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Djibouti’s “International” Free Trade Zone is really just for one country

Samantha Maloof

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For the past quarter century, Djibouti has flourished as the Horn of Africa’s most strategic port, serving as a lifeline for landlocked Ethiopia’s $3.13 billion in exports at the mouth of the Red Sea and Gulf of Aden. So on the face of it, the Phase 1 opening last month of the Chinese funded, multi-billion dollar Djibouti International Free Trade Zone (DIFTZ) appears to position the tiny nation as a growing trading hub for the entire East African region. But is that just wishful thinking?

The DIFTZ is a sprawling complex meant to house four industrial clusters specializing in trade and logistics, export processing, business and financial support services, as well as manufacturing and duty-free merchandise retail. It’s touted to provide employment for tens of thousands and solidify Djibouti’s reputation as a business-friendly place.

The geopolitical calculations behind China’s generous financing in Djibouti are part of its Belt and Road Initiative, an aggressive economic plan designed to open up and create new markets for Chinese goods and technology by strengthening the traditional Silk Road trade route. That rationale is rooted in the fact that Ethiopia uses ports in Djibouti for about 95 percent of its external trade and pays around $1.5-2 billion in port fees. With the Ethiopian economy growing fast, obtaining better access to Addis Ababa is a crucial objective for the Chinese leadership.

But Djibouti should hold the champagne for now. Despite the glowing press releases, there are at least three major partners who have serious reasons for doubting the trustworthiness of the country’s leaders and its viability as a new axis for regional trade.

First, many U.S. analysts are expressing concern that the DIFTZ is financed by loans from state-backed financial institutions from China, dulling Djibouti’s triumphant expansion as a critical line between the export-rich Ethiopia and vital shipping lanes. In East Africa, the Export-Import Bank of China is the major investor in at least eight infrastructure projects, including an ongoing $322 million water pipeline project from Ethiopia and the $490 million Addis Ababa-Djibouti railway. Yet critics have described the Belt and Road Initiative as a method of entrapping poor countries to Beijing as “economic vassals.” For instance, a major report from the Washington-based Center for Global Development released in March cautions that the Chinese iniatives raise “serious concerns about sovereign debt sustainability in eight countries it funds,” including Djibouti.

Even more worrisome, Chinese commercial investment in Djibouti has been paralleled by the construction of a major Chinese military base, a mere six miles from the United States’ long-established Camp Lemonnier — the only permanent U.S. military base in Africa. The Chinese base is the first outside its borders and gives Beijing a military foothold on the African continent, an outcome that previously led to American political and military leaders pressuring the Djibouti government to block the construction of the base. U.S. military experts have expressed concern that a Chinese presence would hinder U.S. interests and its counter-terrorism missions, tensions that remain as American allies France, Japan and Italy also have bases of various sizes and capabilities in Djibouti.

The second reason: Ethiopia. Until a few months ago, Djibouti represented the country’s only way to access the sea and, as a stable partner, reaped the benefits of a near-monopoly on thriving Ethiopian trade. While ports exist in Sudan, Somaliland, and Eritrea, Djibouti’s developed facilities, political stability and investment-friendly atmosphere have proven more attractive than anywhere else in the region.

Now, however, a new player is coming to town: according to reports from Bloomberg, Eritrea is now mulling building a port on its coastline to export potash from its own mines as well as from Ethiopia. The port will be based at the Bay of Anfile, close to Eritrea’s potash mine at Colluli, which contains large quantities of potash that can be used as fertilizers for fruits, vegetables, and coffee trees. Most significantly, the development follows a historic rapprochement between Ethiopia and its former province of Eritrea in July, which has left Djibouti scrambling to protect its market share.

The third issue: the United Arab Emirates (UAE). Djibouti illegally seized a leased port container terminal from the UAE-based DP World company over a dispute dating back to at least 2012. Earlier this month, Dubai successfully sued the Djibouti government in a London-based international arbitration court over the seizure. Eyebrows were raised when Djibouti issued a statement dismissing the ruling as inconsequential, and the country is now trying to negotiate damages. But the scandal has already cast a shadow over Djibouti with potential foreign investors, as large shipping clients such as DP World publicly advocate for an additional 10 to 12 ports from Sudan to Somalia and continue to make a number of investments in East Africa, including in Somaliland.

The Emiratis also have close ties to Eritrea, where they established a naval base in 2015 that has been used to support the Saudi-led war against Houthi rebels in Yemen. And it was the UAE that helped broker a peace deal between Eritrea and Ethiopia, a further indicator that UAE businesses may favor Eritrean ports over those in Djibouti.

Is Chinese investment in the DIFTZ and other infrastructure projects enough to make up for all of this disruption? Perhaps not. Beijing had already started to cool on Ethiopia as an investment destination, and if the Ethiopian market finds multiple alternative ports in Eritrea or Somaliland, the promises of a thriving DIFTZ may end up being little more than hype.

