03-10-2018, 11:37 PM
*** 11-Mar-18 World View -- General warns of US security danger if China acquires Djibouti seaport
This morning's key headlines from GenerationalDynamics.com
****
**** General warns of US security danger if China acquires Djibouti seaport
****
![[Image: g180310b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g180310b.jpg)
Djibouti is strategically located at the mouth of the Red Sea, with access to the Suez Canal and the Indian Ocean
The government of Djibouti made a shock announcement in February that
it was canceling its contract with Dubai's DP World, and was seizing
control of Djibouti's strategic port at the entrance to the Red Sea,
the Doraleh Container Terminal.
DP World and the Republic of Djibouti had signed a 30-year agreement
in 2006 for DP World to operate the terminal, which augments the
capacity of the International Autonomous Port of Djibouti. But last
month, Djibouti announced "The Republic of Djibouti has decided to
proceed with the unilateral termination with immediate effect of the
concession contract awarded to DP World, ... [to serve] the higher
interests of the nation, in particular those relating to the
sovereignty of the state and the economic independence of the
country."
DP World called the move an illegal seizure of the terminal and said
it had begun arbitration proceedings before the London Court of
International Arbitration, but even if DP World wins the case, they
will receive monetary compensation, but they will still lose control
of the port.
On Tuesday of last week, Djibouti signed a deal with Singapore-based
Pacific International Lines (PIL), a company that works with China
Merchants Port Holdings. Although this does not give China control of
the port, it's a step in that direction.
General Thomas Waldhauser, the top US general for Africa, said that
"If the Chinese took over that port, then the consequences could be
significant," and added, "There are some indications of (China)
looking for additional facilities, specifically on the eastern coast
... So Djibouti happens to be the first — there will be more."
Djibouti is home to the only permanent US military installation in
Africa. But last year, China opened its first overseas naval base
there too, provided loans to the country, and built a railway
connecting the seaport to the Ethiopian capital to improve regional
trade.
One of the concerns is that if Djibouti illegally seized the port from
DP World in order to give it to China, then they could just as easily
terminate the lease for the US military base, and award that to China
as well. According to Waldhauser, "If they did [give the port to
China], down the way that restricts access, that restricts the navy’s
ability to get in there and offload supplies."
The larger concern is that the US has been falling behind China in
influence in Africa. The US gives millions of dollars in aid, but
China has eclipsed the US in Africa in many ways: providing loans,
financing much-needed infrastructure, competing for resources like oil
and minerals, increasing its trade share, and spreading its
ideological influence. Maritime Executive (22-Feb) and Reuters and Quartz and Reuters
****
**** China continues influence through 'debt trap' policies
****
The US has provided millions of dollars in aid for counter-terrorism
efforts in countries like Ethiopia, Djibouti, Kenya, Chad, and
Nigeria, to fight terrorist groups like al-Shabaab or Boko Haram.
China's policies are quite different. China does not provide aid. It
provides high interest rate loans to the country to build
infrastructure, then provides Chinese workers which the country has to
hire to build the infrastructure. The country that receives this kind
of "aid" then must pay the salaries of all the Chinese workers, and
must also repay the loan, including the high interest. China then
extract's the country's resources, and no local jobs are created, and
almost no benefit goes to the country.
If the country is unable to make those payments, then China takes
possession of the seaport or other infrastructure, in lieu of payment,
and also establishes a community of Chinese workers in the country --
a community which will be there forever.
We've already described
what
happened with Sri Lanka, when China invested $1.2 billion in Sri
Lanka's Hambantota seaport in 2009. The plan was that revenue
generated by the seaport would be used to repay the Chinese, and the
surplus would bring wealth and happiness to all Sri Lankans. It
didn't turn out that way, and the project turned out to be a "debt
trap." Sri Lanka couldn't repay the loan, and now China has taken
control the seaport and the surrounding area. It's been a disaster
for Sri Lanka.
In a speech last week, Secretary of State Rex Tillerson contrasted US
policies with China's policies:
<QUOTE>"The United States pursues, develops sustainable
growth that bolsters institutions, strengthens rule of law, and
builds the capacity of African countries to stand on their own two
feet. We partner with African countries by incentivizing good
governance to meet long term security and development goals.
This stands in stark contrast to China’s approach, which
encourages dependency using opaque contracts, predatory loan
practices, and corrupt deals that mire nations in debt and
undercut their sovereignty, denying them their long-term,
self-sustaining growth. Chinese investment does have the potential
to address Africa’s infrastructure gap, but its approach has led
to mounting debt and few, if any, jobs in most countries. When
coupled with the political and fiscal pressure, this endangers
Africa’s natural resources and its long-term economic political
stability."<END QUOTE>
Countries that have already substantially increased their debt-to-GDP
ratio because of China's debt trap policies include Djibouti,
Montenegro, Pakistan, Mongolia, Maldives, Laos, Kyrgyzstan, and
Tajikistan. US State Dept and Quartz and CNN and US Embassy in Nigeria
Related Articles
KEYS: Generational Dynamics, Djibouti, Doraleh Container Terminal,
International Autonomous Port of Djibouti, Red Sea,
Dubai, DP World, Pacific International Lines, PIL,
China, China Merchants Port Holdings, Thomas Waldhauser,
debt trap, Sri Lanka, Hambantota seaport, Rex Tillerson,
Montenegro, Pakistan, Mongolia, Maldives, Laos, Kyrgyzstan,
Tajikistan
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- General warns of US security danger if China acquires Djibouti seaport
- China continues influence through 'debt trap' policies
****
**** General warns of US security danger if China acquires Djibouti seaport
****
Djibouti is strategically located at the mouth of the Red Sea, with access to the Suez Canal and the Indian Ocean
The government of Djibouti made a shock announcement in February that
it was canceling its contract with Dubai's DP World, and was seizing
control of Djibouti's strategic port at the entrance to the Red Sea,
the Doraleh Container Terminal.
