti is a critical logistic and trading hub in Beijing’s new Silk Road strategy.
- Separately, a $3.4 billion railway line running from Addis Ababa in Ethiopia to Djibouti City plays an important part in maximizing Djibouti’s strategic position within the BRI framework.
ANOTHER REASON: DEBT TRAP
- A Chinese company agreed to finance Djibouti port’s revamp, one of the many development projects involving Chinese companies.
- China Merchants Group, China’s biggest port operator, signed a $350 million investment deal with the stateowned company Great Horn Investment Holding to turn the Port of Djibouti into an international business hub.
- For the Chinese company, which owns a 23.5 percent stake in the Port of Djibouti.
- This venture offers opportunities and economic benefits in developing, operating, and managing the redevelopment project, given Djibouti’s prime location, stable geopolitical environment, and the largest deep-water port in East Africa
BIG PICTURE
- U.S. officials have raised concerns that Djibouti’s infrastructure projects, financed by Chinese banks, are causing the tiny East African nation to fall into a debt trap that will allow China to reinforce its influence on the continent.
- Djibouti’s debt to China has reportedly increased to more than 70 percent of its gross domestic product (GDP).
WHAT IS DEBT TRAP DIPLOMACY?
- Debt Trap Diplomacy is used by China to lure strategically located developing nations to borrow infrastructural loans.
- If these nations fail to repay the loans on time, China pressurizes them to support its geostrategic interests.
- Example: After indebting Africa, China will occupy Kenya’s immensely profitable Mombasa port.
CONCERN FOR INDIA
- Increasing China’s presence in Indian Ocean is a worry for India’s vision of Secure and peaceful Indian Ocean region
- India has a competitive and cooperative relationship in many countries of Africa and South East Asia which might get affected due to Chinese presence.
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