ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018)

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THE ROLES OF PORT IN STRENGTHENING THE ETHIO-DJIBOUTI ECONOMIC RELATIONS

Mulubrhan Atsbaha

Department of Civics and Ethical Studies,

College of Social Science and Humanities,

Adigrat University, , , Email: [email protected]

Abstract The main purpose of this study was to assess the roles of Djibouti port in strengthening the Ethio- Djibouti economic relations. The study applied descriptive type of methodology and qualitative approach. The study used primary and secondary data collection methods. Primary data was elicited through semi-structured interview with key informants whereas secondary data was gathered from relevant literatures, such as books, theses, journal articles, published and unpublished materials, treaties, government documents, and etc. The primary and secondary data used in this study were analyzed through thematic analysis method. Therefore, the study found that the main factors that led Ethiopia to use Djibouti port have been not only its geographical proximity and infrastructural connection of the two countries via road and railway, but also the pacific Ethio-Djibouti relations, Ethiopia’s landlockedness as a result of ’s independence, and Ethio-Eritrea conflict 1998-2000. The study revealed that Djibouti port plays vital economic roles to Ethiopia serving as the main seaport to its foreign trade, and Djibouti generates revenue from Ethiopia’s use of its port and enhanced its economic development. The heavy dependency of Ethiopia on Djibouti port, foreign powers influence, political instability in the Horn of Africa, managerial snags, infrastructural and Djibouti port operational problems hinder Djibouti port in strengthening the economic relations. Given the infrastructural links, growing Ethiopian economy, and their economic integration, the prospect of continuity of Djibouti port in strengthening the Ethio-Djibouti economic relation most likely seems promising. However, the availability of other ports in terms of less cost and better services will pose a challenge against the Djibouti port and the Ethio-Djibouti economic relations. Key Words: Ethiopia, Djibouti, Djibouti port, Economic relations

1 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) 1. INTRODUCTION to Djibouti. However, formal Ethio-Djibouti relation started in 1984 following the latter’s Ethiopia has long history of relation with the independence from France in 1977 (Styan, outside world. This goes back to the first 2013:3-5). Needing its port for external century AD when there is evidence of gateway, successive Ethiopian regimes relation with ancient Greek, Egypt, the strived to maintain good relations with Arabia world kingdoms, India and extra Djibouti. Both the emperor Minilik and Haile Selassie regimes showed a strong (Ethiopian Economics Association/ commitment in their respective foreign Ethiopian Economic Policy Research policies towards Djibouti and provided due Institute, 2009:3). Ethiopia maintained its attention of getting Ethiopia to access the sea independence to the modern era, except to the extent of claiming Djibouti was part of during the five years (1936-41) of the Italian Ethiopia. This was mainly for economic occupation. This brought it as decolonization concern relating to the Djibouti port and actor for the cause of Africa and enhanced its connected via railway (Endalcachew and position in African politics, which is evident Kidanu, 2015:9-10). With the coming to in the foundation of such as Economic power of in 1974, however, Ethiopia Commission for Africa and OAU (now AU) gave up claim to incorporate Djibouti with in in 1963. As a result, almost Ethiopia and showed interest to support its all African states have diplomatic relation independent existence (Urgassa, 2014:36). with Ethiopia. Except with Somalia during the imperial period and during the Derg In the post-1991 period, especially Ethiopia’s regime and recently with Eritrea (1998- loss of the Eritrean-based ports ( and 2000), Ethiopian has had good relation with ) following the Ethio-Eritrean its neighbors and the Horn of African conflict of the 1998-2000 has intensified the countries (Tewodros and Halellujah, 2014:8- intensity and dimension of their economic tie 9). (Styan, 2013:3). After this war, the two countries tie is expanded in other areas like Djibouti is one of the African countries to transport and communications, trade and which Ethiopia is tied most for economic investment, peace and security issues, relation. In fact, such relation is traced back electric power and potable water (Mormul, to the beginning of colonial period of France 2016:264).

2 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) The Ethio-Djibouti relation has for long been 3. METHODS AND DATA ANALYSIS constructive and a good example of mutual TECHNIQUE partnership between landlocked and transit This study employed descriptive type of developing countries (Almaty Program of methodology and qualitative approach. The Action, 2013:9). Ethiopia has no sea of its study utilized both primary and secondary own that in turn imposes heavy burden while data sources. Primary data was collected via using the Djibouti port. For Djibouti, semi-structured interview from purposively Ethiopia is a primary economic partner using selected key informants based on their its port (Anbalagan and Kanagaraj, 2014:2). experience about the study topic. The key Many studies have been conducted on the informants were officials in the Ethiopian overall Ethio-Djibouti relation. However, Ministry of Foreign Affairs, Ministry of none appears to be addressed based on Trade, Ethiopian Shipping and Logistics Djibouti port role in strengthening the Ethio- Services Enterprise (ESLSE), and Importers Djibouti economic relations. This study and Exporters of Ethiopia. Secondary data aimed to fill this gap by exploring the role of was gathered from relevant literatures such as Djibouti port in strengthening the Ethio- books, internet sources, thesis, journal Djibouti economic relations. articles, published and unpublished materials, treaties, government documents, 2. OBJECTIVES and etc. The objective of the study was to assess the roles of Djibouti port in promoting the Ethio- The study is qualitative in terms of Djibouti economic relations. Particularly, the development. It covered a variety of thematic study was intended to investigate the factors areas that among others include issues within that led Ethiopia to use the Djibouti port as its and outside Djibouti port, Ethio-Djibouti seaport outlet, probe in to the economic economic, political and social relation, contributions of Djibouti port to Ethiopia, conflict sources and collaboration, and etc. examine the advantages Djibouti gets from To this end, the data collected from the Ethiopia’s use of the Djibouti port, and point different interview informants (primary out the challenges and prospects of the sources) and the various secondary materials Djibouti port in strengthening the Ethio- were arranged thematically first in Djibouti economic relations. accordance with their own respective category and blended subsequently and