DP World and the Republic of Djibouti had signed a 30-year agreement
in 2006 for DP World to operate the terminal, which augments the
capacity of the International Autonomous Port of Djibouti. But last
month, Djibouti announced "The Republic of Djibouti has decided to
proceed with the unilateral termination with immediate effect of the
concession contract awarded to DP World, ... [to serve] the higher
interests of the nation, in particular those relating to the
sovereignty of the state and the economic independence of the
country."
DP World called the move an illegal seizure of the terminal and said
it had begun arbitration proceedings before the London Court of
International Arbitration, but even if DP World wins the case, they
will receive monetary compensation, but they will still lose control
of the port.
On Tuesday of last week, Djibouti signed a deal with Singapore-based
Pacific International Lines (PIL), a company that works with China
Merchants Port Holdings. Although this does not give China control of
the port, it's a step in that direction.
General Thomas Waldhauser, the top US general for Africa, said that
"If the Chinese took over that port, then the consequences could be
significant," and added, "There are some indications of (China)
looking for additional facilities, specifically on the eastern coast
... So Djibouti happens to be the first — there will be more."
Djibouti is home to the only permanent US military installation in
Africa. But last year, China opened its first overseas naval base
there too, provided loans to the country, and built a railway
connecting the seaport to the Ethiopian capital to improve regional
trade.
One of the concerns is that if Djibouti illegally seized the port from
DP World in order to give it to China, then they could just as easily
terminate the lease for the US military base, and award that to China
as well. According to Waldhauser, "If they did [give the port to
China], down the way that restricts access, that restricts the navy’s
ability to get in there and offload supplies."
The larger concern is that the US has been falling behind China in
influence in Africa. The US gives millions of dollars in aid, but
China has eclipsed the US in Africa in many ways: providing loans,
financing much-needed infrastructure, competing for resources like oil
and minerals, increasing its trade share, and spreading its
ideological influence. Maritime Executive (22-Feb) and Reuters and Quartz and Reuters
****
**** China continues influence through 'debt trap' policies
****
The US has provided millions of dollars in aid for counter-terrorism
efforts in countries like Ethiopia, Djibouti, Kenya, Chad, and
Nigeria, to fight terrorist groups like al-Shabaab or Boko Haram.
China's policies are quite different. China does not provide aid. It
provides high interest rate loans to the country to build
infrastructure, then provides Chinese workers which the country has to
hire to build the infrastructure. The country that receives this kind
of "aid" then must pay the salaries of all the Chinese workers, and
must also repay the loan, including the high interest. China then
extract's the country's resources, and no local jobs are created, and
almost no benefit goes to the country.
If the country is unable to make those payments, then China takes
possession of the seaport or other infrastructure, in lieu of payment,
and also establishes a community of Chinese workers in the country --
a community which will be there forever.
We've already described
what
happened with Sri Lanka, when China invested $1.2 billion in Sri
Lanka's Hambantota seaport in 2009. The plan was that revenue
generated by the seaport would be used to repay the Chinese, and the
surplus would bring wealth and happiness to all Sri Lankans. It
didn't turn out that way, and the project turned out to be a "debt
trap." Sri Lanka couldn't repay the loan, and now China has taken
control the seaport and the surrounding area. It's been a disaster
for Sri Lanka.
In a speech last week, Secretary of State Rex Tillerson contrasted US
policies with China's policies:
<QUOTE>"The United States pursues, develops sustainable
growth that bolsters institutions, strengthens rule of law, and
builds the capacity of African countries to stand on their own two
feet. We partner with African countries by incentivizing good
governance to meet long term security and development goals.
This stands in stark contrast to China’s approach, which
encourages dependency using opaque contracts, predatory loan
practices, and corrupt deals that mire nations in debt and
undercut their sovereignty, denying them their long-term,
self-sustaining growth. Chinese investment does have the potential
to address Africa’s infrastructure gap, but its approach has led
to mounting debt and few, if any, jobs in most countries. When
coupled with the political and fiscal pressure, this endangers
Africa’s natural resources and its long-term economic political
stability."<END QUOTE>
Countries that have already substantially increased their debt-to-GDP
ratio because of China's debt trap policies include Djibouti,
Montenegro, Pakistan, Mongolia, Maldives, Laos, Kyrgyzstan, and
Tajikistan. US State Dept and Quartz and CNN and US Embassy in Nigeria
Related Articles
- Pakistan overwhelmed and China alarmed over the China-Pakistan Economic Corridor (CPEC) (12-Dec-2017)
- China takes control of strategic Hambantota seaport in Sri Lanka, raising concerns in India (11-Dec-2017)
- China establishes its first foreign military base, in Djibouti (13-Jul-2017)
- The African Union celebrates China's rise in Africa (29-Jan-2012)
- African leaders once again furious that they won't get a climate change bonanza (18-Nov-2017)
KEYS: Generational Dynamics, Djibouti, Doraleh Container Terminal,
International Autonomous Port of Djibouti, Red Sea,
Dubai, DP World, Pacific International Lines, PIL,
China, China Merchants Port Holdings, Thomas Waldhauser,
debt trap, Sri Lanka, Hambantota seaport, Rex Tillerson,
Montenegro, Pakistan, Mongolia, Maldives, Laos, Kyrgyzstan,
Tajikistan
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
