Decades of colonial rule, neocolonial presence, and resource extraction aims hindered many African states’ ability to achieve political stability and economic development to pursue self-determination; Great Power Competition (GPC) between the United States and China risks reinforcing these historical patterns. The elected and appointed leaders of the two great powers are accountable to their citizens and, thus, must act in their state’s best interest over the host state's interests. On the surface, the U.S.’ promotion of security, foreign aid, and good governance coupled with Chinese “gift” lending and foreign direct investment appears to benefit African states like Djibouti. However, Djibouti’s incremental economic gains fail to significantly improve human development along with it (World Bank, 2020; United Nations, 2020).
It is no question the two powers both have a geostrategic interest in maintaining their presence alongside the Bab al Mandab, one of the world’s critical maritime waterways that see approximately one-third of the global economy’s shipping movements, and they are willing to pay for it (Zimmerman, 2020, p. 70). What is questionable is the two powers’ methods in working with the Djiboutian government and civil society to ensure Djibouti and the Bab al Mandab remain secure and open. Their methods so far address only mutually agreeable national objectives with the Djiboutian government; this, in turn, neglects to address the root causes of enduring poverty, income inequality, and political disenfranchisement. Left unchecked, the U.S. and China’s methods may potentially achieve the exact opposite effect by fostering growth in instability, economic stagnation, invite extremism and piracy from Somalia, or potentially spark an armed proxy conflict between the two powers. Deprioritizing Djiboutian governmental and civil society development objectives jeopardizes the future of one of the few relatively stable African states on which the global economy depends.
Recurring themes across the body of literature on GPC in Djibouti include research of Arab rentier states, Djibouti’s colonial legacy, its geostrategic monopoly of secure port access in the Horn of Africa, foreign direct investment and loans, and additional external actors. This review explores the Arab rentier state model theoretical base and proposes its application to Djibouti. Literature examining the models of foreign direct investment and external debt to low-income nations can serve as a focal point for future quantitative research. Colonial historical context from Djibouti’s independence to its current authoritarian state informs how Djibouti became a proving ground for GPC between the U.S. and China. Next, this review analyzes Djibouti’s advantageous location and relative stability that enables its success but also poses a risk for economic failure. GPC is chiefly concerned about the U.S. and Chinese involvement due to the nature and scale of their influence; however, there is literature supporting significant influence from Brazil, Russia, India, China, and South Africa (BRICS) and Gulf Cooperation Council (GCC) states too. Lastly, this literature review analyzes multiple interpretations of U.S. and Chinese foreign policy actions in Djibouti.
Numerous studies regarding rentier state theory frequently cite Beblawi’s (1987) foundational research on oil-rich Arab states and the political and economic characterizations which define these states. The literature defines rents as “rewards” to generate revenue for owning a natural resource, land, or location (p. 383). Beblawi illustrates that rentier states have four essential qualities: there are no states’ economies strictly reliant on external rents, rentier economies rely primarily on rents from external sources, only a few actors such as the government and corporations engage with the distribution and utilization of rents, and that the government is the primary benefactor of external rents (p. 385). Simply put, foreign actors continuously pay large sums of money in exchange for critical natural resources or access to land or ports it deems strategic to their interests. This exchange often incentivizes rentier governments to submit to the external actors via coercive practices and policies as the government’s livelihood depends on the cash flow (p. 393). Djibouti’s two primary revenue sources come from the rents from the military bases of eight different countries and its port located near the critical Bab Al Mandab (Dua, 2017, p. 22; Wan, Zhang, Xue, & Xiao, 2020, p. 1). The spread of the Global War on Terror to the Horn of Africa turned Djibouti’s relatively stable and secure land into an invaluable commodity to the U.S., NATO countries, and eventually, China, who all wish to secure their interests abroad (Bereketeab, 2016, p. 6). Each external stakeholder values their relationship with the Djiboutian government to maintain their presence, but the external support enables the government to consolidate and stay in power longer. The Djiboutian government's ability to carry out human rights violations and failure to appropriately distribute the external rents, enabling further poverty (p. 7), indicates the country fits the rentier state model.
