Date first published: 17/04/2018
Key sectors: infrastructure
Key risks: rising tensions; project/license cancellation
The Horn of Africa has long been a theatre of instability wracked with internal problems. However in recent months this has been compounded by politicised, strategic Arab involvement. Talks are underway between Somalia and the United Arab Emirates (UAE) to mend a relationship that reached a nadir last week when Somali officials seized US$9.6m from an Emirati plane. The seizure of the cash, which the UAE contends is to pay and train the Somali military, came after Somalia’s parliament voted to nullify a deal between UAE-based DP World and Somalia’s breakaway region of Somaliland to develop and manage Berbera Port and to establish a military base there. Somalia argues the deal violates international law, but in reality there is little it can do to stop it.
Rising tensions can be traced back to Somalia’s, or more precisely Mogadishu’s reluctance to take sides in the ongoing dispute between Qatar on the one hand, and the Saudi-led anti-Qatar Quartet including the UAE, Egypt and Bahrain on the other. Several of Somalia’s sub-regions swiftly sided with Saudi Arabia, but Mogadishu relies on investment from all sides, as well as Qatari ally Turkey. Ankara is one of Somalia’s largest investors and providers of humanitarian assistance. Its military has a training facility in Mogadishu and a Turkish company operates the port. Yet Saudi Arabia is a key export destination for Somalia’s admittedly meagre exports, and UAE investment, as is any investment in Somalia, is important. The country also pays for and trains part of the military, although this has been suspended. The need for investment lowers the chance of the dispute having knock-on effects for other projects in the country, although some Somali officials have called for DP World’s agreement to manage the Bosaso port in Puntland to be reviewed.
It is not just Somalia where GCC influence is growing. The UAE operates a military base in Eritrea that the UN says violates an arms embargo on the country. The port in Somaliland has taken on greater importance since the government of Djibouti cancelled a contract with DP World in February for it to develop and manage the Doraleh Container Terminal at Djibouti port. DP World has since begun arbitration proceedings in London. In Sudan, the government, which severed ties with Iran in 2014 at the behest of Saudi Arabia, has an agreement with Qatar for it to redevelop the Red Sea port of Suakin. But it also relies on deposits to the central bank from the UAE and Saudi Arabia for much needed foreign exchange and consequently President Omar al-Bashir has been more nervous than most when it comes to maintaining positive relations with all sides. Khartoum also has an agreement with Turkey for it to redevelop Suakin Island, which, along with the Qatar deal, angered Egypt at a time when Egypt-Sudanese relations are already fraught over Ethiopia’s Grand Ethiopian Renaissance Dam (GERD). This has pushed Egypt closer to South Sudan, and Sudan closer to Ethiopia.
Ethiopia itself has remained more insulated than most. However, it has a 19 per cent stake in the Somaliland port as it seeks to diversify away from its own reliance on the port in Djibouti. It is plausible that Ethiopia’s involvement, not DP World’s, angers Mogadishu the most. Taken together, investment into the Horn of Africa undermines efforts to mend relationships and improve cooperation in the region.