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Djibouti emerges as shipping link for eastern Africa
The Washington Times / January 25, 2001

By Larry Luxner

DJIBOUTI -- Colorful, brightly painted wooden dhows and huge Iranian freighters jostle for berthing space in the main port of this tiny African city-state that, until recently, seemed forgotten by time and ignored by much of the outside world.

But now, Djibouti hopes to make a name for itself, not only as landlocked Ethiopia's principal lifeline to the Indian Ocean, but also as a transshipment hub for all of East Africa.

Last June, the former French colony signed an agreement with Dubai Ports International of the United Arab Emirates. Under the 20-year concession, DPI will boost efficiency and vastly expand container-handling operations at the Port of Djibouti, which sits at the entrance to the Red Sea and accounts for 75% of the country's economy.

There was no competitive bidding, and terms of the deal are unclear. But Djibouti's president, Ismail Omar Guelleh, said in an interview that his government is investing $50 million in the project, with DPI getting only $400,000 a year for its role in managing the port.

"They want to help us," said Guelleh, who was inaugurated in April 1999 for a five-year term as president of this Massachusetts-sized desert nation (see sidebar).

Wedged in between Eritrea, Ethiopia and Somalia, the Republic of Djibouti is home to just under 700,000 inhabitants. These include the majority Issa, the country's dominant Somali clan, as well as the less numerous Afar people, some 3,000 French soldiers and over 120,000 desperately poor refugees from neighboring countries.

"We have more people living in the streets than in houses," says Ismail Tani, chief of the presidential cabinet. While this may be an exaggeration, it's not much of one, as a visit to any of half a dozen squalid refugee camps ringing the capital city, Djibouti-ville, attests.

"These people are here because they think Djibouti is at peace, and that they can get something to eat," says Tani, the country's former official government spokesman. "Some were nomadic, and some were peasants. They hope to use Djibouti as a transit point to go to Europe or America."

Late last year, Djibouti received rare media attention following the bombing of the USS Cole, when several sailors who were injured in that terrorist attack in Yemen -- just across the Red Sea from Djibouti -- were brought to the local French military hospital for treatment. Since the end of a civil war in 1995 between the Afars and Issas, Djibouti has been a relative oasis of calm in the Horn of Africa, and the few tourists who pass through appear to be warmly welcomed.

"I have yet to perceive any anti-American sentiment here," says one of the 50 or so Americans living in Djibouti. He noted that if the locals resent anyone, it's the French, who were the colonial masters of Djibouti from 1884 until 1977.

The Place du 27 Juin 1977, a shady square commemorating the day France gave Djibouti its independence, is the focus of life in downtown Djibouti-ville, home to half the country's population. Restaurants, hotels, clothing shops and shoeshine men cluster around the plaza, where taxi drivers honk their horns and peasant women sell qat -- a semi-narcotic leaf chewed by nearly everybody.

About two blocks from the plaza, young Djiboutians check their e-mail at NubiaNet -- the country's only functioning Internet cafe -- while at night, Ethiopian prostitutes in miniskirts look for clients in front of half a dozen seedy discotheques,

On Friday afternoons, loudspeakers atop mosques call the faithful to prayer. Djibouti, which is 99% Muslim, belongs not only to the Organization for African Unity but also to the Arab League, though some observers suggest this is economically rather than ideologically motivated

"Djibouti is on the outskirts of the Arab world," says Jordanian UN official Amer Daoudi, who travels here frequently in his capacity as regional logistics coordinator for the World Food Programme."The people barely speak Arabic."

They do, however, get substantial aid from Saudi Arabia, which recently built a modern asphalt highway between Djibouti-ville and Lac Assal, an inland desert lake that is the source of Djibouti's only real industry, salt extraction. The only major U.S. investor here is Mobil Oil, which has a petroleum storage facility, though Nevada-based Geothermal Development Associates has just completed a feasibility study for the construction of a $117 million power plant at Lac Assal.

"When you remove all the Europeans, the per-capita GDP here is pretty low," said the American, estimating it at no more than $400 -- about on par with Nicaragua.

Asked about Djibouti's tourism potential, he chuckled. "It's got the resources, but not the infrastructure. And it's beastly hot," he said, noting that Djibouti is listed in the Guinness Book of World Records as being the hottest place on Earth, with summer temperatures often exceeding 125 degrees.

That leaves the port as Djibouti's only real economic hope for the future.

Luc Deruyver, director-general of the Port of Djibouti, politely refused to discuss the Dubai management deal or say how much revenue the port generated last year, insisting that such details were "strictly confidential." He did, however, say that since his Dubai-based team took over six months ago, "we have almost doubled the performance of the gantry cranes, jumping from 10.2 container moves an hour to 19.7. We hope to be at 23 by the beginning of 2001."

The four brightly painted blue-and-orange cranes, imported from Italy and China, are about the only signs of modernity in this otherwise impoverished, dusty port complex.

"The ships are working twice as fast as they used to, so they're in port only half the time," said the Belgian-born Deruyver, estimating that the port handled 126,000 twenty-foot equivalents (TEUs) of cargo in 1999, with Ethiopia accounting for 95,000 TEUs and Djibouti itself for another 10,000. The remaining 21,000 TEUs represented transshipments to Dar es Salaam and Mombassa.

"We hope to become a major transshipment port for East Africa," he said. "By improving our performance, other ports will have to start competing against Djibouti."

In May 1998, a fierce border war erupted between Ethiopia and Eritrea, and the Eritrean government declared the ports of Assab and Massawa off-limits to Ethiopian importers and exporters. As a result, Ethiopia -- a nation of 60 million people -- has become totally dependent on Djibouti for everything from weapons to wheat.

The port is working 24 hours a day to handle the increased business, which in 2000 consisted of roughly two million tons of bulk cargo, 1.6 million tons of containerized cargo, 1.5 million tons of oil products and 150,000 tons of miscellaneous goods -- everything from soap to steel to automobiles.

"Since we're using Djibouti, we've seen a lot of improvement," said Abdulrezak Sherif, chairman of the Ethiopian Coffee Exporters Association, which exports 100% of its coffee through here. "Everything is going smoothly. Before, we used Assab and we had a lot of problems -- shortages of cranes, delays of shipments and theft."

About 60% of all food aid destined for Ethiopia comes from the United States, where Midwest grain is loaded onto barges, floated down the Mississippi River to New Orleans, and then shipped to Djibouti. From there, the grain is loaded onto trucks for the grueling, 10-hour road trip to Addis Ababa, the Ethiopian capital.

In mid-December, Ethiopia and Eritrea signed a long-awaited peace treaty, paving the way for renewed use of Eritrean ports by Ethiopia. But President Guelleh says Djibouti has already carved out a market niche for itself that's unlikely to disappear with the end of hostilities.

In the meantime, the port provides direct and indirect work to over 3,000 Djiboutians, making it the country's biggest single largest employer. Some of these laborers are civil servants, while others work under contract for DPI.

Walking around the docks, it's easy to spot port employees lounging around, smoking cigarettes and not appearing to do much work. One official who asked not to be named said the payroll includes stevedores who are blind, crippled or otherwise not employable.

"It's a fact that Djibouti is in the midst of a severe economic crisis. There are no natural resources here except for the salt industry," says Deruyver, who's under pressure not to fire unneeded laborers in a country already suffering from 35% unemployment. "We are trying to better utilize our workers. We're trying to avoid any social conflicts."

One thing no longer seen at the port are dockworkers with their mouths full of qat. Among the first things DPI did upon winning the management contract was prohibit qat-chewing. Says Deruyver: "Any substance that diverts you from your job cuts down on efficiency."

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