Sino-Ethiopian Cooperation: Modern-day colonial joint venture

Chinese foreign direct investment [FDI] has soared in Africa, with over $14 billion invested in the continent by Chinese companies in 2016. Ethiopia is at the lead of this increasing trend, having received negligible amounts of FDI in 2004, rising to almost $60 million in 2010. Outside of FDI in the traditional sense, China has also been heavily involved in funding major infrastructure projects undertaken by the Ethiopian government, totalling $6.5 billion since 2009. The focus of this article is what implications this Sino-Ethiopian cooperation, particularly in extractive industries, has for the people of the occupied Somali territories, The Ogaden.

In understanding this, the rhetoric surrounding the projects undertaken by joint Sino-Ethiopian ventures is of interest. For example, at the completion of the Aba-Samuel Hydropower Plant Project, Dr Abraham Tekeste, the Ethiopian Minister of Finance and Economic Development thanked China for supporting Ethiopia’s economic development vision.

He also remarked: “Investment in transport infrastructure and in clean energy is critical for driving industrialization, for driving export development, and thereby transforming the Ethiopian economy…The cooperation mutually benefits both Ethiopians and the people of China.”

But how inclusive is Ethiopia’s economic development vision? The stated rhetoric to develop energy and infrastructure as engines to spur industrialization efforts are not as pro-poor and broad based as portrayed. Much of this Sino-Ethiopian cooperation has been painted as a strategy for economic development that mutually benefits all in Ethiopia, yet it is evident some major projects are at the expense of marginalised groups, namely the Somalis. It’s a de facto wealth transfer when the Ethiopian regime enjoys that level of investment support in exchange for natural resources.

Not everyone wins.

Whilst there is a stated economic motivation behind China’s increased FDI inflows into Ethiopia; namely high growth rates experienced by the country in the past ten years, as well as access to cheaper labour in light of rising domestic labour costs, there is a much more disconcerting motivation that does not receive enough attention – the need for resources.

The resource-extraction agenda is pertinent when understanding Chinese collaboration with the government of Ethiopia, specifically when focusing on the Ogaden Basin. The Ethiopian Premier Hailemariam Desalegn on his visit to China in 2013, invited Chinese companies to begin investment in oil and gas exploration in the Ogaden Basin. In a bid to secure new sources of energy and to deal with its own air pollution problem, China instantly took advantage of this invitation. The subsequent news of the proposals by joint venture POLY-GCL Petroleum Holdings for a multi-billion dollar project to export gas from the Hilala and Calub gas fields in Ogaden to China came as no surprise.

What is crucial however is that this Sino-Ethiopian collaboration, guised as a successful step towards enabling economic development is laying a framework for resource extraction that is to the detriment of the Somali people. Three points underpin this agenda: infrastructure to physically transport the resources, a base to provide security for resource exploitation and the repression of locals.

In the quest for resource extraction, the Chinese were aware of the need for infrastructural developments in landlocked Ethiopia to take advantage of the potential natural resources in the Ogaden. The recent opening of the first fully electrified cross-border railway line in Africa  which links Addis Ababa to The Port of Djibouti was one of the major infrastructure projects agreed between the Ethiopians and Chinese. For the Ethiopian section of the railway, the project was financed by The Ethiopian Government and China’s Exim Bank at 30% and 70% of the $3.4billion cost of the project.

The railway is used for transporting freight, to facilitate the transport of goods into and out of the landlocked country through Djibouti’s port – on which Ethiopia relies heavily for trade. However, there is no planned infrastructure project within the occupied Somali territories, with an active avoidance of the the region either due to security concerns or more likely, as a result of China’s lack of interest in the region, except for its own resource-extraction purposes.

The lack of concomitant infrastructure development in the region is an illustration of the infrastructural plans skewed in favour of the Ethiopian government and Chinese interests to the detriment of Somalis. For argument’s sake, if it was solely security risk that prevented infrastructural development in the Ogaden region, the Chinese conglomerate charged with developing the pipeline would not have taken up the project, as many previous oil exploration companies have pulled out of the region. Instead, the Chinese effort has been more aggressive, in stubbornly pursuing resources. The building of a Chinese base next to the Port of Djibouti is no coincidence in this regard.

The Djibouti President, Ismail Guelleh, directly confirmed with Saudi newspaper Al-Hayah in June last year that the two countries intended to sign an agreement to allow the opening of a Chinese base in the country. The construction of the base is already well under way, as figure one shows the contrast between the area for the base, in November 2015 and August this year.