3 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) analyzed using thematic analysis method to that became operational for Ethiopia in 1926. give meaning for the study. Beside, Warsame (2017:6) noted that the newly inaugurated 753-km, Addis Ababa- 4. RESULTS AND DISCUSSION Djibouti railway links Ethiopia with the 4.1. The Main Factors that Led Ethiopia to Djibouti port allows for an average speed of Use Djibouti Port as its Seaport Outlet 120 km/hour, and has a capacity to transport

4.1.1. Geographical Proximity and 3500 tonnes per trip, seven times greater than Infrastructure for Ethiopia’s Use of the old railway. Urgassa (2014:42) pointed Djibouti Port out that Ethiopia and Djibouti are also connected by road system that goes back to a Interviewed experts of the Ministry of century. Foreign Affairs revealed that Djibouti port has become the closest port to Addis Ababa Furthermore, the pacific relation between next to Assab, located at 910 kms by road and Ethiopia and Djibouti, as informants of the 781 kms by railway. This geographic Ministry of Foreign Affairs affirmed, had nearness makes it the most economical for enabled Ethiopia to use the Djibouti port. Ethiopia when compared with other There have been no major interstate conflicts neighboring country ports (Kenya, Somalia, between the two countries. Mormul and Sudan). (Ref table 4.1). This has enabled (2016:263-264) treated this peaceful relation the two countries for better infrastructure between the two countries as an exceptional interconnection of road and railway case in the conflict-ridden Horn of Africa. transportation in the past, which is widening Owed its renaissance mostly to the now in port facilities. Girma (2009:5) consequences of the Ethio-Eritrean war asserted that Ethiopia which has become (1998-2000), the good Ethio-Djibouti landlocked as a result of colonial loss of relation has enhanced broader cooperative Eritrea to Italy, reached an agreement for partnership on regional and global issues of railway construction that could connect the common concern. country with French . The railway Source: Samrawit, 2016 construction between Addis Ababa and Djibouti started in 1897 was completed in Informants of the Ministry of Foreign Affairs 1917. Followed with this was Djibouti port argued that Ethiopia’s alternative ports such

4 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) as; Port Sudan, Berbera and to some extent to had Assab and Massawa ports that lasted Mombasa port are at a disadvantageous from 1952-1991. The Eritrean secessionist position due to long distances and they need movements that started in the early 1960s, a work of upgrading if Ethiopia wishes to use however, led it to lose them again since the them proportional to its interests. Thus, early 1990s. Consequently, both Assab and Djibouti port has become a principal port to Massawa ports were lost to Eritrea when it Ethiopia. has become an independent state in 1993. In fact, the landlockedness of Ethiopia as a 4.1.2. Eritrea’s Independence and result of the Eritrea independence has Ethiopia’s Landlockedness maintained Ethiopia’s use of Djibouti port. Ethiopia had been a maritime country. Its Although Ethiopia and Eritrea began their history of access to the sea goes back to the relation with good atmosphere, this was only early Axumite era that flourished from the until 1998 when the Ethio-Eritrea conflict 1st-7th century AD during which it had broke out. Until 1998, Assab port was the conducted international trade via the port of main seaport of Ethiopia handling most of the Adulis. Eritrea, which was an integral part of import-export trade. In relation to this, Styan Ethiopia, annexed by the Ottoman Empire in (2013:53) explained that Eritrea’s the 16th century and later lost to Italy from independence from Ethiopia and with it the 1890-1941 about half a century, and since consequent latter’s loss of sovereignty over 1941-1952 was under British control. the ports of Assab and Massawa had initially Consequently, Ethiopia had been landlocked limited impact on trade pass through Djibouti from the early Ottoman Turkish occupation port. However, the eruption of the 1998 war of the area around Red Sea coast up to the between Ethiopia and Eritrea altered this federation of Eritrea with Ethiopia in 1952. In situation. the then time the only Ethiopia’s outlet to the 4.1.3. The Ethio-Eritrea Conflict 1998- sea was the Djibouti port (Robera, 2011:49). 2000 According to the informants of the Ministry Informants from the Ministry of Foreign of Foreign Affairs, Eritrea’s federation with Affairs argued that the Ethio-Eritrean conflict Ethiopia in 1952 and transformation into an forced Ethiopia to strengthen its tie with Ethiopian province in 1962 allowed Ethiopia Djibouti port for bilateral economic relations.

