Djibouti and UAE battle over control of Doraleh Container Terminal

The Republic of Djibouti has nationalised the majority stakeholder of the Doraleh Container Terminal at the Port of Doraleh, further stoking a conflict with the United Arab Emirates over control of the terminal.

The Djibouti government took control of all shares of Port de Djibouti SA, which owns a two-thirds stake in Doraleh Container Terminal. The remaining third of the terminal is owned by DP World, which in turn is majority-owned by the government of the United Arab Emirates.

Hong Kong company China Merchants Port Holdings—a subsidiary of the state-owned China Merchants Group—was previously a 23.5% shareholder of Port de Djibouti SA.

Doraleh Container Terminal was opened in 2009 after DP World—one of the world’s largest port operators—won a 30-year concession from the Djibouti government in 2006 to design, build and operate the terminal.

In 2014, however, Djibouti sought the annulment of the concession on the grounds that the deal was unfair and that bribes had been paid by DP World, claims that were dismissed by the London Court of International Arbitration.

Credit: mali maeder

Earlier this year, Djibouti seized the facility and in July terminated its shareholder agreement with DP World. Djibouti has claimed that its moves to control the Doraleh Container Terminal are to protect its national sovereignty.

Djibouti has grown in strategic importance due to its proximity to major shipping lanes in the Red Sea and Gulf of Aden, and it takes in more than 95% of imports for neighbouring Ethiopia.

However, DP World, which also operates the Port of Berbera in Somaliland under a similar concession agreement, has been trying to push for Berbera as an alternative for Ethiopian trade, a potential threat to Djibouti’s competitiveness.

On September 5th, DP World obtained an injunction from the High Court of England and Wales to prevent its removal from the port, as well as Djibouti’s interference with the management of Port de Djibouti SA.

Responding to the injunction, Djibouti said that “DP World’s ‘strategy’, which consists in trying to oppose the will of a sovereign state, is both unrealistic and destined to fail.”

Source: The Wall Street Journal, Al Jazeera