Developing ties with Ethiopia key to Djibouti's future prosperity

A good neighbour policy often makes for an appealing sound bite but in practice – as countries from Turkey to the US have found – it can prove extremely difficult. However, Djibouti has managed to develop a canny strategy towards its neighbours in order to ward off threats to its stability and ensure prosperity. Bordered by Ethiopia and Eritrea – two countries with a chequered history of conflict with each other – and Somalia, a failed state, this is no small feat for the nation. Djibouti is a key player regionally, acting as a gateway to the Horn of Africa through its 300-km coastline and port access.

Improving Regional Ties

Djibouti maintained neutrality during the Ethiopian-Eritrean conflict of the late 1990s, and the country has taken an active role in fostering greater cooperation in the region. The fact that Djibouti plays host to the headquarters of the eight-member Inter-Governmental Authority for Development is testament to this. The regional body, which includes Kenya, Sudan, South Sudan and Uganda, as well as the Horn of Africa countries, was established as a trade bloc with a focus on economic cooperation and food security in 1986. In more recent years, the body has taken a more pro-active stance in conflict resolution and peace and security issues.

These issues remain key to the success and prosperity of Djibouti, which relies on trade, logistics and services – all dependent on a stable environment – to generate growth and employment. Indeed, the country’s bilateral relationships can also be viewed through this prism. This is clearest with regards to its relationship with Ethiopia. Djibouti has leveraged its friendly ties with its western neighbour and the export potential that its ports offer to landlocked Ethiopia to drive its own development agenda.

Pipelines & Power

However, Djibouti also benefits from its larger neighbour. In 2013, ministers from the two countries signed an agreement to construct a pipeline supplying drinking water from Ethiopia to Djibouti. Given the levels of water scarcity in Djibouti, this infrastructure will become a key long-term strategic asset and support the development agenda in the country. The pipeline is set to deliver water all the way to Djibouti city and will have the capacity to carry as much as 100,000 cu metres of water per day.

In 2011 interconnection between the power networks of Djibouti and Ethiopia was completed. Sponsored by the African Development Bank, the $95m project entailed the installation of a 283-km, 230-KV transmission line, which allows Djibouti to import 60 MW of electricity from its neighbour.

Transport Link

Moreover, while Ethiopia is looking at other avenues for import and export, including Sudan, the role of Djibouti is unlikely to be diminished anytime soon. The new 756-km rail line between Addis Ababa, the Ethiopian capital, and the Djiboutian coast is testament to this. Set for completion in 2016, the first freight train began transporting wheat on the route in November 2015. A new 550-km fuel pipeline between the two countries will also help to cement the bilateral relationship. The $1.55bn project will allow Ethiopia to import diesel, gasoline and jet fuel through the 240,000-barrel-per-day duct.

Bilateral relations with Ethiopia remain crucial for Djibouti’s development, though the government is not focusing exclusively on its larger neighbour. Djibouti hopes to make this relationship a model for its interactions with other countries in the region; it hopes the cross-border infrastructure is just the start. In June 2015, Aboubaker Omar Hadi, chairman of Djibouti Ports and Free Zones Authority, told local press, “We are already the gateway to Ethiopia. We intend to continue this railway line to South Sudan, the Central African Republic and Cameroon to connect the Red Sea to the Atlantic Ocean.”