5 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) This conflict has prohibited Ethiopia’s access coffee, chat, flower, animal products such as to the Assab and Massawa of Eritrean ports. meat, finished and unfinished leather items, As Berouk (2008:2) noted, it has greatly and other goods (ESLSE, 2017:9). reinforced the Ethio-Djibouti economic, Djibouti port has been important to political and security ties particularly after Ethiopia’s economic integration with the the two countries signed a trade protocol outside world. Even during the 1952–1993 treaty in 1996. Djibouti and Ethiopia periods when Ethiopia controlled the Eritrean concluded a military cooperation protocol in Red sea ports, Djibouti maintained its 1999 that promotes the cooperation of position as the most important port for its Ethiopia and Djibouti in the area of peace and needs. Prior to 1974, 60% of Ethiopia's security. As a result, Ethiopia diverted almost foreign trade transited via the Djibouti port all external trade relation since 1998 towards (Marks, 1974:101). However, this does not Djibouti port. It is worth giving to mention mean that there was no problem for Ethiopia that Ethiopia had been using Djibouti port in using the Djibouti port. It was hampered even before the federation of Eritrea with from 1970s to the late 1990s due to increasing Ethiopia, which enabled it to get access to domestic instability in Djibouti, and Assab and Massawa, and even later as the use Djibouti’s connection to regional conflicts- of them was disrupted due the civil war going Yemen, Somalia and Sudan, and the Somali on in northern Ethiopia. forces interrupted the transit via Djibouti by 4.2.The Economic Contributions of cutting the railway line during the Ogden war Djibouti Port to Ethiopia of 1977-78 between Ethiopia and Somalia. Thereafter, Ethiopia switched most of its Djibouti port serves as Ethiopia’s maritime trade from Djibouti port back to its ports in communication-import and export trade. pre-independence of Eritrea. As a result, in Ethiopia’s main imports through Djibouti the 1970s until the late 1990s, Ethiopia’s port include petroleum products, machines, external trade on Assab port reached almost vehicles, spare parts, medical and 80%, with 20% passed to the Djibouti port pharmaceutical products, agricultural and (Chorin, 2010:23). Also, from 1993-1997, industrial equipment and machines, and when Eritrea and Ethiopia were in cordial consumer commodities. Likewise, Ethiopia relation before going to conflict, Ethiopia’s exports mainly agricultural products such as dependency on Assab port reached almost

6 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) 80%, with 20% passed to the Djibouti port. (2016:4) added that the real GDP growth Thus, the economic roles of Djibouti port to averaged 10.1% per annum during the period Ethiopia and the economic relations has been of GDPI (2010/11-2014/15). Foreign trade declined only from the 1970s until the late with respect to GDP grew by 2.12 for ten 1990s and from 1993 to 1997 (Urgassa, years (1998/99-2008/09). Sea and land 2014:56). transport of imports and exports grew by an average of 12 % and 5 % from 2005 to 2012 Since 1998, due to Ethio-Eritrean war respectively. It is safe to infer that growth in Ethiopia’s diversion of almost all external seaborne trade was significantly contributed trade relation towards Djibouti port has to economic development in which Djibouti hastened the Ethio-Djibouti relations. port has been playing a critical role on its own Djibouti port’s handling of Ethiopian trade part. increased from 1.5 million in 1990 (96%) in to 2.7 in 1995, to 1.7 in 1997, to 3.1 in 1998, The ESLSE (2017:2) noted that the ESLSE to 3.9 in 1999, to 4.2 in 2002, to 4.6 in 2007 was established in 2011 to render maritime in to 8.3 million tonnes in 2013 (WBG, transport services to the Ethiopia’s export 2015:2). As of 2016, Mormul (2016:264) and import trade, and provides coastal and affirmed that the Djibouti port was supposed international marine transport services to and to give service for almost 90% of Ethiopian from Djibouti port. The ESLSE is the result trade. of an amalgamation of the former Ethiopian Shipping Lines S.C, Maritime and Transit Informants of the Ministry of Foreign Affairs Services Enterprise, Services firmly admitted that Djibouti port has Enterprise, and Comet Transport S.C with provided services to other sectors of the more than five decades of dedicated maritime economy and boost economic development and logistics transport service, has been of Ethiopia. In this respect, the Ethiopian serving to Ethiopia’s international trade since Economics Association (2012:2) noted that the 1950s. The following Ref table 4.2 shows between 1996/97-2010/11, the service sector the total cargoes lifted by the ESLSE based and transport services of Ethiopia with on trade and vessel types. respect to Djibouti port grew by 9.4 % and 8.5 % per annum, respectively. Moreover, the Source: ESLSE, 2017 FDRE National Planning Commission