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Figure 1: Source: Google Earth/Digital Globe

China has actively begun to build up a base in Djibouti to protect its interests and investments in Ethiopia and surrounding countries. In figure 2, analysts Collins and Ericksons’ estimation of the distance a Shaanxi Y-8 class maritime patrol aircraft could cover without refuelling is shown in the black circle. This area covers the Middle East, most of North-East and Central Africa and the Indian Ocean.

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Figure 2: The Chinese base in Djibouti, and the distance covered by Shaanxi Y-8 class maritime patrol aircraft encircled. Source: China Signpost, 2015

With the resource-extraction project in the Ogaden region, the need for securing Chinese interests is at the forefront of the strategic development of the base. The main reasons for the base can be summarized in the following three points:

  • To protect investments and personnel in the region
  • To counter the presence of other multinationals seeking to exploit the same resources
  • To create a permanent access point for further expansion into Africa and the Middle East

On the first point, a reminder of the events in 2007 in the Abole Oil Field Raid, wherein the Ogaden National Liberation Front (ONLF) killed over 70 Ethiopians and 9 Chinese workers, provides a rationale for the development of the Chinese base in Djibouti. In deciding not to retract the project despite the tenuous security situation in this occupied territory, the Chinese are taking great risks. This is in the face of warnings from the ONLF who state:

“…[they would] stop any attempt to steal the wealth of the Somali people in Ogaden until a genuine representative government that can safeguard the interests of the Somali people is established in the Ogaden,” in their recent press release.

The Chinese have taken the challenge head-on, through adopting militarism in the protection of interests in an attempt to mitigate security risks. The conglomerate effectively teaming with the Ethiopian army to clear the land and expel the locals in ‘scorched earth’ evictions for oil and gas exploration in the region means the project pushed as part of Ethiopia’s economic development vision is to the harm of the Somali people.

On the second point, a Cold-War scenario appears to be emerging, with the Horn of Africa and specifically Ethiopia serving as a ‘battleground’. With the expansion of China’s economy, the country has shifted from a non-interventionist global agenda to pursuing a status as a global maritime power which could mark the start of a challenge towards US hegemony in this regard. Tellingly, the only permanent US naval base in Africa – Camp Lemonnier – is also situated in Djibouti near the port. A similar picture emerges in the presence of US oil exploration companies such as Marathon Oil in the nearby South Omo basin. The two major powers are vying over resources in the region, with China using the base as an assertion of its position as a major power. These expressions of militarism and exercise of political muscle are unlikely to benefit the Ogaden region. Whilst in Djibouti, the President can use Chinese interest in the region to extract windfall gains from the two powers, such as President Obama pledging $80 million to the US annually to the Djiboutian Government to aid US companies to invest in the Horn particularly the Ogaden Basin, no such government exists in the occupied Somali territories to defend against this encroachment or to extract gains from the situation.

On the final point, the base’s strategic location near the Port of Djibouti is palpable. Situated South to the Bab-el-Mandeb strait, the location provides a link between the Indian Ocean and Mediterranean Sea, through the Red Sea. Primarily, this allows China to safeguard its heavy dependence on imports of crude oil from the Middle East that pass through the Gulf of Aden and the Indian Ocean towards China. This location also provides ready access to the EU markets as well as the Arabian Peninsula and Africa. The terminal of the Ogaden-Djibouti pipeline near the Chinese base thus creates a ready-made access point for further economic expansion into Africa and the Middle East, as well as protecting existing Chinese stakes in Middle East oil and ongoing projects in the Horn and beyond.

With security and surveillance provided by the base, repression provided by the Ethiopian Army and the port provided by the Djiboutian government, the points summarized show that the Sino-Ethiopian cooperation has far-reaching effects. The cooperation provides an effective framework for the secure transportation of oil out of the Ogaden Basin with the Djiboutian government, Ethiopian and Chinese benefitting, with no obvious economic benefit for the Somali people of the Ogaden region.

Without consultation with the locals, this exploitation of the natural resources of the region, as well as the historical and present marginalisation they are subjected to, points to the inevitability of the project contributing to conflict. It is another example of the suppression of the people of the region, with the locals unable to voice their dissent. It is unlikely that such an export project in extracting natural resources will contribute to the economic development of the occupied territories; the exclusionary nature from its conception to its deployment has set a deeply unfavourable tone for the future. Aside from broad economic development, some of the destructive outcomes include: the evictions of locals; environmental degradation with little improvement in local job prospects and diminutive benefit sharing.

As long as the practice of discrimination and marginalization in pursuing these projects continues, the promise of cooperation between Sino-Ethiopian ventures mutually benefitting all remains hollow and not only contributes to the destruction of occupied Somalis in the Ogaden region, it also lays the groundwork for the destruction rather than development of Somalia itself.


Contact: safiya.abdi@barkinka.com