DP World: The New Maritime Empire in the Horn of African Shores

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A ship docks at the Berbera port in Somaliland. DP World currently manages two major ports in Somaliland and Puntland.
©Khadar Hanan

By Khadar Hanan

The United Arab Emirates (UAE), a country that geographically rests on the Arabian Peninsula, situated in the southeastern coast of the Persian Gulf and the northwestern coast of the Gulf of Oman was formally commenced on a treaty between seven small Trucial states or sheikhdoms under the British Colonial Powers in the early 1970s. Prior to the discovery of the black diamond, “the world’s most blessed and precious hydro-carbon reserves”, the lives of the Arabian people under the Sheikhdoms was fairly similar as no one have had a clue about the kind of wealth naturally buried beneath the barren sands in one of the world’s unpleasant atmospheres in terms of the weather. As the fortune would never be the same for everyone even biological brothers, some of the Sheikhdoms found that they were not been naturally blessed with similar resources like their peers and had to become dependent states that sustains over the handouts by their brethren emirates.

Dubai (a business hub), whilst much of its development was due to the oil industry,again it is less fortunate when it comes to the oil reserves as it barely extracts not more than 70,000 barrels a day and potentially could exhaust this in less than 20 years from now. Its non-hydro-carbon revenues was barely 5% in recent years, and owing to this fact, this emirate had aggressively taken progressive developmental projects in all fields such us, free trade strategic partners from east to west like China, India, USA, EU and others in Africa. Promoting real estate commercial land marks, like theEmirates Towers, the BurjKhalifa, the Palm Islands and the most expensive hotel, “the Burj Al Arab”. Dubai also succeeded to become a free heaven for the worlds IT and Financial industries coupled with the Media and Techno-industry. On top of that, Dubai has also the Jebel Ali port, constructed in the late1970s, one of the largest harbors in the region and ranked ninth globally for the volume of container traffic it supports annually. The non-oil and gas foreign trade revenues of Dubai jumped 2.7% and stood roughly $ 327 billion in the first quarter of this fiscal year. This commercial and trade hub needs to be preserved and strategically sustained what so ever it might cost.

DP World

A company with portfolio of 78 operating marine and inland terminals was founded in 2005 by merging Dubai Ports Authority and Dubai Ports International. It was enlisted into the stock market in 2007 and its shares were over subscripted due to its potentiality of high returns. In 2016 Jabal Ali port in Dubai under the DP World has managed roughly 15 million (twenty-foot equivalent unit (TEU)) containers. The notion that this man-made economic zone would not survive in the future unless mitigation plans were aggressively forced to put safety nets in place was what behind the DP World’s monopolistic expansion strategy on the red sea and the Gulf of Eden. DP World’s dual faced business strategy is presumably to do fair business in far inter-continental terminalsto yield profit, but to sabotage the regional terminals to keep vibrant its non-strategic ports.   Implementing this monstrous opportunistic policy, DP World had to conquer its closest ports to get them under commercial and trade strangulations encapsulated in long contractual terms (30 years clause).

Red arrows in the picture depict how strategic are ports in the red sea and Gulf of Aden than that of Dubai.

Aden & Djibouti Ports

In 2006, DP World has signed a 30 years long joint venture contract with Djibouti government to have the Doraleh Container Terminal under its management. This port falls in a more strategic location as a maritime gate way that connects Asia, Africa and Europe. Ever since DP World kick started the port operations, there had been an apparently increasing misunderstanding between the Djiboutian government and the company. Doubtful feelings on how healthy the contract was at the beginning have raised many questions which has eventually prompted the Djiboutian government seek the annulment of the DP World-Doraleh concession. With this Djibouti had to file a court case against DP World with an international court in London in July 2014. Although, Djiboutian government lost the London Tribunal case to DP World in February this year, the distorted born between UAE and Djibouti was yet to be mended, as Djibouti complained about that DP World has hugely bribed Mr. AbdirahmanBoreh, the former head of Djibouti’s Ports Free Zone Authority to have this opportunity.Mr. AbdirahmanBoreh has also been the key broker of the DP World-BarbaraTerminal Concession through Mr. BasheAwil, the head of the Somaliland’s liaison-office in Dubai and the son in low of the present Somaliland president.

