DJIBOUTI: RED SEA REALIGNMENT TESTS NEUTRALITY WHILE DEBT-FUNDED INFRASTRUCTURE MASKS UNDERLYING RISK

   Thu, 08 May 2025

Djibouti faces intensifying regional pressure as Ethiopia’s engagement with Somaliland challenges existing port dependencies and draws the country deeper into polarised alignments with Somalia and Egypt. France has secured long-term military and infrastructural access through a renewed defence agreement, reinforcing its regional footprint while limiting Djibouti’s leverage in bilateral terms. On the economic front, output remains anchored in sovereign-led investment and logistics, but vulnerabilities persist due to external debt exposure, weak domestic fiscal mobilisation, and continued reliance on Ethiopian trade flows.

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