Djibouti
Should I Care About This City / Country?
Djibouti is a very small country in Africa with a great natural harbor - located in a very strategic location.
Djibouti sits at the straight which connects the Gulf to Adan to the Red Sea and the Suez Canal. Nearly all of the energy imported to Europe from the Persian Gulf must ship through this relatively narrow waterway. It is also close to operations that are designed to reduce or eliminate piracy in the region. It is one of the few ports in the region that has a stable government.
The country has monetized its geographic location and its political stability.
Economically, Djibouti relies on a service economy focused on financial trade and investment. It is a reasonably save haven for opaque transactions in Africa. And it provides anonymous transactions, that are popular with depositors that do not want to be identified. It is uniquely positioned to manage financial assets in North-east Africa, offering a consistent set of laws in the banking sector.
The other chief source of revenue is leasing of military bases. France, the old colonial ruler, still maintains a contingent of military at their request. The United States and Germany also have land troops based in the nation.
Because Djibouti has one the best and most important harbors in the region, this is also a critical national resource. The United States leases a port for their naval ships. The same harbor has separate facilities that hosts both a Chinese Naval base and a Japanese Naval base – the only one outside of Japan. These navies have cooperated to reduce piracy in the area, although China and the United States have disagreements in other world hot spots.
Finally, Djibouti serves as the main port for Ethiopia and its capital, Addis Ababa. There is a train line to the Ethiopian capital. The train line has been upgraded and rebuilt with Chinese loans and expertise.
And so, to answer our question, Djibouti is important to the international economy, in particular our European allies. The United States is involved in the country as Djibouti serves as a friendly base for our navy.
There are a few threats to the country. Djibouti has a very large population of unemployed, some estimations are up to 50% of the population. Holding onto political stability is hard in a nation with 50% unemployment. Anger towards immigrants that will work for less than minimum wage is a constant threat.
The immediate region is also subject to political upheaval. Somalia and Yemen are both in the midst of civil wars. Ethiopia just put down a insurrection by an unrepresented minority. And Eritrea is a isolationist dictatorship on their border. The international military presence does keep this country stable in the region.
Djibouti is a stable country in a region that is not stable. It’s importance is due to that very stability.