Djibouti, a small country that hosts several supper powers and regional countries due to the importance of its geographical location, has succeeded to grant China for building one of the region’s state of the art container terminals. This was an exit strategy for the Djibouti from the DP World’s grip, but annoyed DP World, as the company labeled this move as a parallel strategy which would detract its maritime objectives on the region.

DP World has similarly signed a long-term contract with the then government of Yemen headed by the ousted dictator Ali Abdullah Saleh in 2008, prior to the Arab spring. Owing to the strategic location of the Aden port as the gate way to the Suez Canal, DP World has taken the port in a 30 years long contract stipulated $220 million to manage and develop the port. The Aden port had the capacity to manage 500,000 (20-foot equivalent container units) per year and DP World had taken a pledge to surge the container traffic by 900,000 (20-foot equivalent container units) by 2011. Ironically, the ports annual traffic container has exponentially dropped down to roughly 140,000 containers from 500,000 and no infrastructural development had ever been carried out by the lessee (DP World).

When the new government with the wave of Arab spring born in Yemen, an anti-corruption body sought the official annulment of the DP World contract from the parliament and eventually won through a highly heated dispute that has culminated to the cancellation of the contract with a refund of $ 30 million for DP World in late 2012. Yemen won its stolen port back and any chance to even renegotiate faded away.

DP World has also taken two other ports in Somali regional states, like Puntland on similar contracts too. It had leased theEritrean port of Assab in a contract with a value of $500 million for a period of 30 years, as per its aforementioned plan(s).

Berbera Port of Somaliland

Berbera port is strategic port as her peers in the region, the locations of which are more strategic than that of Jabal Ali of Dubai. Berbera port is roughly 1755 nautical miles (NM) away from Dubai and shipment days at sea between them takes more than 7 days. Berbera is one of the viable corridors to a major African land locked countries like Ethiopia, the Somaliland’s biggest frontline neighbor in the region and a strategic ally in terms of trade and security. As Dubai have presumably had an eye on the strategic maritime waters in the region to execute their double standard strategy of development and sabotaging, the port of Berbera has this time slipped into the DP world’s trap, which if not closely monitored and controlled could badly damage the ports image globally.

Somaliland, a breakaway state from what formerly known as the Republic of Somalia in 1991, has since not gained a recognition from the international community, although several countries communicatewith it as a de-facto-state. Somaliland has its own success story which gives her a clear cut above many states on the continent, but itslong quest for recognition seems to have made it susceptible for submissively conforming into any deals proposed by an internationally existing institution, entity or government. In August 2016, an unstudied, undebated agreement-confused proposal, written in Somali language,introducing vague points in not more than 6 pages memo titled as “Berbera Port Concession Summary Agreement” was presented to both the Houses of Somaliland (the elders and the parliament).  As simple majority vote would underscore the official ratification of DP-World-Somaliland agreement__ it didn’t take minutes to have the YES majority votes from mainly, already bought MPs.

Somaliland is constitutionally obliged to enter into any international treaties that would bolster and develop the national interest, but as the main stream public has lost faith with the system due to the unabated levels of corruption and mismanagement, a preconceived notion that any deal would benefit for the small rather than the many has widely resonated across the nation. The proposed three faceted investment of $442 million underlying project by DP World seems to be fair at the current level, but the deal lost its confidence as the initially introduced ownership of Berbera Port Operating Company (the joint venture) of 65% by DP World and 35% by Somaliland (see article #4 of the proposal) was later on compromised due to the fact that, Ethiopia has seemingly jeopardized the deal. The deal was eventually rubber-stamped after an allocation of 19% stake was re-adjusted from the already parliament approved shares. 14% from DP World stake and 5% from Somaliland’s would respectively make up a 19% share allotment which would promote the above company to a tripartite joint venture. Though, Ethiopia__ the region’s most populous country and biggest economy is very important to be part of this strategic investment, yet it was not re-introduced the deal to the two houses of the parliament to farther approve the amendments made with a clear stipulation on the kind of investmentEthiopia had to inject into the project based on its allotted share.  This 19% stake would however, not be a trap bait for Ethiopia shift its export – import business from Djibouti to Somaliland either, as Ethiopia favors Djibouti in terms of proximity and infrastructure.Did I say unstudied deal? The arbitrary decision of the inclusion of Ethiopia coupled with the parallel misinformation by the government officials duly justifies?