Some literature signifies a positive correlation between foreign investment and the recipient state’s economic development. Gaies and Nabi’s (2019) empirical study analyzed 67 low-income countries between 1972 and 2011 and found that, in general, states’ economies improved with an increase in foreign direct investment, external debt, and were less vulnerable to financial crises. However, the study strictly focuses on economic benefits without conducting a socioeconomic cost-benefit analysis or addressing any negative externalities involved with state-to-state economic aid and financing. Initial screening of Djibouti’s economic performance compared to its human development show Djibouti’s economy improving over time while its human development increases only marginally (World Bank, 2021; United Nations 2020). Djibouti’s human development fell within such a small margin, the UN Human Development Reports caution accepting the data changes over time as sampling variation and reporting inconsistencies could skew the results (2020). Furthermore, Gaies and Nabi’s (2019) study utilizes gross domestic product (GDP) per capita as the dependent variable in determining economic health. A monolithic measurement such as GDP per capita can only measure the state's performance as a whole and not the individuals within the country. Since the primary beneficiary of a rentier state is the government itself, GDP per capita can only accurately measure the government’s performance. Therefore, assessing the impacts of aggregate foreign direct investment, economic aid, and loans against variables such as income inequality, human development, and purchasing power parity would better evaluate Djibouti’s socioeconomic health.
Multiple studies underscore the importance of Djibouti’s colonial experience informs how Djibouti acquired its geographic near-monopoly over Ethiopian trade, became the port of choice, and host military bases from several powerful states. France initially colonized Djibouti for its natural port and access to the Ethiopian hinterland during the land grab between Great Britain and Italy (Wan et al., 2020, p. 2). Since France established the colony of Somaliland in 1885, the French consistently alternated back and forth between favoring the interests of one of the two ethnic groups, the majority Issa-Somali, and the minority Afar. France facilitated two referendums in 1960 and 1967 to determine if Djibouti would separate from French Somaliland. Both referendums’ results split along ethnic lines and were rife with reports of vote-rigging. France facilitated a third referendum in 1977 in which Djibouti ultimately won its independence due to the growing Issa-Somali population and the growing cost of maintaining the French colony (Kessels, Durner, & Schwartz, 2016, p. 9). Djibouti has only had one president before the Guelleh. Gouled Aptidon, an Issa-Somalian, became the first Djiboutian president governing from 1977 to 1999. During Aptidon’s administration, Djibouti experienced a civil war between Aptidon’s People’s Rally for Progress (PRP) and an Afar rebel group culminating in a new constitution, multiparty elections, and increased Afar government representatives. Djibouti elected its second president, Guelleh, after Aptidon’s resignation in 1999 and improved Afar representation in government slightly. However, the Issa-Somalians still dominate the civil service and PRP, which remains a contentious issue despite Djibouti’s reputation as the island of stability in a conflict region (Kessels et al., 2016, p. 9; Pronk & Van der Graf, 2020, p. 2). Djibouti’s relative haven of stability and security agreement with France created favorable conditions to base foreign troops alongside a strategically crucial maritime trade route. After the Ethiopia-Eritrea war, Ethiopia lost its access to the Red Sea, thus requiring it to reroute nearly all of its trade through Djibouti, which today makes up about 86 percent of the Port of Djibouti’s business (Bereketeab, 2016, p. 6; Dua, 2017, p. 22). Shortly after Djibouti’s rise in economic importance, the Global War on Terror and, subsequently, the presence of Al-Shabaab in the Horn of Africa brought Djibouti’s global relevance further into the limelight, making it a key state in the GPC era.
Many of the studies, think tanks, and policy brief publications center around the last twenty years of the U.S. and China’s increasing interest in Djibouti and the interpretations of each state’s strategic intent in East Africa. Djibouti capitalizes on both U.S. and Chinese interests, frequently playing both sides to its advantage without regard for the other power’s interests (Berekeateab, 2016, p. 9). Most authors agree in the realist sense Djibouti acts out of necessity for its survival and prosperity as a relatively weak state involved in a game between two powerful states. At this point, the literature diverges with some arguing Djibouti’s duplicity brokers continued peace between the U.S. and China. Djibouti currently owes $1.4 billion, about 75 percent of its GDP, to China in infrastructural loans from the Belt and Road Initiative (BRI). There is speculation China may repeat its actions in Djibouti as it did in Sri Lanka and require Djibouti to lease the port back to China to repay its debts. However, this would confirm China’s “debt-trap diplomacy” image, and the Djiboutian government would not allow China to restrict the U.S.’ access to the port out of fear of losing rents from the military base (United States Institute of Peace, 2020a, p. 29).
