Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: When I say Djibouti, what comes to your mind?
Speaker 3: A lot of us had to go online.
Speaker 4: Yeah, why that was yes?
Speaker 2: And what if I told you that the small country
Speaker 2: situated in the Horn of Africa plays a major role
Speaker 2: in the troubled area of the Red Sea.
Speaker 3: This is all Iran trying to cause troubles and trying
Speaker 3: to make its message that they're against what's happening in
Speaker 3: Israel without starting a full on war. They're letting its proxy,
Speaker 3: the Houthis and Yemen do it instead.
Speaker 2: Since the reigniting of tensions between Israel and Hamas at
Speaker 2: the end of twenty twenty three, Jibouti has played a
Speaker 2: strategic role in the international community's effort to resolve the
Speaker 2: conflict while also managing its consequences. But when you're in
Speaker 2: the eye of the cyclone, how do you maintain neutrality?
Speaker 2: That's what we'll discuss this week with our reporter Simon Marx.
Speaker 2: I'm Jennifer Zabasaja and this is the Next Africa Podcast,
Speaker 2: bringing you one story each week from the continent driving
Speaker 2: the future of global growth with the context only Bloomberg
Speaker 2: can provide. Simon thanks so much for being with us.
Speaker 2: So you're based in Kenya, but you just came back
Speaker 2: from a trip to Djibouti. I don't know many people
Speaker 2: who have actually been there. I myself have never visited
Speaker 2: the country. So can you just start by setting the
Speaker 2: scene for us and tell us what Jibouti is like
Speaker 2: On the ground.
Speaker 5: Djibouti is kind of a sleepy place.
Speaker 4: It's very hot, nestled right on the coast on the
Speaker 4: Red Sea, very picturesque in some ways, surrounded.
Speaker 5: By blucy etc.
Speaker 4: And yet as you go into the center, you're driving
Speaker 4: past a lot of embassies, you feel the presence of
Speaker 4: the international community. You have pretty slick roads, and you
Speaker 4: can see the ports. They have several ports. They actually
Speaker 4: have six different ports for this tiny little country. So
Speaker 4: you quickly get the sense that this place is playing
Speaker 4: a bit of an oversized role in a way.
Speaker 2: And what exactly do you mean by oversized role?
Speaker 4: Djibouti is this tiny little country on the tip of
Speaker 4: the Horn of Africa, which often isn't in the news.
Speaker 4: It goes very unnoticed, but it so happens to be
Speaker 4: really right at the cusp of this crisis unfolding on
Speaker 4: the Red Sea. It's literally kilometers away from where the
Speaker 4: Hooties are firing missiles at naval vessels, and it has
Speaker 4: a role to play in this crisis.
Speaker 2: These ship attacks by the Hoothiets have caused chaos.
Speaker 3: They started launching cruise drone.
Speaker 5: Missiles attacking shipping in the Red.
Speaker 1: Seat, and it's the latest in a continued at tax
Speaker 1: within the Red Seat that is one.
Speaker 5: Of the most important shipping lanes in the whole world.
Speaker 2: Clearly, Djibouti is playing an important role on a geopolitical level,
Speaker 2: and yet its coastline, as you mentioned in the story,
Speaker 2: is one of the most dangerous in the world.
Speaker 4: One of the key cornerstones of Djibouti's sort of rationale
Speaker 4: I guess, and also its discourse internationally, is the absolute
Speaker 4: need for stability. It's really dependent on it, and yet
Speaker 4: it is completely surrounded, as you mentioned, by instability.
Speaker 5: You know, recently you.
Speaker 4: Have the crisis because of Hooti attacks on ships, but
Speaker 4: even before that you had a lot of instability. To
Speaker 4: the south in Somemalia, Al Shabab are very active. There
Speaker 4: is a lot of smuggling in the area, be it
Speaker 4: of drugs, of counterfeit goods and also of people. There's
Speaker 4: a huge migration crisis that goes through Djibouti from countries
Speaker 4: like Eritrea and Ethiopia. And then you have Eritrea to
Speaker 4: the north, which does not have a good relationship with Djibouti.
Speaker 4: They have disagreements over territory over the border. So all
Speaker 4: in all, yeah, it's surrounded by forms of chaos.
Speaker 5: Hence this messaging from the.
Speaker 4: Government there that they are really you know, the one
Speaker 4: country the international community can depend on for bringing stability.
Speaker 2: Is the government aware of how strategic the country is
Speaker 2: to actually maintaining stability in the region.