7 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) As it can be seen from table 4.2, the imported 4.3. The Advantages of Djibouti in cargoes to Ethiopia and cross trade cargoes Ethiopian Port Service shipped by ESLSE are slightly in an Djibouti is primarily a service-based increasing trend from the year 2008 to 2016. economy mainly dependent on port services. However, the export cargoes transported by Port services to Ethiopia, and infrastructural the enterprise generally are in fluctuating cooperation with Ethiopia, and its geo- trend. This large and unanticipated export strategic significance for external powers are trade instability is a serious problem for the principal sources of revenue for Djibouti Ethiopia’s sustainable development where (Zelalem (2015:26). According to the most of the total import is for investment informant from the Ministry of Trade, goods and equipment, fuel, and semi-finished Djibouti generates huge amount of revenue goods. The ESLSE is increasing its cargo from Ethiopia’s use of its port and this import service capacity by adding the number enables it to intensify economic of ships and using charters. The number of development. Djibouti's main source of ships of the ESLSE today has reached 11. revenue is its port, while Ethiopia has They are making significant contribution in remained at least thus as far as the only being strengthening the nation’s maritime transport dependent on its port use. As to Styan capacity and increasing the number of (2013:8), Djibouti is becoming regional hub cargoes carried by Ethiopian vessels. Now its in the Horn of Africa because of its port. In vessels’ total carrying capacity has reached the same vein, the International Monetary 333,967 tons at a time. Accordingly, even Fund (2017:6) affirmed that Djibouti’s GDP though the performance has decreased to has steadily grown over the past one or two 952,628 tons in 2016, the cargo transported decades, increasing at 6% average annual by ESLSE owned vessels has increased to rate. Factually, the Ethio–Eritrea war of 1,315,517 tons in 2015 from 763,498 tons in 1998–2000, and the impact of Ethiopia’s 2008. This entails that ESLSE has played an economic transformation and growth upon enhanced role to Ethiopia’s import and trade that makes Ethiopia dependent on export trade. Djibouti port are the contributing factors of Djibouti’s economic growth. This has brought a parallel Djibouti’s economic development.

8 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) According to the informants of the Ministry electricity, telecommunications, potable of Foreign Affairs, Ethiopia pays for Djibouti water, and peace and security collaboration. to port services; port rent payment when Zelalem (2015:24) noted that the ships are docking, port maintenance fee or complementary economic structure where port handling fees, demurrage fee (for Ethiopia is landlocked but with a favorable import) and storage fee (for export). climate for the production of other materials Annually, Ethiopia paid for port services to needed by Djibouti that in contrast is Djibouti 2 billion birr in 2006 (Robera, characterized by dry weather condition. 2011:51), US$ 700 million in 2009 (UN, Hence, Ethiopia rarely has, but Djibouti as a 2013:17), and $850 million in 2010 major partner for external sustainable (Getachew, 2017:5) for port services. economic relation and for Djibouti Ethiopia Similarly, an informant of the ESLSE to generate port service income as well as its contended that Ethiopia currently pays more people livelihood, assures the reciprocal than the US $850 million per year to Djibouti. nature of their relation. Nevertheless, as Besides, Endalcachew and Kidanu (2015:10) informants of the Ministry of Foreign Affairs put that the revenue Djibouti generated from argued, this does not mean that the Ethiopia accounted for 80% of Djibouti’s landlockedness of Ethiopia does not entail economy in 2012. Dagmawi (2016:12) disadvantage. For example, it is exposed to explained that Djibouti port generated direct pressures such as giving to Djiboutian revenues that estimated from $65 million to citizens’ visa-free entry to Ethiopia and free $90 million per year, as of 2016, most of were water without counter return from Djibouti, generated from Ethiopia. which creates discrepancies in their relation.

Data collected revealed that Djibouti port has enhanced mutual economic relations of Ethiopia and Djibouti. As a result of Djibouti port, the two countries’ relation has expanded into other spheres of higher level of cooperation and interdependence. This can be understood in the present integration between them through the railway and road infrastructure, trade and investment,

9 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) 4.4. Challenges and Prospects of Djibouti apparent lack of any pay off for Ethiopia can Port in Strengthening the Ethio- be seen as one of the discrepancies in the Djibouti Economic Relations mutual relations.

4.4.1. Challenges Facing Djibouti Port in Furthermore, according to the informants of Strengthening the Ethio-Djibouti the Ministry of Foreign Affairs, unilateral Economic Relations decisions and actions has affected the Ethio- Djibouti economic relations, obviously, the 4.4.1.1. Heavy Dependency of Ethiopia on upper hand went to the port owner state. As a Djibouti Port result, Djibouti keeps rising port price Interviewee experts from the Ministry of unilaterally because it knows that Ethiopia Foreign Affairs claimed that heavy has no relative alternative or no competitive dependency on Djibouti port has become a outlet for market interaction. In this regard, bottleneck for Ethiopia’s fast-growing Belete (2014:180) claimed that unilateral economy. Djibouti port is both incapable to influence of Djibouti in tariff and other handle the fast-growing Ethiopian economic related issues as a port owner influenced needs, but also accompanies with heavy cost Ethiopia. For instance, in 1998 Ethiopia and or high tariff rates imposed on Ethiopia by Djibouti agreed on minutes that provide 30 Djibouti port. Besides, Ethiopia is strained days of grace time for containers and issued and exposed to further influences to provide the payment for stevedoring activities paid to Djibouti nationals visa-free access to Djibouti port to be per container. However, Ethiopia and free water while the reverse is without prior notice to Ethiopia, Djibouti not true which indicates just the burden of unilaterally avoided this minute. Ethiopia’s landlockedness. Mormul Consequently, it issued payment for (2016:277) argued that the benefits of stevedoring activity per hour, reduced the Djibouti as a result of its relation based on grace time from 30 days to 15-20 days, and Djibouti port has multiplied. In 2014, the increased its port tariff by 50% in 2011. Ethiopian government signed an accord to Though Ethiopian was negotiated to reduce enable Djibouti to extract fresh water free of this new port tariff at the time where it is charge from Zone in the Ethiopian issued, Djiboutian refused. Ethiopia had no for 30 years. However, the option but to accept it. Moreover, according to Kindiki (2008:22-23), Ethiopia and

