US embassy cable - 04DJIBOUTI526

C O N F I D E N T I A L DJIBOUTI 000526 
 
SIPDIS 
 
STATE FOR AF, AF/E, AND AF/EPS 
 
E.O. 12958: DECL: 04/11/2014 
TAGS: PREL, ECON, ETRD, PGOV, DJ, EG, TU, IN, UG, TC 
SUBJECT: DJIBOUTI'S MINISTER OF COMMERCE ON UTILITY OF 
PROPOSED DORALEH PORT 
 
 
Classified By: AMBASSADOR MARGUERITA RAGSDALE. 
REASONS 1.4 (B) AND (D). 
 
1. (C) Minister of Commerce and Industry, Saleban Omar 
Oudine, sees the planned port of Doraleh as key to a 
prosperous economic future for Djibouti.  In a March 31 
meeting with Ambassador, he talked about the port and its two 
key components: a fuel container terminal and a Free Zone. 
The container terminal will require relocation of operations 
of oil companies currently in Djibouti, including America's 
Exxon-Mobil, and the construction of new fuel reservoirs. 
Oudine accused oil companies of having caused a great deal of 
environmental harm to the existing main port, which he said 
will need to be cleaned after repositioning at Doraleh. 
 
2. (C) The Free Zone for commerce and industry envisioned for 
the port could serve land-locked Common Market for Eastern 
and Southern Market (COMESA) countries, according to Oudine. 
Uganda wants to lease space at the Free Zone in order to 
stock both imported and exported goods. As Djibouti is a 
member of both COMESA and the Africa Caribbean Pacific Group 
(ACP), Uganda could take advantage of Djibouti's ACP 
membership to export products to ACP countries, he said. 
Oudine also stated that Egypt is anxious to obtain private 
space at the Free Zone for use as a produce export point to 
reach the huge Ethiopian market. 
 
3. (C) Oudine continued that China has expressed interest in 
establishing a car-manufacturing facility in this Free Zone. 
China is becoming "more aggressive" in Africa broadly, with 
200 Chinese companies having organized a trade show in 
Ethiopia in 2003, he stated.  In his view, the Chinese are 
targeting low-income African countries which are more 
interested in low-cost goods than expensive high-quality 
products. 
 
4. (C)  Oudine expects that Turkish and Indian businesses 
will also have interest in the free zone.  He added that 
Jebel Ali in Dubai wants to decentralize its saturated market 
and some of its companies will need to be relocated to 
Djibouti in order to serve African buyers. 
 
5. (C) Djibouti's aim, Oudine said, is to create an 
environment conducive to development of services because it 
has no natural resources upon which to rely.  It does not 
want to be dependent on Ethiopia for revenues, for two 
reasons.  First, Ethiopia does not share Djibouti's values 
and second, a history of thirty years of socialism has made 
its countrymen difficult to work with.  Djibouti wants to 
develop commercial ties with other countries, Oudine 
continued, in order to be truly independent.  To support that 
effort, and boost the activities of the port, he said 
Djibouti is drafting a commercial code which will stress 
Djibouti's liberal economic policies and its desire not to 
impose barriers to trade. 
 
6. (C) Comment:  Despite Oudine's optimism, the Port of 
Doraleh remains an ambitious government-led project for 
Djibouti.  Assuming the financing hurdle is overcome, of 
great concern for Embassy in the short-term will be the 
impact of the proposed port container facility on operations 
of existing companies in Djibouti supplying fuel oil for 
domestic use, including Exxon-Mobil. We are looking at the 
implications of this issue, in direct consultation with 
Exxon-Mobil. Of great concern in the long-term will be the 
overall economic viability of the project, especially its 
Free Zone component, taking into account current and future 
economic trends. End comment. 
RAGSDALE