China mulling a Plan B without Djibouti

Chinese operators exasperated by demands for compensation from the Djiboutian authorities.

Less than silky relations between Beijing and Ismail Omar Guelleh (IOG)

Djib bases

January 19, 2018 – Even as the Chinese foreign minister Wang Yi continues on his tour of the African staging posts along the ‘new silk roads’, which began on 13 January, relations between Beijing and Djibouti, China’s port of entry to the continent, are deteriorating rapidly. An investigation into the unravelling of a strategic alliance.

Unwelcome pressures

According to information obtained by the Indian Ocean Newsletter, Chinese operators in Djibouti are fed up with the political and administrative free-for-all of President Ismail Omar Guelleh’s regime and exasperated by demands for ‘compensation’ from the Djiboutian authorities. Chinese representatives are being subjected to especially strong pressure from the minister of energy Yonis Ali Guedi, who is trying to force the 12-hectare Chinese barracks located in Djibouti city to purchase its fuel through the Societe internationale des hydrocarbures de Djibouti (SIHD), a company run by Dabar Adaweh Ladieh from the minister’s Issa/Ourweineh sub-clan, or failing that via the French firm Rubis Energie, which also has very close ties with the minister. Fed up with this pressure, the Chinese military in the end opted for United Capital Investments Group (UCIG), which already supplies the American Camp Lemonnier. But they are continuing to unload their own tankers so that no one can keep track of how much fuel they consume.

Beijing deprived of its monopoly

Quite apart from these pressures, what has most exasperated the Chinese is President Ismail Omar Guelleh’s failure to honour his promise to grant them a monopoly on the country’s free trade zone. In late December, the Djiboutian president granted a free trade zone licence to Fabtech Group owned by Harry Moraes, an Indian magnate based in the United Arab Emirates who is close to IOG. IOG also renewed the licence of East Africa Holdings, a subsidiary of GSK Group belonging to Ahmed Osman Guelleh, despite the fact that the Djiboutian businessman is in the bad books of the first lady Kadra Mahamoud Haid (ION 1459). International Djibouti Industrial Parks Operation, launched by China to earn a return on the $13 billion invested by China Merchants Holdings (CMH), will therefore be up against two competitors. The vice president of CMH, Hu Jianhua, arrived in Djibouti on 15 January to attend a board meeting of the Djibouti Port & Free Zone Authority (DPFZA) and is planning to meet IOG together with China’s ambassador to Djibouti, Fu Huaquiang, in order to voice Beijing’s displeasure.

IOG is walking on hot coals

Hu Jianhua is also furious with the head of Electricite de Djibouti (EDD) and cousin of IOG, Djama Ali Guelleh, who recently opposed CMH’s 200 MW coal-fired power station (ION 1461), and he will be informing the Djiboutian president that China and CMH are intending to reduce their involvement in the country. He may threaten to terminate a number of planned development projects and to relocate a substantial proportion of Chinese operations to the United Arab Emirates. For example, the Chinese firm East Africa Energy, a subsidiary of Sinofinn Energy Group, concluded an agreement with EDD in April 2017 to develop a 150 MW coal power station in Damerjog, but this project may well be postponed. Worse still for IOG, who is aspiring to turn his country into a logistical hub (an ‘African Singapore’, in his words), the CMH boss is likely to inform him that, unless he instils some discipline into the ranks of the Djiboutian officials with whom the Chinese have dealings, they may withdraw from the projects to construct the Damerjog livestock port (costed at $70 million) and increase by 30% (to 500,000m3) the storage capacity of the Doraleh oil port, at a cost of $140 million.
Source: ION, January 19, 2018
© Copyrights 2018 Indigo Publications All Rights Reserved

China mulling a Plan B without Djibouti

January 09, 2018 – The Chinese have big things in mind for Africa. Their first gambit involving Sudan proved fell flat on its face. At present they are looking for a reliable sea route to East Africa because they are increasingly frustrated with Djibouti and the unpredictability of president Ismail Omar Guelleh, even if they have built their first military base outside of Asia in Djibouti. What they are unhappy about in Djibouti is a political and government confusion and the need to make handouts to a proliferation of go-betweens and others on the take. As a result, the Chinese are seeking alternatives and are currently taking a serious look at Eritrea. Indeed, it was Beijing which lay behind a round of new contacts between Addis Ababa and Asmara over the past two months. That being said – and it’s noteworthy stemming, as it does from a Communist system – the Chinese find it hard to deal with Eritrea because of the government’s bent for secrecy and the heavy hand of its bureaucracy.

Elsewhere, they don’t want to find themselves involved, even indirectly, in the war in Yemen and that could prove a major risk if they deal with Issayas Afeworki ; he is allowing the United Arab Emirates to build a huge military base in Eritrea.

In fact, the alternative for Beijing could well be Hargeisa but that depends on the way the successor to Ahmed Mohamed Mahamoud A K A Silanyo, Musa Bihi Abdi, considers the dual agreements that have also been signed with UAE : extension of the port of Berbera but also creation of a military base in a separate pact, and to what end.
Source: ION, January 09, 2018
© Copyrights 2018 Indigo Publications All Rights Reserved

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