On the other hand, others argue Djibouti’s high public debt to China and the U.S.’ involvement in local politics and military-security affairs will spark instability in Djibouti. Citizens of Somalia, Eritrea, and Ethiopia experience limited economic mobility, corruption, political disenfranchisement, and terrorist threats. Djibouti is at risk of following this same path with the influx of refugees from its neighboring countries and its inability as a weak economy to provide sanctuary to its refugees (Kessels et al., 2016, p. 10). Furthermore, Djibouti’s historical experience with refugees fostered additional ethnic tensions, which can exacerbate political inequality and disenfranchisement of minority groups (Wan et al., 2020, p. 6). Failure to manage appropriately could potentially condemn Djibouti to become an inviable partner for foreign military bases and port operations, forcing the U.S. and China to renew their search elsewhere.
The nature of the competition for influence over Djibouti between the U.S. and China follows realist patterns of self-interest and interstate subversion. However, the literature also shows cooperation that differentiates modern-era GPC from the U.S. and Soviet Union Cold War. Africa’s natural resources and strategic positioning of certain states pose a duality to both states’ foreign policy. China aims to compete for Africa’s natural resources through foreign direct investment, gift loans, and issuing loans; the U.S. deems China’s aims to threaten its interests (Conteh-Morgan, 2018, p. 41). Conversely, the U.S. and China’s foreign policy regarding Djibouti’s both align to keep the flow of international trade free and secure (United States Institute of Peace, 2020a, p. 29). China not only undermines U.S. hegemony through the scale and scope of its foreign investments but also through its methods of foreign investment. The U.S. views China’s non-interference policy in African domestic affairs associated with its foreign investment as damaging to its efforts to promote good governance (Conteh-Morgan, 2018, p. 47). A non-interference policy that constitutes paying and loaning money to Djibouti’s elites without regard for adequate distribution management further reinforces the context of rentier statism in the country. These existing tensions risk escalation in competition but are likely to remain diplomatic and economic friction points as China claims its interest is purely economic and not military (p. 45). Piracy, terrorism, and religious extremism threaten Chinese, American, and Djiboutian interests equally and, thus, cooperate militarily to secure the Bab al Mandab and the Red Sea (Conteh-Morgan, 2019, p. 78). China takes measures to avoid following the hegemonic path of the U.S. but refused to outsource its security to the West, establishing its first overseas military base, ultimately mirroring neocolonial methods (United States Institute of Peace, 2020b, p. 45; Pronk & Van der Graaf, 2020, p. 6). Although the outward appearance of cooperation appears beneficial, some authors argue the competition itself will invite worse challenges for Djibouti and other East African states.
With each state framing their foreign policy in the context of competition, both China and the U.S. will miss their mark in focusing their efforts for improving conditions in African states and stoke additional conflict. The U.S.’ stovepipe strategy in Africa ignores the interconnectedness between the states’ socioeconomic issues, making their relationship just as transactional in nature as China’s (Alpher, 2017, p.3). As the U.S. works simultaneously to stabilize Somalia, the United Arab Emirates (UAE) demonstrates interest in expanding port access to Somalia as well, which, if successful, would cripple Djibouti’s economy (Dua, 2017, p. 24). DP World’s, the UAE-based company, initial attempts to build the port in Somalia failed but may eventually succeed as investment from GCC countries to East Africa increase and supersede both Chinese and U.S. investment (Young, 2020, p. 9). Prioritizing a competition-based agenda over one dedicated to strengthening African institutions and businesses to endure significant political and economic changes may eventually inflame Djibouti's present issues (Alpher, 2017, p. 2). Ethnic-based disenfranchisement and increasing economic inequality may eventually compound into anti-imperialist sentiment towards both the U.S. and China capable of rousing insurgent or extremist violence in Djibouti (Conteh-Morgan, 2019, p. 80). In short, the last twenty years of American and Chinese foreign policy expectedly subjugated Djiboutian interests to pursue political and economic competition. The last twenty years failed to yield any noticeable net benefit to Djibouti’s citizens, institutions, or economy embroiled in massive debt. Several authors recognize East African affairs will continue to complicate as more states express their desire to become key stakeholders in the region.