Samantha is a freshly minted graduate in International Relations based in Cairo, currently working as a research assistant in a small think tank looking at development and inequality in Africa

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Africa

Water Diplomacy: Creating Spaces for Nile Cooperation

Abraham Telar Kuc

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The Nile River is the longest river on the earth, with eleven nation states sharing it and over 487 million people or about 20% of the African population living in the basin countries and they depend partly or fully on the Nile for their daily water use, foods and other economic benefits. The river drains 10 % of the African continent or an area greater than 3,176,541 km2, and its divided to ten different sub-basins with two main feeding sources’ the White Nile and the Blue Nile, which making it one of the worlds largest and complicated international trans-boundary river basins.

It’s very clear that the long and current regional disputes over the Nile’s waters between the upstream and downstream countries specially Uganda, Ethiopia and other upstream nations who are been the forehead leading the campaign for the lifting of colonial era treaties regarding Nile waters allocutions, governance, management, economic use and other Nile related issues and they been demanding renegotiating Nile river basin for fair shares and equal benefits and which they did in 2010 by reaching and signing of (Cooperative Framework Agreement or Entebbe agreement) to replace all the European colonial agreements, meanwhile the two downstream countries Egypt and Sudan in the other sides refusing to renegotiate or sign the Entebbe treaty and insists on maintaining the colonial era treaties  or what they called “the historical rights” which gave the lion’s share of the Nile waters and the absolute veto to only two Nile countries and ignored the rights of other Nile’s nations.

Egypt and Sudan for years been using what they called “the historical rights” guaranteed by the colonial era agreements and their diplomatic influence to block international development funds and loans a policy which its aims only to prevent the upstream nations from establishing or constructing any developmental or economical projects on the Nile River, while Egypt is warring about the potential impacts which could effect its water security level as a result of any construction on the Nile river, the other Nile Basin nations said they are addressing the undergoing  social, economic and environmental changes plus the population in the region is growing rapidly which will need more access to Nile basin resources in aim to provide water, food and energy to their people.

The looming conflict in the Nile Basin region over water recourses governance, allocutions and economic use has been a major security threat to the regional and international peace and stability, the risks of militarizing the Nile water dispute among the basin countries has been a growing serious security threat to the basin region as a result of lacking of middle point agreement on how to share, mange and benefit from the longest river fairly and equally.

In past years the downstream nations had already unilaterally constructed dams, used Nile waters for irrigation, industrial and other projects and with the upstream nations complaining about those unilateral projects done by the downstream nations and the none cooperative method and approach of Egypt and Sudan and as an outcome of years of disagreement over the Nile water issues and unilaterally decisions and actions taken by the individual countries claiming the Nile River waters and only favoring their own benefits over other Nile nations. The Entebbe Agreement came in to escalate the none cooperation situation more by geo-politically shifting the control of Nile basin waters away from the downstream nations and gave the upstream countries a legal frame to construct dams, establish different projects and increase their water use for different propos.

With some countries see themselves as victims of other Nile countries who had taken an advantage of certain period of time or situation that they were in, which let some of them to see no benefit now in been cooperative with the others concerning the Nile related issues and looks only at their national interests, but still the diplomatic dialogue and inclusive negotiations between the Nile basin nations is the only way forward to build confidence, trust and cooperation for sustainable future of the Nile and mutual and shared benefits for basin members countries. A positive engagement between the Nile basin members now can be observed in some steps taken by the countries were technical dialogue and diplomatic approach has increased the sharing of technical and hydrological data between the basin members countries, capacity building workshops and inter-nations trainings and seminars for technicians, policy and decision makers, government officials, diplomats, scientists, researchers, journalists, local and global think-tank institutions, NGOs, regional and other international stakeholders had really helped in easing the interstate political tensions and putting concord foundation for more regional cooperation which will contribute to a better understanding, enhancing the diplomatic relations  and cooperation among the basin nations.

To have a sustainable Nile Basin with equal benefits, comprehensive cooperation, joint management, and effective partnership the diplomatic approach and inclusive negotiations is the only solution to overcome years of mistrust and standoff in the Nile Basin region.

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Russia, Africa and the SPIEF’19

Kester Kenn Klomegah

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In 2019, four African countries – Côte d’Ivoire, Lesotho Niger and Somalia – for the first time attend the St Petersburg International Economic Forum (SPIEF’19) held on June 6-8 under theme “Creating a Sustainable Development Agenda” in Saint Petersburg, Russia.

The Forum brought together a record-breaking number of participants: over 19,000 people from 145 countries, with 1,300 guests representing heads of companies. The sheer number of business community participants, variety of thematic events, and level of representation on both national and international levels underscore the status of SPIEF as a truly global economic forum.