10 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Djibouti concluded the Agreement on the 4.4.1.2.The Influence of Foreign Powers Utilization of the and The other problem is third-party involvement Services to Cargo in Transit on 13th April to disrupt Ethio-Djibouti relation. For 2002. The agreement proper guarantees example, Egypt is blamed greatly for de- Ethiopia unfettered access to the sea and stabilizing their economic integration. There freedom of transit via Djibouti’s territory has been Egypt overt support to the Eritrean regarding goods originating from and Liberation Front stationed in Cairo, military destined to Ethiopia. This agreement also support to Somalia during the 1977-1978 provides any hike of charges and tariffs or War, and military support to Eritrea change of port regulations by Djibouti must during the 1998-2000 Ethio-Eritrea War be notified to Ethiopia in advance and (Berouk, nd:10). In relation to this, Goche presumably discussed accordingly. The (2016:4) maintained that Djibouti has implementation of this agreement, however, maintained close relations with the US, has been unsatisfactory. Ref Table 4.3 China, Japan, and others. Economically and summarizes Djibouti port charges with politically powerful countries are respect to the other ports in the region. intensifying their presence in Djibouti not Source: Dagmawi, 2016 simply due to economic but also for security reasons. Nevertheless, the presence of those As it is shown in table 4.3, the charges for powers in Djibouti could erode the stevedoring and port dues for import levied independence of Djibouti in pursuing its by Djibouti port are too high for both full regional cooperation and integration schemes container of 20’(Twenty Feet Equivalent in the Horn of Africa, particularly with Unit) and for 40’ (Forty Feet Equivalent Ethiopia on port use matters. Unit) or overstated compared to the other ports. Though Ethiopia needs to ease 4.4.1.3. Political Instability in the Horn of dependency and reduce unnecessary costs at Africa, and Its Effect on Djibouti Djibouti port by finding alternative ports, Port other ports too have their own drawbacks as According to Excoffier and Gil (2014:11), aforementioned. inter-state conflicts in the Horn of Africa have long term implications for bilateral

11 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) relations and regional security. The Ethio- Shipping Lines from using the bill of lading Somalia (1977-1978) and the Ethio-Eritrean and becoming the only multimodal operator conflict (1998-2000) are notable ones. As able to operate in the Ethio-Djibouti corridor noted before, for instance, during the gaining sole monopoly of the land route in Ethiopia-Somalia war of 1977-1978, the addition to the sea routes. For Djibouti, the Somali forces cut off the railway line and bill of lading and multimodal transport can prevented Djibouti port of giving service to only function and are only acceptable in the Ethiopia. Similarly, Berouk (2008:2) stated context of open competition. that during the Ethiopia-Eritrea (1998-2000) Informant of the Ministry of Trade conflict, Eritrea accused Djibouti of allowing maintained that corridor institution is vital to Ethiopia to use its port for importing military governing transit trade operations between arms for the war use. In addition, in 2008, landlocked and port owning states over there was a temptation to obstruct Ethiopia access to and from the sea. However, the from using Djibouti port when Eritrea and Ethio-Djibouti Corridor has not a formal Djibouti nearly went to war over their institutional framework and permanent conflictual border called Ras Doumeirah. secretary. It is, as a result, run by a committee During this critical time, Ethiopia announced of experts, and inter-ministerial bilateral even that it would defend the Ethio-Djibouti committees. As an informant of the ESLSE trade route. This indicates inter-state conflict also noted, the implementation of agreed impact on Ethio-Djibouti relation and on the measures on transit and trade facilitation port service too. between those two committees’ meetings, 4.4.1.4. Managerial (Institutional) Snags however, lacks follow up. In fact, establishing a corridor institution is critical to According to Cabanius (2003:11-12), facilitate transit trade between the two multimodal transport of goods and bill of countries. Moreover, the Importers and lading has been a source of disagreement Exporters informants identified that logistics between Ethiopia and Djibouti. The bill of and bureaucratic challenges, lack of lading which Ethiopia requested as a coordination between shippers, forwarders, complement to the establishment of an Inland and port authorities, inadequate containers, Customs Depot was rejected by Djibouti. congestion, and administration inefficiency Djibouti needs to prevent the Ethiopian become major problems of the Djibouti port

12 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) as such, Ethiopian importers and exporters the number of operators in multimodal is one are exposed to high costs, and displayed operator but in unimodal are many requiring discomfort with Djibouti port services. much time to complete transit procedures (Dagmawi, 2016:27-29). 4.4.1.5. Infrastructural Challenges and Djibouti Port Operational As per the Importers and Exporters Problems informants, the other operational hitch that hampers port efficiency is long cargo port According to Elshaday (2016:11), dwelling time. Djibouti port grants eight days infrastructure interconnection is pivotal in of grace period and starts charging linking landlocked and port owning states. In demurrage cost per container per day after this regard, Djibouti port is connected with these days. This grace time is short which Ethiopia through 910 kms via Galafi. Of this makes export process accomplishment road, only 71 kms is in good condition while difficult within this grace time. The longer the rest is not, which poses a challenge to port dwelling time arises as ships may not Djibouti port and the Ethio-Djibouti come at scheduled time due to schedule economic relations. cancelation and related factors, timely