More recent literature points to a shift in the nature of competition in Africa to include BRICS, GCC, and other emerging powers' interest in extracting Africa’s critical natural resources. Hence, some authors recognize the competition is fundamentally shifting towards global competition, not just between the U.S. and China. China leads infrastructural investment to gain access to Africa’s natural resources; India and Brazil attempt to replicate China’s success but do not have the economic and diplomatic clout yet (Alden, 2019, p. 4). Instead, the more regionally aligned emerging powers in the Gulf Region have more significant influence and access with the African states attributable to their significant capital investments. The GCC countries—Bahrain, Kuwait, Qatar, Oman, UAE, and Saudi Arabia—together exceed the U.S. and Chinese foreign investment in low-income developing nations like Djibouti, Yemen, and Ethiopia (Young, 2020, p. 8). However, the GCC is still comprised of sovereign states with similar objectives but do not operate in a unified, multilateral sense in the same way the European Union operates. Their investments in Africa will benefit the GCC’s economies respectively, but no research indicates any GCC nations will rise to regional hegemon status without the U.S. or China trumping their efforts. Therefore, GCC nations seek to operate duplicitously the same way Djibouti does to serve their interests and achieve the most significant gains possible. While GCC nations enjoy U.S. security, countries such as Saudi Arabia and the UAE launched a weapons development agreement with China to further their business interests (United States Institute of Peace, 2020b, p. 46). The GCC’s aims further compound the risks GPC brings to Djibouti as GCC investment mirrors China’s predatory lending practices, reinforcing patronage networks with the government and ignoring development in social infrastructure and human capital (Young, 2020, p. 3). Most of the existing studies agree that Djibouti’s development is at risk of stagnation due to its subservience to numerous stakeholder interests. Consequently, most of the research and policy briefs partial to the U.S. argue for improving development in Africa but only to achieve greater security and increase trade.
Improved security and economic conditions are universally ideal concepts, but the research repeatedly shows how formulating policy in the interests of the lender instead of the recipient, to include the minority and disadvantaged groups within, leads to repeating historical mistakes. Natsios’ (2020) study draws back on previous development successes from the Cold War in which USAID led the effort. Natsios argues the U.S. must allow USAID to renew its old strategies involving long-term, grassroots-led foreign projects to improve recipient nations' conditions. Furthermore, the plethora of U.S. institutions should partner with those in developing nations to refine them into more robust organizations instead of requiring the State Department to oversee it all (p. 113). Natsios’ study is a minority opinion compared to most research and policy briefs centered around recommendations for increasing military presence and increasing earmarked spending. Recommendations which often mirror the U.S.’ bias for action and vast foreign aid spending. Zimmerman’s (2020) research of AFRICOM’s critical role in brokering security in Africa argues that Chinese, Russian, and violent extremist organizations (VEO) efforts strengthen authoritarian regimes and increase volatility (p. 74). China’s non-interference policy is often automatically associated with increasing authoritarianism and reinforcing regimes. While the American discourse often reflects this worldview, there is insufficient research to support the claim that China’s particular absence of involvement in domestic affairs correlates with increased authoritarianism. One could counter by stating that decades of structural adjustment loans financed by the U.S. through the World Bank and International Monetary Fund (IMF) also reinforced regimes since many governments in Africa today are derivative of colonial and foreign policy. Nevertheless, reports suggest the U.S. compete to match China’s foreign investment utilizing other institutions like the Development Finance Corporation (DFC). The DFC would take a different approach than the IMF or World Bank by investing in private corporations instead of states (Madeira, 2020, p. 2). Given Djibouti’s lack of a middle-class and scarcity in local enterprises, the investment would likely end back up in the elites' hands. Thus, reinforcing the rentier state cycle through another means.
In conclusion, the summation of literature indicates GPC between the U.S. and China defers in many ways from the Cold War, but its impacts on developing countries are beginning to mirror the patterns of the past. Beblawi’s (1987) research published during the latter years of the Cold War yet, much of his theory applies to Djibouti and other resource-rich African states today. Gaies and Nabi’s (2019) research contradicts rentier state theory by empirically demonstrating a positive relationship between economic development and foreign investment. However, their metrics for measuring what state development looks like are suspect and warrant further inquiry. Young’s (2020) research reiterates the importance of regional actors as the U.S. and China are not the only states competing for influence and access to critical resources. The GCC may not act as a multilateral body, but downplaying influence by the GCC and the emerging BRICS powers would inadequately represent the reality on the ground in Djibouti. Therefore, framing future around these key studies for the proposed study will capture Djibouti's socioeconomic, political, and subaltern realities.
