Djibouti risks losing autonomy to China's Debt Trap Diplomacy

 

 Infrastructure projects financed by Chinese capital are gathering steam in Djibouti, causing concern in Washington that the tiny East African nation is falling into a debt trap that will allow Beijing to reinforce its influence on the continent. With the coronavirus spreading in the Horn of Africa, its fiscal burden may further increase.

According to Johns Hopkins University, Djibouti has 1008 cases of coronavirus so far, increasing from a mere 30 a month ago. Due to the rising number of cases in the country, the US military based in Djibouti declared a public health emergency on Apr. 23.

Djibouti stands on the western end of the Gulf of Aden and at the southern gateway to the Red Sea, at the other end of which is the Suez Canal. The nation looks out at a busy international shipping lane through which 20,000 vessels pass every year, and its geography has won Djibouti much global attention, with troops from multiple countries including the U.S., China and Japan stationed there to combat piracy.

Among them, China is eager to promote road and port construction in Djibouti, positioning it as a linchpin of its Belt and Road Initiative.

One project is the Djibouti International Free Trade Zone, a $3.5 billion project undertaken by China in cooperation with the Djiboutian government. The entrace to the zone has a huge yellow gate and flies the Chinese flag.

While China helps to build railroads and improve other pieces of infrastructure, Djibouti's debt to China has reportedly increased to more than 70% of its gross domestic product.

Furthermore, the coronavirus pandemic may have a negative impact on Djibouti's budget, bringing about the need to increase spending on health care and employment. On April 2, the World Bank approved $5 million in credit to the cash-strapped country to respond to the epidemic.

In 2017, Sri Lanka, also heavily indebted to China, ended up leasing a seaport to a Chinese company for 99 years.

Djibouti may be the next domino to fall to China's influence.