Djibouti port has also faced operational unavailability of empty containers, and snags. Transit inefficiency takes a longer delays of documentation processes. time to clear goods through the port in According to Dagmawi (2016: 29), the unimodal or multimodal methods. For average dwelling time for a container at example, the average unimodal cargo Djibouti for both unimodal and multimodal clearance in Djibouti port takes about 10 days operations is 22 days which is too high that is facilitated in less than 3 days in other compared with Mombasa and Dar-es-salaam ports that have global best practice. The lack which have an average of 7 days grace time. of synchronized organization of clearance, Yet, it is worse from international standards and the non-value adding procedures and which is a maximum average of 3 days. requirements contributing to the cargo Generally, the Djibouti port operational clearance delay from the seaport incur a inefficiency is resulted from poor longer time and unnecessary costs. Transit infrastructure, inadequate administration and time in multimodal is relatively short because coordination, and congestion. The WBG (2015:5) has rated the performance of the

13 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Djibouti port as fair as an international port. plan to construct a new modern railway line However, according to the Islamic i.e. - Tadjourah railway between Development Bank (2013:1), Djibouti port Mekelle and Tadjoura port. As indicated has been operating at nearly in full capacity before, Elshaday (2016:11) described that of (400,000 TEUs), thus, preventing it from the 910 kms road via Galafi except the only taking benefit of its potential. 71 kms, the remaining portion is not in good condition. As such, Ethiopia and Djibouti 4.4.2. Future Prospects and Scenario have a plan to rehabilitate it. The growing Analysis in Strengthening Ethio- Ethiopian economy and the Ethio-Djibouti Djibouti Economic Relations economic integrations also could make the It is worthwhile to put three important levels relation bright. Ethiopia will remain of scenario-most likely, likely, and least Djibouti’s main partner by virtue of its likely, to make possible prediction to the role closest location and the size of its economy of the Djibouti port in both countries and vise-versa. economic relation in the future. The likely scenario, as Styan (2013:17) The most likely scenario holds that the scrutiny examined, shows that the future prospect of continuity of Djibouti port in prospect of Djibouti port in strengthening the strengthening the Ethio-Djibouti economic Ethio-Djibouti relation likely seems to relations most likely seems promising. The continue but likely seems to be reduced in the interviewed informant of the Ministry of future. Djibouti port will face increased Foreign Affairs, the Ministry of Trade, and competition from other ports such as Port of the ESLSE argued that, the current Sudan and Berbera as a result of infrastructural links such as the newly infrastructural development and enhanced inaugurated 753 kms Addis Ababa-Djibouti capacities. Besides, an informant from the railway, and a plan to construct new modern Ministry of Foreign Affairs argued that railway line, the construction of the new port Ethiopia is in search of alternative ports to (port of Doraleh), and the plan to build port reduce its heavy dependency on Djibouti of Tadjourah supports this scenario. port. As stated in the FDRE National Moreover, the FDRE National Planning Planning Commission (2016:152), Ethiopia Commission (2016:150) stated that there is a has planned to distribute 60%, 30%, and 10% of its port use between Djibouti, Berbera and

14 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Port Sudan respectively. This indicates that Ethio-Djibouti economic relations. It has Djibouti port likely seems to reduce its identified the main motivating factors that led importance in the future for the economic Ethiopia to use Djibouti port has been not relations. only its geographical proximity when compared to other neighboring ports, but also With respect to the least likely scenario, an infrastructural links such as the connection of informant from Ministry of Foreign Affairs the two countries via road and railway argued that, given the availability of other construction that goes back to a century. The ports in terms of less cost and better services landlockedness of Ethiopia as a result of in relation to the highest rate of tariff and its Eritrea’s independence from Ethiopia has incapability to handle the fast-growing maintained Ethiopia’s use of Djibouti port, Ethiopian economy, the prospect of Djibouti and the Ethio-Eritrea conflict of 1998-2000 port giving service to the bilateral relations that denied Ethiopia’s access to Eritrean ports can be terminated. much made further to increase Ethiopia’s use

It can be inferred that given the of Djibouti port. infrastructural links such as roads and It has also revealed that Djibouti port plays a railway, the growing Ethiopian economy that vital role for Ethiopia becoming the major benefit both countries and the Ethio-Djibouti outlet of economic integration with the economic integrations between the two outside world. Despite this, the economic countries, most likely shows the prospects of role of Djibouti port to Ethiopia declined continuity of Djibouti port in strengthening from the 1970s until the late 1990s owing to the Ethio-Djibouti economic relations the increasing domestic instability in promising. However, the availability of other Djibouti, and the Ethio-Somali war 1977-78, ports in terms of less cost and better services and from 1993 to 1997, when Eritrea and will pose a challenge against the Djibouti port Ethiopia were in cordial relation before going and the economic relations of the two to conflict in the name of border dispute. countries. Since 1998, however, Ethiopia's diversion of

5. CONCLUSION almost all trade has towards Djibouti port transformed the Ethio-Djibouti economic This study was conducted with the aim of relations into a parallel high level of assessing the role of Djibouti port for the economic interdependence and cooperation.