Alex Teynor is an Active Duty Army Officer who graduated from the U.S. Military Academy at West Point, NY in 2015. Alex earned his B.S. in Human Geography. He is currently working towards his M.S. in Global Studies and International Relations with a focus in Conflict Resolution at Northeastern University. Areas of academic interest include Sub-Saharan and Sahelian African affairs, state development, military and security policy, and cybersecurity. Alex served one combat tour in Afghanistan from September 2017 to May 2018. He has published one research article with Small Wars Journal titled “Mali: The Tradeoff Between Impartiality and Military Aid.”
Disclaimer: The views expressed in this article are those of the author and do not reflect the official policy or position of the Department of Defense or the U.S. Government.
Alden, C. (2019). Emerging powers and Africa: From development to geopolitics. Istituto Affari Internazionali. http://www.jstor.com/stable/resrep19667
Alpher, D. (2017). Re-balancing the triangle: American strategy in Africa should prioritize African leadership, not Chinese Competition. Stimson Center. http://www.jstor.com/stable/resrep10809
Beblawi, H. (1987, Fall). The rentier state in the Arab world. Arab Studies Quarterly, 9(4), 383-398. https://www.jstor.org/stable/41857943
Bereketeab, R. (2016, June/December). Djibouti: Strategic location, an asset or a curse? Journal of African Foreign Affairs, 3(1/2), 5-18. https://www.jstor.org/stable/10.2307/26661713
Conteh-Morgan, E. (2018, Winter). The United States and China: Strategic rivalry in Africa. Insight Turkey, 20(1), 39-52. https://www.jstor.org/stable/10.2307/26301066
Conteh-Morgan, E. (2019, Winter). Militarization and securitization in Africa. Insight Turkey, 21(1), 77-94. https://www.jstor.org/stable/10.2307/26776048
Dua, J. (2017). Djibouti: Sovereignty as a resource. From Pirates to Ports to Special Economic Zones: Violence, Regulation and Port-Making in the Somali Peninsula, 21-25. http://www.jstor.com/stable/resrep13443.9
Gaies, B. & Nabi, M.-S. (2019, September). Financial openness and growth in developing countries. Journal of Economic Integration, 34(3), 426-464. https://www.jstor.org/stable/10.2307/26756452
Kessels, E., Durner, T., & Schwartz, M. (2016). Djibouti. In Violent Extremism and Instability in the Greater Horn of Africa: An Examination of Drivers and Responses. http://www.jstor.com/stable/resrep20264.8
Madeira, J. (2020). Choosing the American model: Development finance as a soft power tool in Africa. American Security Project. https://jstor.org/stable/resrep25620
Natsios, A. S. (2020). Foreign aid in an era of great power competition. PRISM, 8(4), 100-119. https://www.jstor.org/stable/10.2307/26918237
Pronk, D. & Van Der Graaf, M. (2020, April). Outpost of empire: Base politics with Chinese characteristics. Clingendael Institute. http://www.jstor.com/stable/resrep24651
United Nations. United Nations Development Programme. (2020). Human development reports, Djibouti, 2020. New York, NY: Author. http://hdr.undp.org/en/countries/profiles/DJI#
United States Institute of Peace. (2020). China’s impact on conflict and fragility. In China’s Impact on Conflict Dynamics in the Red Sea Arena. https://www.jstor.org/stable/resrep24926.7
United States Institute of Peace. (2020). Extra-regional actors. In Senior Study Group on Peace and Security in the Red Sea Arena. http://www.jstor.org/stable/resrep26646.7
Wan, Y., Zhang, L., Xue, C.Q., and Xiao, Y. (2020). Djibouti: From a colonial fabrication to the deviation of the “Shekou model.” Cities, 97, 1-14. https://doi.org/10.1016/j.cities.2019.102488
World Bank. (2021). World Bank Open Data [Data Set]. The World Bank Group. https://data.worldbank.org/
Young, K. (2020). Gulf financial aid and direct investment: Tracking the implications of state capitalism, aid, and investment flows. American Enterprise Institute. https://www.jstor.org/stable/resrep26684
Zimmerman, K. (2020). No competition without presence. PRISM, 9(1), 68-87. https://www.jstor.org/stable/10.2307/26940160