Over the years, SPIEF has become an open platform to exchange best practices and key competences in the interest of providing sustainable development.

The main event was the plenary session, with the participation of President of the Russian Federation Vladimir Putin, President of the People’s Republic of China Xi Jinping, President of the Republic of Bulgaria Rumen Radev, Prime Minister of the Republic of Armenia Nikol Pashinyan, Prime Minister of the Slovak Republic Peter Pellegrini, and Secretary-General of the United Nations António Guterres.

During his address to the participants of the Forum, Vladimir Putin talked about the tasks the country is facing, as well as about the importance of national projects as a driver of economic growth in Russia.

The overall budget for the implementation of proposed development projects of Russia is about US$400 billion. The priorities are healthcare, education, research and development, and support for entrepreneurship. And, considerable funds will also be allocated to develop major infrastructure, transport and the energy industry.

Putin also stressed to the guests and participants for their friendly attitude to Russia, their willingness for joint work and business cooperation based on pragmatism, understanding of mutual interests and, of course, trust, frankness and clear-cut positions. That global inequality between countries and regions is the main source of instability. It is not just about the level of income or financial inequality, but fundamental differences in opportunities for people.

More than 800 million people around the world do not have basic access to drinking water, and about 11 percent of the world’s population is undernourished. A system based on ever-increasing injustice will never be stable or balanced.

As a first step, necessary to conduct a kind of demilitarisation of the key areas of the global economy and trade, that also includes utilities and energy, which help reduce the impact on the environment and climate. This concerns areas that are crucial for the life and health of millions, one might even say, billions of people on the entire planet.

Russia has embarked on implementing long-term strategic programmes, many of which are global in nature, it is important to hear each other and pool efforts for resolving common goals. Russia is ready for these challenges and changes.

During the four days of the Forum, over 1,300 speakers and moderators, including Russian and international experts, took part in discussions. They shared their knowledge, experiences and best practices with the participants of the Forum. There was special zone of the area that hosted interviews with politicians, government officials, representatives of big business.

On the sidelines, there were business dialogues between Russia and other countries, for example Russia–Africa, were very popular this year. President of the Senate of the Parliament of the Republic of Zimbabwe, Mabel Chinomona, was one of the African participants. State officials came from Botswana, Egypt, Zimbabwe, Côte d’Ivoire, Lesotho, Mauritius, Niger, Sierra Leone and Uganda.

The Russia-Africa session featured Mikhail Bogdanov, Deputy Minister of Foreign Affairs of the Russian Federation; Special Presidential Representative for the Middle East and Africa; Amani Abou-Zeid, Commissioner for Infrastructure and Energy, African Union Commission and Tatyana Valovaya, Member of the Board – Minister in Charge of Integration and Macroeconomics, Eurasian Economic Commission.

Isabel Jose dos Santos, Chairman, Unitel SA; Daniel Kablan Duncan, Vice President of the Republic of Cote d’Ivoire; Dmitry Konyaev, Deputy Chairman of the Board of Directors, URALCHEM JSC and Benedict Okey Oramah, President, Chairman of the Board of Director, The African Export Import Bank.

Sylvie Baipo-Temon, Minister of Foreign Affairs and Central Africans Abroad of the Central African Republic; Nikita Gusakov, General Director, EXIAR; Boris Ivanov

Managing Director, GPB Global Resources and Nataliya Zaiser, Chair of the Board, Africa Business Initiative UNION; Executive Secretary, Russian National Committee, World Energy Council (WEC).

The participants noted that 2019 should be a historic year in the development of Russian-African relations. The summit of heads of state in October should take place amidst record growth in Russian exports to Africa. Russia is interested in new markets and international alliances more than ever before, while Africa has solidified its position as one of the centres of global economic growth in recent years.

In this context, the countries need to rethink the approaches, mechanisms, and tools they use for cooperation in order to take their relations to the next level as their significance grows in the new conditions of world politics and economics. What steps are needed to give a new impetus to bilateral economic relations? What are the key initiatives and competencies that can create a deeper strategic partnership between Russia and African states?

These are among the key questions on the meeting agenda for the upcoming Russia-Africa Summit planned for October in Sochi under the co-chairmanship of President of the Russian Federation Vladimir Putin and President of the Arab Republic of Egypt Abdel Fattah el-Sisi, Chairperson of the African Union.

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Russia joins Gulf states in coaching Sudan’s military

Dr. James M. Dorsey

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Russia has emerged as Saudi Arabia and the United Arab Emirates’ silent partner in assisting the Sudanese military’s efforts to weaken, if not defeat a months-long popular revolt that has already toppled president Omar al-Bashir.