Speaker 4: This is their selling point. This is something they literally
Speaker 4: sell through the form of granting land to foreign and militaries.
Speaker 4: There's five military bases, including French, the United States, the Japanese,
Speaker 4: the Italians, and the Chinese also, and the government are
Speaker 4: earning hundreds of millions of dollars every year from granting
Speaker 4: these bases. Really you can kind of see that their
Speaker 4: economy depends on it, right, they earn money from this
Speaker 4: and their ports again depends on this stability. You know,
Speaker 4: without stability, there are no naval vessels coming in and
Speaker 4: actually you can see them taking advantage of what's happening
Speaker 4: on the Red Sea as we speak, because major vessels
Speaker 4: coming from Asia going north towards the Suez Canal are
Speaker 4: doing what you call transhipment, which is basically unloading from
Speaker 4: big vessels and putting containers onto smaller vessels as a
Speaker 4: way of avoiding the risk of being hit by missiles.
Speaker 2: And Simon, was this happening prior to the Israel Hamas
Speaker 2: war or was this something that was really zeroed in
Speaker 2: on as this conflict has continued over the past few months.
Speaker 4: The transhipment business at the ports was something that was
Speaker 4: sparked in direct relation to the Hooti attacks. So whereas
Speaker 4: before a lot of larger vessels would simply bypass Djibouty
Speaker 4: and either just go straight up through the Suez Canal
Speaker 4: or they might stop at Jeddah in Saudi Arabia, they're
Speaker 4: now being forced to take a bit of a detour
Speaker 4: and come into the port in Djibouty where they unload
Speaker 4: onto these smaller vessels. I think the rationale there is
Speaker 4: that they're harder to attack just by the nature of
Speaker 4: their size, but also maybe the ownership structures of these
Speaker 4: vessels are different, you know, they might be linked two
Speaker 4: countries that aren't being honed in on by the who.
Speaker 5: He's in Yemen.
Speaker 4: So this is something the chairman of the port, when
Speaker 4: I spoke to him, he acknowledged, but he was also
Speaker 4: quite careful to say, you know, this is not a
Speaker 4: business plan that we want to see go on. You know,
Speaker 4: we'd rather sea stability on the Red Sea.
Speaker 2: Which is why Simon I found it so interesting in
Speaker 2: your story. The Jibusian government says they don't want to
Speaker 2: be brought into a war. They explicitly said that to you,
Speaker 2: But they're essentially in the middle of a war. I mean,
Speaker 2: how are they able to maintain this neutral objective position
Speaker 2: as they describe it to you.
Speaker 5: They're on a very tight tightrope here.
Speaker 4: You know, they're navigating something that's very sensitive, and through
Speaker 4: our reporting, you know, we found out that the onset
Speaker 4: of the war on Gaza, the Americans actually did ask
Speaker 4: the Jibusians if they could conduct more sort of offensive
Speaker 4: like operations out of their military base in and the
Speaker 4: Jibusians turned round to them and said, under no circumstances,
Speaker 4: you know, as you go ahead and do this, do
Speaker 4: not bring us into this war.
Speaker 5: They have been.
Speaker 4: Clear with their partners that they have to remain neutral.
Speaker 4: But on the other hand, you know, they have to
Speaker 4: sort of play ball a bit. So you've seen them
Speaker 4: invite European naval ships into their ports from Sweden, from Greece,
Speaker 4: from Germany. They're allowed to refuel, they're allowed to use
Speaker 4: port services, so they are willing to help as long
Speaker 4: as the work attempts to secure the Red Sea are
Speaker 4: of a defensive nature, basically.
Speaker 2: And do you think they're going to be able to
Speaker 2: walk this tightrope for much longer?
Speaker 4: You know, I think probably they will be able to
Speaker 4: because they have the biggest character play in that is
Speaker 4: their geographical location.
Speaker 5: And in the end, most people are willing to abide
Speaker 5: by Djibout's rules, so they kind of opened the door
Speaker 5: in some way to anyone, but within reason.
Speaker 2: After the break, we discuss how the latest events in
Speaker 2: the Red Sea are indirectly benefiting the economy of Djibouti.
Speaker 2: We'll be right back, Welcome back, Simon. Earlier we talked
Speaker 2: about the strategic asset Jibouti plays globally, but for the country,
Speaker 2: the current geopolitical position actually represents to a certain extent
Speaker 2: and economic opportunity for them. Can you just describe that for.
Speaker 4: US, revenues at the poor supposedly this year are going
Speaker 4: to go up quite a lot, you know, thirty forty
Speaker 4: percent as a result of this trendshipment business.
