Djibouti to go to war with Eritrea

Djibouti’s president has said his country will have to go to war with Eritrea unless the UN acts to resolve growing tension over a border dispute. Djibouti has accused Eritrea of invading its territory and its ambassador to the UN said Eritrea had been avoiding mediation. Eritrea has said it had no territorial ambitions.Both France and the US have troops in Djibouti. Its border with Eritrea is at a key strategic point on the Red Sea. But Eritrean ambassador Araya Desta said his country wanted “the cultivation of good neighbourly relations with Djibouti”.

Djibouti suspends increased port tariffs

A new tariff regime that was planned by the government of Djibouti and set to take effect beginning August 15 this year was withdrawn one day before it became operational.

Djibouti Port Authority Board under its Chairman Abdourahiman Boreh had decided on the 15 percent raise due to high oil prices on the global market and inflation which the country is experiencing but had to reverse the decision following instructions from the country’s President, Ismael Omar Guelleh, sources have said.

The withdrawal of the new regime is good news to Ethiopia as the increase would have cost the Ethiopian economy an additional 22.5 million dollars annually.According to DP World Djibouti, a management company in charge of the port’s operations since 2000, had designed a new regime of tariff rates for all services, a move which would mean an increase of 15 percent on container handling and stevedoring costs. It had also planned reduce the free storage period from 15days to eight days. The two issues would have heavily impacted on Ethiopia’s import and export businesses.The last time the port attempted to increase its tariff was in January 2001 when it wanted to increase tariffs by 30 percent but Ethiopia successfully protested at the proposal that would have cost it 170 million dollars.

Ethiopia and Djibouti signed a port utilization agreement in May 2004 which among other things stipulates that tariff changes are supposed to be discussed in advance. There is, however, a difference of opinion over what exactly prior notification means; while Djiboutians understand that they have to inform their Ethiopian counterparts two months in advance of the planned date of enforcement, Ethiopians take it as an opportunity to negotiate the amount and nature of any proposed tariff adjustment.

The port’s management company had attributed the tariff rise to the soaring cost of fuel, which has increased by 350pc, a headline inflation rate of 19.2pc in Djibouti and a need to fund new equipment. Ethiopia is the major user of the port as it is not only a gateway for its transit cargo, but also as a point of its destination. The volume of Ethiopia’s import and export cargo rose from 3.9 million tonnes in 2006/07 to 4.6 million tonnes in 2007/08. It is projected to grow by 20pc this year.