15 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) It shows that Djibouti generates revenue from The influence of foreign powers such as Ethiopia’s use of Djibouti port that enables it Egyptian attempts to destabilize Ethiopia, to enhance its economic development. and the presence of France, USA and China Djibouti's main source of revenue is its port, around and in Djibouti port erode the while Ethiopia has remained at least as far as confidence of Djibouti in pursuing relations the only being dependent on its port use. with Ethiopia and becomes a challenge for Djibouti is, in fact, becoming a regional hub their relations. Instability in the Horn of in the Horn of Africa as a result of its port. Its Africa has long term impact on Ethio- GDP has grown steadily over the past one or Djibouti economic relations and its effect on two decades, increasing at an average annual Djibouti port is quite another challenge. For rate of 6%. instance, the Ethio-Somalia war of 1977- 1978 and the Ethio-Eritrea war of 1998-2000 It indicates that the Djibouti port boosts both were cases in point. Another challenge countries mutual economic benefits. The emanates from management snags like the complementary economic structure reliant is non-existence of formal institutional on Ethiopia's landlockedness, but favorable framework for the Ethio-Djibouti corridor, climate for the production of other materials and Djibouti’s lack of heartfelt willingness needed by Djibouti, that in contrast is on the introduction of Ethiopia’s multimodal characterized by dry weather condition. transport and the bill of lading. More than Hence, Ethiopia rarely has, but Djibouti as a this, infrastructural problem in the Djibouti major partner for external sustainable port, lack of coordination between economic relation and for Djibouti Ethiopia stakeholders, shortage of cargo handling and to generate port service income as well as its cargo transport equipment within the port, people livelihood, which makes benefit to be timely unavailability of empty containers, mutual. congestion and high costs to

However, it does not mean things are importers/exporters are also common. Quite straightforward for the Ethiopia-Djibouti another, poor infrastructure in the road economic relation. The heavy dependency of connecting Ethiopia and Djibouti, and Ethiopia on Djibouti port and the high tariff Djibouti port operational inefficiencies are rates of Djibouti port as a result has become the main challenges facing the Djibouti port. a bottleneck for its fast growing economy.

16 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Given the infrastructural links such as roads Berouk Mesfin (nd). The Horn of Africa as a and railway, growing Ethiopian economy, Security Complex: Towards a Theoretical and Ethio-Djibouti economic integrations, Framework. African Conflict the prospects of continuity of Djibouti port in Prevention Program, Institute for Security strengthening the Ethio-Djibouti economic Studies. relations most likely seems promising. Cabanius, Philippe (2003). Improvement of However, the availability of other ports in Transit Systems in the Horn of Africa: terms of less cost and better services will pose Ethiopia’s Main Access Corridors to the a challenge against the Djibouti port and the Sea. UNCTAD working paper, New York. Ethio-Djibouti economic relations. Chorin Ethan (2010). Articulating a “Dubai Model” of Development: The Case of REFERENCES Djibouti. Published by the Dubai Almaty Program of Action (2013). The School of Government, Dubai, United Arab Status of Implementation of the Almaty Emirates. Program of Action (2003-2013). Dagmawi Shewangizaw (2016). Assessment Democratic Republic of Ethiopia National of the Impact of Logistic Performance on Report, Ethiopia. Trade in Ethiopia. MA Thesis Anbalagan Chinniah and Kanagaraj Submitted to School of Graduate Studies of St Kalimuthu (2014). A Study on Problems and Mary University, Addis Ababa, Prospects of Transport in Ethiopia: Special Ethiopia. Reference with Auto Rickshaw’s in Elshaday Woldehawariat (2016). Assessment City, SNNPRS, Ethiopia, IFSMRC AIJRM, of the Performance of Dry Ports in Vol. 02. Ethiopia. MA Thesis Submitted to Belete Belachew (2014). ጅቡቲ የጥገኝነታችን Addis Ababa Institute of Technology School መስፈርያ (Djibouti: A Source of Dependency). of Civil and Environmental Engineering Oland Printing Press, Addis Ababa, Graduate Studies, Addis Ababa University, Ethiopia. Ethiopia. Berouk Mesfin (2008). The Eritrea-Djibouti Endalcachew Bayeh and Kidanu Atinafu Border Dispute. Situation Report, Institute (2015). Economic Interdependence as a for Security Studies. Driving Force for Peace and Security

17 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Cooperation: Ethio-Djibouti Relations. Girma Gelalcha (2009). An Overview of Global Journals Inc.USA, Vol. 15. Transport and Trade Facilitation Initiatives ESLSE/Ethiopian Shipping and Logistics and Measures Implemented in Ethiopia. Services Enterprise/(2017). Statistical Country paper, Ethiopian Ministry of Trade Bulletin 2008- 2016. and Industry. Ethiopian Economics Association (2012). Goche Stephanie (2016). Djibouti: A Tiny Developments in the Transport Sector of Haven with Strategic Importance in a Ethiopia. Research Brief, Addis Troubled Neighborhood. Future Ababa Institute of Technology, School of Directions International Pty Ltd. Graduate Studies, Addis Ababa International Monetary Fund (2017). University, Addis Ababa, Ethiopia. Djibouti: Staff Report for the 2016 Article IV Ethiopian Economics Association/Ethiopian Consultation-Debt Sustainability Economic Policy Research Institute (2009). Analysis. Prepared by the staffs of the A Survey of the Economic and Trade International Monetary Fund and the Relationships between China, India, and International Development Association. Ethiopia. Final Report, Addis Ababa, Islamic Development Bank (2013). New Ethiopia. Container Port Raises Djibouti's International Excoffier Marion and Gil Manuel Manrique logistics Profile. Islamic Development (2014). East Africa: Competing Dynamics in Bank Success Story Series: NO.10. a Rapidly Changing Region. Regional Kindiki Kithure (2008). Cooperation among Briefing Policy, Department Directorate- the Landlocked and Transit Countries for the General for External Policies of European Right of Access to and from the Sea of Union. Landlocked Countries, A Consultant’s Draft FDRE National Planning Commission Report, University of Nairobi, (2016). The FDRE Growth and Nairobi, Kenya. Transformation Plan II (2015/16- Marks Thomas A. (1974). Djibouti: France's 2019/20). Vol. I. Addis Ababa, Ethiopia. Strategic Toehold in Africa. African Affairs, Getachew Begashaw (2017). Port of Assab as Vol. 73, No. 290. a Factor for Economic Development and Mormul Joanna (2016). Ethio-Djiboutian Regional Conflict. ResearchGet, Relations in 21st Century – Towards New William Rainey Harper College. African Cooperation. African Studies,

