Berbera Deal: The Ultimate Winners and Losers

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The Berbera Deal between DP World, Somaliland and Ethiopia is causing controversy across the Horn of Africa. Successive declarations by the governments of Somalia and Somaliland are in direct opposition. The Federal Government of Somalia has ‘officially’ voted down the deal in parliament. Contrarily, the President of the Republic of Somaliland has declared the Berbera deal will continue as planned.

The agreement also puts in question Ethio-Djibouti relations. Djibouti’s Ambassador to Ethiopia claims the tripartite port deal does not threaten Djibouti.

There are also reports linking the UAE government’s involvement as a means to influence the political situation in the region, especially Yemen.

Let’s look at the ‘winners and losers’ of the new deal and what it could mean for the region.

United Arab Emirates – Dubai Ports World

The UAE-controlled DP World has attained a 30 year contract for the “management and development of a multi-purpose port project at Berbera.” The company set off on the initiative with a $442 million investment.

The company was in bitter disputes with the government of Djibouti since 2012. Consequently, the two-party deal to manage Doraleh was cancelled and the government took over the running of the port in 2017. Djibouti claims “the government’s agreement with DP World did not include the company designing, building and operating [Doraleh].”

After winning the legal battle against the Djibouti government, DP World quickly approached Somaliland to gain access to Berbera port. Thus, in 2016, the 30 year deal was signed, maintaining the UAE’s foothold in the region.

There are various reports linking the deal with the UAE’s political-military-economic interests in the region. The UAE is building a military base in the port city, much welcomed by the Somaliland government. This could allow the Middle East country to better manage its fight against rebel groups in Yemen.

The outlook seems bright for DP World and the UAE. Berbera will serve as a strategic location maximizing both their political and economic ambitions.

Somalia and ‘Threats to Sovereignty’

The Federal Government of Somalia has publicly announced the Berbera deal is ‘null and void‘. The parliament made it ‘official‘ by voting against the deal and announcing the deal is no longer valid.

Somalia was not brought into the Port of Berbera deal from the start. This may be due to Somalia’s ‘neutrality’ over the Gulf-Qatar crisis in late 2017. Somalia refused offers to boycott Qatar, to the dismay of the UAE, Saudi and Bahrain governments.

However, it reacted swiftly to Ethiopia’s involvement in the agreement. Letters were sent to Arab League states, and an official complaint was made against the UAE. The President of the FGS, Mohamed Abdullahi Mohamed said, “I am warning foreign companies not to interfere with our sovereignty.”

Somalia may view Ethiopia’s entry into the deal as a shift towards acknowledging Somaliland’s independence. According to Stratfor, “[Mohamed Abdullahi’s] clan ties to the Ogaden, a tribal group currently waging an insurgency in Ethiopia, put him at odds with Ethiopia.”

There is little else Somalia can do diplomatically, and many are anxious of rising tensions between FGS and Somaliland.

Djibouti’s Hold on Ethiopian Trade May Falter

Djibouti is a longstanding partner of Ethiopia, and the land-locked country’s gateway to the world of maritime trade. Ethiopia has commenced the operation of an Addis-Djibouti railway linking the capital directly to Djibouti’s ports.

“The railway goes from Addis Ababa to the sea; there is no other sea access in the … new ports of the region; so that is an advantage.” – Djibouti’s Ambassador to Ethiopia Ambassador Mohammed Idriss Farah

All in all, the government of Djibouti seems unworried by the Berbera deal. With increased focus on the Doraleh port, seized back from DP World in 2017, Djibouti seems unaffected by Ethiopia’s interests in Berbera.

“Ethiopia is a sovereign country to sign any agreement and we recognize that it is normal, as we ourselves are sovereign,” said Ambassador Mohammed Idriss Farah. He went on to say Ethiopia’s agreement coinciding with Djibouti “suspending [its] relations with DP World “what surprised us”.

“… but we are by no means bothered by the decision. The negotiations were also started more than two years ago and we know that…. we are not bothered by the fact that there are other competing ports.” concluded the Ambassador.

Somaliland – Path to Recognition and Security

Somaliland has welcomed the development of Berbera by DP World, the country’s largest investment since independence in 1991. As yet unrecognized by the international community, it has taken bold steps to be “a regional trading and maritime hub”. In an exclusive letter to UAE’s The National, President Muse Bihi Abdi criticized Somalia’s “senseless hostility” towards his country.

He asserted the Somali Parliament’s decision “has no legal merit and will not in any way impact the deal with DP World and Ethiopia.”

Somaliland’s strategic acceptance of DP World in light of the latter’s disputes with Djibouti has paved the way for better ties with the UAE.

The President is also aiming to strengthen its security amid rising tensions between Somalia and Somaliland. “The UAE would train police and military in Somaliland, which wants independence from war-torn Somalia,” confirmed the President.

Furthermore, Somaliland has granted UAE’s plans to set up a military base in Berbera. “In 2017, Somaliland declared UAE had permission to launch attacks from its new military installation in Berbera,” reports The New Arab. President Abdi claimed the military base will “act as a deterrent to extremist groups in the region.”

Ethiopia – Broadening Horizons

The Ethiopian government is yet to issue a statement on Somalia’s complaint against the Berbera Port Deal.

It seems Ethiopia is not willing to negotiate over the lucrative economic opportunities of the deal. Ethiopia basically holds all the cards and is in a position to exponentially increase maritime trade through Berbera. Playing both sides, Ethiopia stands to profit from the already established economic ties with Djibouti and the newfound partnership with Somaliland.

No matter the assumed geopolitical benefits to Ethiopia (which may be numerous and impossible to ignore), the Berbera port lessens Ethiopia’s dependence on Djibouti. The relative proximity of the port to central and southern Ethiopia is also vital. “The agreement will help Ethiopia secure an additional logistical gateway for its ever increasing import and export trade driven by its growing population and economy,” said Ahmed Shide, Ethiopian Minister of Transport.

Tip of the Scales

Ethiopia and the UAE seem to benefit the most from the Port of Berbera deal. It will allow them to safeguard and maximize their economic and geopolitical interests in the region.

Somaliland follows next with a promise of investment that could curb the country’s plague of unemployment. The deal may also boost Somaliland’s security and push for international recognition.

Djibouti will face some tough competition in the years to come. However, potential losses may be minimal due to recent moves to develop multiple ports in the country. For Djibouti, the motto seems to be “Business as Usual.”

Obviously, Somalia is the ultimate loser. Actually, it is the only concerned stakeholder to publicly and adamantly oppose the deal. The government is ‘pouring salt on old wounds’ as it maintains brash tactics to fight the Berbera Port deal. The FGS is in a dark, lonely corner, and cannot afford to infuriate its neighbors with aggressive statements and veiled threats.

የተመረጡና ሰበር ዜናዎችን ያግኙ

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