Why is Djibouti willing to host both a US and a Chinese military base at the same time?

The country has almost no arable land and no oil or minerals to speak of. With almost no arable land, few natural resources, and little industry, Djibouti's economy depends heavily on its service sector and trade through its port complex. What it does have is the Bab el-Mandeb strait sitting right off its coast, that narrow chokepoint we talked about, and every maritime power on earth needs access to it.

Geography as currency

Despite being roughly the size of New Jersey, Djibouti hosts at least eight foreign military bases, a fact largely explained by its position along the Bab el-Mandeb, a maritime channel through which an estimated 10 to 12 percent of global trade passes every year. The US, China, France, Japan, and Italy all have installations there, all within miles of each other along the same coastline. It is the only place in the world where Beijing and Washington have military bases so close together.

Djibouti's leadership understood early that this position was worth money, and they charge accordingly. Rents from foreign militaries total over $125 million per year, and that is a significant income stream for a country whose entire economy is worth only a few billion dollars. Military base leases bring in at least $117 million annually, mostly from the US ($63 million), China ($20 million), and France ($34 million).

Why neutrality is the strategy, not the problem

Experts have described President Ismaïl Omar Guelleh's strategy as one of welcoming multiple powers to ensure security guarantees and economic rent, with Djibouti's approach contributing to its role as a focal point of great-power competition in the Horn of Africa. By never committing exclusively to one side, Djibouti keeps every power bidding for its favour.

It is the only country that hosts both American and Chinese military bases mere kilometres apart, and while the two countries are largely adversaries, their primary purpose in Djibouti is the same: securing maritime traffic. Both sides want the shipping lanes open. Both sides need a forward position to do that. Djibouti simply rents the position to both and pockets the difference.

Djibouti is also important to China's Belt and Road Initiative, a massive infrastructure and trade program linking China to markets across Asia, Africa, and Europe, as a key maritime stop and through a new railway line connecting it to Ethiopia's capital Addis Ababa. China is the largest investor in Djibouti, with $14.4 billion in infrastructure committed to an economy worth only $4.67 billion. The US, meanwhile, has operated Camp Lemonnier there since 2003 as its only permanent military base on the African continent, primarily for counter-terrorism operations in the Horn and anti-piracy patrols off Somalia.

The honest answer is that small countries with no oil learn to sell what they do have. Djibouti's leadership looked at the map, saw what everyone else needed, and built a national strategy around charging them for it. That is not weakness. That is leverage.