Speaker 5: But you know, the Jibutis are quite keen to sort.
Speaker 4: Of pain give another message whereby if there was stability
Speaker 4: in Somalia and if Ethiopian economy stabilized and there was
Speaker 4: less violence in Ethiopia, that would provide huge markets in
Speaker 4: East Africa. You know, there's one hundred and ten hundred
Speaker 4: and twenty million people in Ethiopia, and so if this
Speaker 4: economy can grow, that would mean so much more business
Speaker 4: Forgibiuty miles more than what you're getting from a bit
Speaker 4: of transhipment off the Red Sea. So they're quite acutely
Speaker 4: aware that, yes, there's a short term benefit, but on
Speaker 4: the other hand, this market of East Africa is so
Speaker 4: much bigger if they, you know, can just stabilize a bit.
Speaker 2: I wonder does the rest of the region see it
Speaker 2: that way?
Speaker 5: Definitely.
Speaker 4: Ethiopia, for example, have recently made moves to have port access,
Speaker 4: have access to the coast via Somaliland, which is a
Speaker 4: breakaway state of Somalia.
Speaker 5: That's caused a.
Speaker 1: Lot of apro Ethiopia sign a deal with Somaliland to
Speaker 1: gain access to the Red Sea. But the deal by
Speaker 1: landlocked Ethiopia risks heightening tensions in a region it's already
Speaker 1: racked by conflict.
Speaker 6: The US, EU and African Union are calling on Ethiopia
Speaker 6: and Somalia to de escalate tensions.
Speaker 4: The State of Somalia doesn't see this as legitimates.
Speaker 6: They're not happy because they still consider Somali land a
Speaker 6: part of their sovereign territory and their timing the agreement
Speaker 6: is an act of aggression against their sovereign and territorial integrity.
Speaker 4: So all eyes are on the Red Sea. It's a
Speaker 4: hugely coveted area. You have Russia making moves with their
Speaker 4: Atrayer at the moment to get access to the port's
Speaker 4: system there and perhaps a naval base.
Speaker 5: So yeah, it's fair to say that Jibouti's coastline is
Speaker 5: very highly coveted.
Speaker 4: They've also tried to bring on board the Sudanese port
Speaker 4: Sudan to have a concession. The Emiratis have wired a
Speaker 4: port in Somaliland already and were a number of years
Speaker 4: ago kicked out of Djibouti and replaced by the Chinese.
Speaker 4: In general, actually this coastline is quite undeveloped. You know,
Speaker 4: there's not a huge amount of infrastructure, and yet there's
Speaker 4: these huge populations which are developing quickly and so widely speaking,
Speaker 4: from the United Emirates to the Chinese to the Russians,
Speaker 4: a lot of people are looking to sort of get
Speaker 4: a piece of.
Speaker 2: This Pae and simon for the population in the country.
Speaker 2: Is this actually translating on the ground.
Speaker 4: Yeah, I think this is perhaps could we say, you know,
Speaker 4: the biggest black mark against the Jubutian government, there isn't
Speaker 4: a huge amount of what you would call, I guess
Speaker 4: trickle down, you know, from the successes they've had through
Speaker 4: their ports, through their sort of role as an international
Speaker 4: mediator to the general or public. You know, a lot
Speaker 4: of the population is still very poor. You know, World
Speaker 4: Bank figures show extreme poverty up to about one and four.
Speaker 4: So there's a massive job of integrating the population into
Speaker 4: the workforce, creating jobs from these success projects, and that
Speaker 4: again boils down to government policies and education on training,
Speaker 4: and you know, they say they are trying to diversify
Speaker 4: the economy into other sectors. Green energy is one, logistics
Speaker 4: is another. They have a large dry port which on
Speaker 4: paper could generate quite a few jobs.
Speaker 2: Thank you so much, Simon Marx joining us there from Nairobi.
Speaker 2: Look Perhaps unlike any of the other fifty three countries
Speaker 2: on the African continent, Djibouti as an international asset is
Speaker 2: evident in its location, investment, and allies. But the future
Speaker 2: success of the small East African country and maybe even
Speaker 2: those around it, may just depend on its ability to
Speaker 2: keep the surrounding chaos at bay. You can read more
Speaker 2: about this story at Bloomberg dot com, and don't forget
Speaker 2: to follow and review this show wherever you usually get
Speaker 2: your podcast. I'm Jennifer Zabasaja. Thank you so much for listening.