Since the incumbent president Ahmed Mohamed Mahmoud (Silanyo), a visibly tired nonagenarian, but a veteran for many came to the power through a sweeping victory of more than 50% of the entire electoral votes in 2010, the president’s administrative power was untimely compromised by health/age related issues, if medically proven could cause him relieved constitutionally (article 86(02)). The administrative absence of the president has created a power vacuum in the presidency, that was filled by mainly an unelected oligarchy of the president’s close family members headed by the first lady. Many regardthis as the elephant in the room; but in fact, they have taken the entire country way back, where the inflation, corruption and mismanagement became rampant and clear to everyone. This oligarchy has further abused the power by replacing the competent figures in the key positions with incompetent, sycophantic and fortune-diggers of all ages. The famous satirical phrase among the Somaliland people “opulence rests at home”, (dalkeenanimcaafadhida, in Somali), was framed out of the corruptive behavior of the system. Many public properties and landmark buildings were sold at prices good enough for their pockets, as many of them are believed to have huge investment(s) included real estates in the UAE.

UAE, the yesterday’s tiny state of the conservative Sheikhdoms had turned to a power-full regional player today and perhaps, a Trojan horse for third-party interest(s). Berbera Airport was also given to UAE in a similar deal as a military base, but many have greater concerns over it__ as it could be a torturing and interrogation center, similar to the recently disclosed torture center in Yemen; where, according to the Amnesty International, horrendous crimes against humanity were committed by the UAE.

The recent disagreements between DP World Berbera and the native business society__ complaining a deliberate mismanagement, higher handling tariffs and unforced delays to offload/upload the commercial vessels and the squabbling over trivial measures imposition on the part of the business people, but a consequential safety procedure by the DP World could further escalate the issue and needs to be wisely measured and resolved. Any unresolved misunderstanding could trigger far more grim disputes that could conclude Aden-port style dissolution.

The other missing point is__ what if Somaliland had received the long-awaited recognition from the international community in the near future or the proposed Somaliland-Somalia talk ends up remarriage or a lasting divorce that would potentially open up new trade and business opportunities with the world at large. Was there a clear article stipulating an automatic breach of contract in the wake of the above possibilities__ no place was seen on this matter in the contract. It’s like Somaliland has exhausted of such anticipation let alone realization.

What the solution might be?

As many see this contract as imbalanced or one-way traffic that would mainly benefit the interests of the UAE, in my opinion, they have every reason for such an apprehensive feeling about the project, based on the DP World’s history in the region. To thwart DP World from doing any unpleasant exploitation(s) over the national resources, any new government that would be the successor to this lime-duck government in the upcoming elections next month, should adopt new policy on making a thorough review and re-assessment of the UAE contracts of all types both business and security, in the best interest of reviving the lost trust between the people and the international investment(s).

The introduced procedural terms mentioned between 22nd and 25th(see, Reporting Section of the summary agreement), coupled with the budgetary disclosure on the proposed port infrastructural development projects including the Ethio-Somaliland logistics corridor that, as per the agreement would be started within a year from the date of the official signature among other faces would be the yardstick for the project reliability. However, to succeed this, an independent ad-hoc national committee has to be established to oversee the project due in progress in line with the terms and conditions of the contract and to come up with technical resolution(s) for any potential dispute(s) what so ever. The committee so established should publicly produce a detailed periodic report on what has been achieved and accomplished, what is remaining and what are the unforeseen hurdles (if any). This could be a turning point on the part of the government of Somaliland to further take extra strides in signing more international treaties with pride and not letting their status-quo be a source to be preyed on by both regional and international powers.

A practical port operational Service Level Agreement (SLA) has to be introduced and monitored for the smooth processes on the container handling services to deter any argument(s) as between the port authority and the local business owners and dealers. Lack of SLA would repeat the same inconvenience between the ports authority, shipping companies and the local business society.

UAE’s current business and political agenda in the Horn of Africahas its weight on the region’s economic and political conditions in general and that of Somaliland in particular. Any failure in protecting the Horn of Africa shores from the thin disguised exploitations by the Emirates could be blank chequefor the region’s future outlook.

By: Khadar Hanan is a political commentator, based in Doha, Qatar. He can be reached at his e-mail address: Khadarhanan@yahoo.com

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Alleastafrica Media.

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