18 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) Jagiellonian University, Kraków, Poland. Urgessa Deressa (2014).The Ethio-Djibouti News. Relations: Implications for Sub Regional Robera Regassa (2011). Ethio Eritrean Integration Schemes in the Horn of Relations: Problems and Prospects in the Africa. MA Thesis Submitted to the School of Aftermath of Algiers Peace Agreement. MA Graduate Studies in International Thesis Submitted to Department of Political Relations. Addis Ababa University, Ethiopia. Science and International Relations, Warsame Mohammed (2017). Djibouti Must School of Graduate Studies, Addis Ababa Improve in Upgrading Infrastructures. University, Ethiopia. Wardheer Samrawit Kinfemichael (2016). Assessment World Bank Group (2015). Horn of Africa on Logistics Interconnectivity with Special Initiative Berbera Corridor Program. Reference to Ethiopian Fast Moving Background Note. Consumer Goods (FMCG) in Ethiopian Trading Enterprise. MA Thesis Zelalem Tesfay Gebreegzabhere (2015). The Submitted to St. Mary’s University School of Political Economy of Geo-Strategic Location Graduate Studies Addis Ababa and Infrastructure Development in University, Ethiopia. Djibouti: National and Regional Styan David (2013). Djibouti: Changing Ramifications. In Demessie Fantaye Influence in the Horn’s Strategic Hub. (2015). The Horn of Africa Bulletin Life and Chatham House Africa Programme | Peace Institute, Vol. 26. AFP BP 01. Acknowledgment Tewodros Makonnen and Halellujah Lulie

(2014). Ethiopia, Regional Integration and All praises to the almighty God who has the COMESA Free Trade Area. created this world of knowledge for us. I am Occasional Paper, South African Institute of deeply thankful to Dr. Belayneh Fikadu for International Affairs. his persistent comment and professional United Nations (2013). The Way to the advice all along the article process. Especial Ocean: Transit Corridors Servicing the Trade thanks deserve to this man of duty and of Landlocked Developing Countries. responsibility. The same appreciation also Technical report by the UNCTAD, Series No. goes to Ato Legesse Hankorie for what he did 4. the same thing. I also would like to extend my

19 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018) gratitude to my families for their enduring acknowledgment to persons and love, perpetual support and encouragements. organizations that helped me during I am really honored by you all. It is also worth conducting the study. mentioning that to extend heartfelt

LIST OF TABLES

Table 4.1. The Distances of Potential Sea Outlet for Ethiopia’s in relation to Addis Ababa

Distance of ports in kilometers

Djibouti Massawa Assab Sudan Berbera Mogadishu Merca Kismayo Mombassa

Road Rail

910 via Galafi and 847 via 781 1163 869 1881 964 1507 1567 1979 2077 Ports in kilometers

Distance of ports in kilometers Table 4.2. Total Cargoes Lifted by ESLSE by Trade Type and Vessel Type (in tons)

Year Import Export Cross Total Own Chartered Own trade trade vessel vessel share%

2008 1,867,692 3,527 353,429 2,224,648 763,498 1,461,150 34

2009 1,953,492 4,974 213,473 2,171,939 699,793 1,472,146 32k2

2010 2,170,353 1,138 305,887 2,477,378 841,375 1,636,003 34

20 ELK ASIA PACIFIC JOURNAL OF SOCIAL SCIENCE ISSN 2394-9392 (Online); DOI: 10.16962/EAPJSS/issn. 2394-9392/2015; Volume 5 Issue 1 (2018)

2011 1,739,571 1,222 466,987 2,207,780 787,906 1,419,874 36

2012 3,062,330 492 202,062 3,264,884 686,404 2,578,480 21

2013 3,018,969 1,082 75,000 3,095,051 655,498 2,439,553 21

2014 2,767,053 1,351 445,704 3,429,889 1,767,649 1,662,240 52

2015 3,657,055 10,706 306,214 3,657,055 1,315,517 2,341,538 36

2016 4,966,265 734 61,913 4,966,265 952,628 4,013,637 19

Table 4.3. Port Charges Comparison of Ports

Cargo Port charges (USD) full container

Aden Hodeida Port Sudan Berbera Mombassa Djibouti

20’ 228 235 127 200 157 405

40’ 301 159 172 300 195 810

21