How Djibouti became the Red Sea’s fulcrum

On the African shore opposite the Arabian Peninsula, Djibouti’s standing is growing as a pivotal anchor in the equation of influence, security, and trade across the Red Sea and the Gulf of Aden, at a time when the map of Gulf partnerships in the Horn of Africa is being reshaped. The small state, which has built its economic model around logistics services and ports, has also become a hub for foreign military bases, giving it political weight that exceeds its geographic and demographic size.

Djibouti’s importance rests on two closely linked factors: its location at the entrance to the Red Sea near the Bab al-Mandab Strait, and the logistical role of its ports as a principal gateway for transit trade and for neighboring economies, foremost among them Ethiopia. Reuters reports that Djibouti’s economy depends heavily on port and logistics services, while leasing land to foreign military bases provides the state with a steady source of income, generating about $25 million annually, according to the agency’s account citing the chief executive of its sovereign wealth fund.

On the security front, Djibouti has become a convergence point for major international powers. A report by the U.S. Congressional Research Service notes that it has become a hub for foreign forces, hosting military facilities for France, the United States, Japan, Italy, and China, and that rental revenues constitute an important component of government income. French sources underscore this significance: Le Monde reported that Djibouti now hosts France’s last major operational base in Africa, with around 1,500 personnel, at a time when other countries also maintain a military presence in the country. The U.S. Navy, for its part, describes Camp Lemonnier as the United States’ primary operating base in the Horn of Africa.

The most notable shift in recent months, however, has appeared on the economic and investment side. Saudi Arabia has expanded its presence in Djibouti’s ports and logistics sector, in line with a broader approach that links Red Sea security to supply chains and trade. In November 2025, the Djibouti Ports and Free Zones Authority announced the signing of a framework agreement granting the Saudi company Red Sea Gateway Terminal (RSGT) a 30-year concession to develop and operate the Port of Tadjourah. The plan aims to transform the facility into a multipurpose port with an initial capacity of five million tonnes per year, alongside the establishment of a dedicated free zone to attract investment and strengthen storage and logistics services.

This step reinforces assessments that Riyadh is seeking to secure a practical foothold on the opposite African coast through long-term operational partnerships in ports. The Maritime Executive notes that Tadjourah was originally inaugurated in 2017 as part of Djibouti’s plan to expand transport infrastructure in the north of the country, and that it was also designed to facilitate potash exports from Ethiopia, in addition to other exports such as livestock and sesame. The outlet adds that the Saudi concession is expected to raise the port’s capacity to five million tonnes annually in the coming years.

By contrast, the influence of the United Arab Emirates in Djibouti appears to have reached a ceiling, due to a prolonged and costly dispute over the Doraleh port—an issue that continues to cast a shadow over relations between the two sides. The EastAfrican reported that the Djiboutian government rejected an arbitration ruling related to the management of the Doraleh Container Terminal, in which DP World was involved, with President Ismail Omar Guelleh justifying the rejection on what he described as “the supreme national interest.” According to the report, DP World says the cancellation of its concession in February 2018 caused estimated losses of nearly $1 billion, while the government notes that large parts of the port system are operated under various partnerships, including an operational concession granted to China Merchants at other facilities.

Research assessments link this trajectory to Djibouti’s inclination to diversify its partners in the ports sector and reduce reliance on the UAE, particularly after relations deteriorated over the Doraleh dispute. The Middle East Council on Global Affairs noted that the disagreement over Doraleh marked a pivotal moment in the decline of ties with Abu Dhabi, and that Djibouti has been increasingly “drawn” toward Saudi Arabia. The council highlighted the signing of a contract in 2024 to build a Saudi base or logistics hub in Djibouti to serve exports across Africa, alongside cooperation on Red Sea security.

In sum, Djibouti appears to have succeeded in entrenching its role as a platform at the crossroads of trade and security in the Red Sea. It hosts major military bases, attracts international competition, and at the same time reshapes its economic partnerships according to a logic of interest and balance. Saudi moves in ports and logistics point to a bid for a long-term, practical presence on the opposite shore, at a moment when the model of “influence through ports” is facing legal and political tests, as illustrated by the Doraleh dispute. In parallel, the rise of Berbera Port in Somaliland is emerging as an ascending outlet and a growing competitor, particularly as its role expands in servicing regional supply lines and trade and in offering a partial alternative to traditional transit routes tied to Djibouti. While the region will remain highly sensitive to any disruption in maritime navigation, developments in Djibouti suggest that the contest for influence there is no longer purely military, but is increasingly being decided through concession contracts, supply chains, and investment balances.