Tue, Apr 09, 2019 - Page 9 News List

US, France worry over Chinese money in Djibouti

While Western nations say China is using debt to manipulate African states, Beijing insists that its infrastructure programs are improving people’s lives in poorer nations

By Nizar Manek  /  Bloomberg Markets

Illustration: Yusha

Inside the carriages on the 10-hour rail journey through land-locked Ethiopia into the tiny Red Sea state of Djibouti, the chirping of mobile phones mingles with a mashup of regional languages and the murmur of the devout at prayer. A woman in a yellow frock trundles past maroon-upholstered seats with her cart: “Coffee! Bunna! Tea! Chai!”

At first glance, there is nothing conspicuously Chinese about the Addis Ababa-Djibouti Railway, but then you spot the train’s Chinese driver and a few Chinese passengers huddled on a bunkbed.

In fact, says Ilyas Moussa Dawaleh, Djibouti’s good-humored minister of finance, “It’s all about the ‘C.’”

The railway would not exist in its current form without a massive infusion of Chinese loans — indeed, most of Djibouti’s economy relies on Chinese credit. And the Chinese might not have shown as much interest if it had not been for Djibouti’s geostrategic location: About a third of all the world’s shipping steams past this barren land on the northeast edge of Africa en route to and from the Suez Canal, the Red Sea and the Indian Ocean.

China’s bridgehead there is part of its globe-girding Belt and Road Initiative, an amalgam of economic strategy, foreign policy and charm offensive that is fueled by a torrent of Chinese money and is designed to rebalance global alliances. And as with dozens of other way stations along this new “Silk Road,” Djibouti’s dalliance with China is raising hackles from Paris to Washington. China has no qualms.

“China-Africa cooperation is yielding fruitful results all across Africa, bringing tangible benefits to every aspect of local people’s lives,” Chinese Ministry of Foreign Affairs spokesperson Geng Shuang (耿爽) said at a press briefing on March 18. “It is these people who are in the best position to judge the effects of China-Africa cooperation projects.”

The railway will eventually string together a necklace of big Djibouti infrastructure projects in which the Chinese, through state-owned companies, have substantial interests: the Doraleh Multi-Purpose Port, the Doraleh Container Terminal and the Djibouti International Industrial Parks Operation, a sprawling manufacturing hub. At one point, the railway skirts within a few kilometers of the two-year-old Chinese People’s Liberation Army support base, which was China’s first overseas naval station.

China Merchants Port Holdings Co, a state-owned corporation, wants to turn Djibouti into “the Shekou of East Africa,” Dawaleh says, referring to the free-trade zone across Shenzhen Bay from Hong Kong. Djibouti, whose GDP was US$1.85 billion in 2017, can use the help.

According to the World Food Program, 79 percent of Djiboutians live in poverty and 42 percent in extreme poverty. Barely larger than Wales, the nation has a population of about 1 million people. Livestock represents the main livelihood of a third of the population, but the country, whose meager natural resources include salt and gypsum, has to import 90 percent of the food it needs.

As clanking machinery and the rising dust of construction activity along the coast attest, Djibouti is making progress of a sort, but it is coming at a steep price. Under Djiboutian President Ismail Omar Guelleh, the one-party state is partway through what started out as a US$12.4 billion infrastructure development program, much of it funded through loans from the Export-Import Bank of China.

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