Documents leaked to The Guardian and MHK Media, a Russian-language news website, by the London-based Dossier Centre, an investigative group funded by exiled Russian businessman Mikhail Khodorkovsky, disclosed Russia’s hitherto behind-the-scenes role in Sudan.

Laying out plans to bolster Russia’s position across Africa by building relations with rulers, striking military deals, and grooming a new generation of leaders and undercover agents, the documents included details of a campaign to smear anti-government protesters in Sudan.

The plan for the campaign appeared to have been copy-pasted from proposals to counter opposition in Russia to president Vladimir Putin with references to Russia mistakenly not having been replaced with Sudan in one document.

Russia advised the Sudanese military to use fake news and videos to portray demonstrators as anti-Islamic, pro-Israeli and pro-LGBT. The plan also suggested increasing the price of newsprint to make it harder for critics to get their message out and to discover “foreigners” at anti-government rallies.

Yevgeny Prigozhin, a St. Petersburg-based businessman and close associate of Mr. Putin, complained in a letter to Mr. Bashir before he was overthrown that the president was not following his advice.

Mr. Prigozhin, who was indicted by US special counsel Robert Mueller for operating a troll factory that ran an extensive social media campaign that favoured of Donald J. Trump’s 2016 presidential campaign, was according to the documents a key player in efforts to enhance Russian influence in Africa.

Mr. Prigozhin accused Mr. Bashir and his government of not being active enough and adopting an “extremely cautious position.”

If a visit this week to Sudan by foreign journalists at the invitation of the military to show them medical facilities that had allegedly been ransacked by protesters and demonstrate that hospitals that had been attacked by notorious paramilitary forces associated with Sudanese army were returning to normal, is anything to go by, Mr. Prigozhin’s criticism may have merit.

“It must have seemed like a good idea to somebody, although I cannot imagine why. The plan was to show us how terribly the protesters had behaved. If the world could see what they were really like they would understand that the regime had no choice but to send in the militia. Except from the moment we arrived at the first medical facility things started to go wrong,” said the BBC’s Africa editor, Fergal Keane.

To Mr. Keane, the omnipresence of paramilitaries of the Rapid Support Forces (RSF) made the paramilitary headed by General Mohamed Hamdan Dagalo aka Hemedti, believed to be a Saudi and UAE favourite because his troops fought in Yemen and his reputation for ruthlessness, look “more like an army of occupation than an internal security force.”

Widely viewed as ambitious and power hungry, General Dagalo resembles in the eyes of protesters Abdel Fattah al-Sisi, the autocratic general-turned-president who in 2013 staged a Saudi-UAE-backed military coup that toppled Egypt’s first and only democratically elected president.

Defending the UAE’s contacts with the military council, Emirati minister of state for foreign affairs Anwar Gargash said his country’s “credibility is our means to contribute to enhancing peaceful transition in a way that preserves the state and its institutions.”

Human Rights Watch this week called on the United Nations Security Council to halt the withdrawal of peacekeepers from Darfur, noting that the Rapid Support Forces “have a long track record of abuse. They carried out highly abusive counter-insurgency campaigns in Darfur, and the Southern Kordofan and Blue Nile regions over the past five years, in which they attacked villages, killed and raped civilians, and burned and looted homes.”

Witnesses outside a medical facility and a hospital that Mr. Keane visited countered the military’s tale, describing how troops stormed the buildings and looted and destroyed facilities. “”The international community has to intervene. There is no peace here in Sudan. People are suffering a lot… I am frightened for my country,” said a man as he drove by Omdurman Hospital.

The failed public relations tour, the crackdown, the Russian guidance and stalled talks between protesters and the military fits a Saudi-UAE promoted pattern that has evolved across the Middle East and North Africa since the 2011 popular Arab revolts. It’s a pattern that aims to defeat popular protest at whatever cost.

The Sudanese protest movement has emerged from the crackdown that doctors said killed at least 118 people and efforts to delegitimize it battered, divided and potentially weakened but still standing.

A general strike declared at the beginning of this week initially paralyzed the capital Khartoum but within a day or two appeared to be weakening.

Ethiopian mediator Mahmoud Dirir said on Tuesday that the protesters had agreed to end the strike while the governing Transitional Military Council (TMC), headed by officers with close ties to Saudi Arabia and the UAE, was ready to release political prisoners, one of several key demands of the protesters.

Mr. Dirir said the two sides had also agreed to “soon” resume talks to resolve the crisis even if they were nowhere near narrowing differences of returning Sudan to civilian rule. It was not clear what soon meant.

“Negotiation – even if it happens soon – will circle back to the same issue: will the military cede power to a civilian government? Nothing about the generals’ actions has indicated that this is an imminent possibility. The fear is that they will use any negotiations to try to divide the opposition while security pressure is maintained on the streets,” Mr. Keane said.

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