Addis Abeba — For much of the past three decades, the political economy of the Horn of Africa rested on a fragile but durable arrangement: Ethiopia's overwhelming dependence on Djibouti as its primary maritime gateway and Djibouti's ability to convert geography into political and economic leverage. That arrangement is now in terminal decline. What is unfolding across the Horn is not simply a series of bilateral disputes or diplomatic misunderstandings, but a structural transition--a Red Sea Cold War--that is testing the resilience of long-standing regimes and exposing the limits of rent-based statehood.
Few developments have crystallized this shift more clearly than the January 2024 Memorandum of Understanding between Ethiopia and Somaliland, an attempt by Addis Abeba to "secure access to the sea and diversify its access to seaports" through the port of Berbera. While framed by Ethiopian officials as part of a broader diversification strategy, the agreement struck at the core of an economic order that had privileged monopoly over competition.
Foundations of rentier-fortress system
Djibouti's modern political economy is inseparable from its role as Ethiopia's maritime lifeline. Since the late 1990s, successive Ethiopian governments--facing geopolitical constraints and limited alternatives--channeled the vast majority of the country's imports and exports through Djiboutian ports. By early 2024, more than 95% of Ethiopia's seaborne trade transited through Djibouti, primarily via the Doraleh port complex. This dominance generated substantial rents that formed the backbone of Djibouti's fiscal model. According to World Bank assessments, income from port services and related activities has consistently accounted for a disproportionate share of state revenue relative to Djibouti's small population.
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Djibouti's long-standing political and economic model has rested on stability sustained through patronage networks and heavy security spending under President Ismaïl Omar Guelleh, who has been in power since 1999. While this approach delivered short-term predictability, it concealed deep structural vulnerabilities. These weaknesses have become increasingly visible in recent years. The International Monetary Fund's 2025 Article IV Consultation classified Djibouti as facing a high risk of debt distress, with external debt nearing 70% of gross domestic product (GDP)--a level that sharply constrains fiscal flexibility and heightens exposure to external shocks.
For decades, these vulnerabilities remained largely manageable because Ethiopia, Djibouti's principal economic partner, was effectively locked into a single maritime corridor. Djibouti's near-monopoly over Ethiopian trade flows insulated the country from competitive pressure and ensured a steady stream of port revenues, rents, and strategic relevance. That equilibrium, however, has begun to erode as Ethiopia actively pursues alternative routes to the sea. From Addis Abeba's perspective, port diversification is not merely a logistical adjustment but a question of economic sovereignty, resilience, and long-term growth.
From Addis Abeba's perspective, port diversification is not merely a logistical adjustment but a question of economic sovereignty, resilience, and long-term growth."
The development of Somaliland's Berbera port--led by DP World and connected to Ethiopia through the Berbera Corridor--has emerged as the most credible alternative to Djibouti's dominance. Against this backdrop, the January 2024 memorandum of understanding (MoU) marked a decisive rupture. It struck at the heart of an economic order that, for more than three decades, had privileged monopoly over competition. What had once been a stable, if fragile, arrangement now faces structural reconfiguration, with far-reaching implications for Djibouti's political economy and its role in the wider Horn of Africa.
Emergence of tripartite axis
Rather than recalibrating its economic model, Djibouti appears increasingly inclined to resist change through political means. Rising tensions along Somaliland's western frontier cannot be understood solely through the lens of internal Somali politics. Regional rivalries are intersecting with local grievances, creating fertile ground for proxy behavior. The emergence of the Tripartite Alliance between Egypt, Eritrea, and Somalia has moved from diplomacy to active military mobilization. With Egyptian military hardware arriving in Mogadishu to contest Ethiopia's naval ambitions, the strategic encirclement of Ethiopia has become a tangible reality.
A significant shift in January 2026 is the deepening fissure between Riyadh and Abu Dhabi. Saudi Arabia is actively rallying an anti-UAE bloc. Recent high-level engagements signal a formal Saudi pivot toward supporting the tripartite security pact to counter Emirati influence in Berbera. This rivalry has transformed President Ismaïl Omar Guelleh from a fading dictator into a local facilitator for Saudi Arabia's attempt to re-establish Arab hegemony over the Red Sea, effectively blocking the UAE-Ethiopia corridor.
Irro Doctrine: Sovereignty through trade
In response to this multipolar siege, a powerful counter-axis has formed, anchored by the UAE-Ethiopia strategic partnership. This momentum was on full display at the World Economic Forum in Davos last month. President Abdirahman Mohamed Abdullahi, known as Irro, met with international leaders, signaling a shift toward what is being called the Irro Doctrine: Sovereignty through Trade.
By attracting multinational companies to the Berbera Port Free Trade Zone, Hargeisa is creating de facto statehood through global trade integration. President Abdirahman Mohamed Abdullahi is executing a delicate re-brand of the MoU, framing the Ethiopia deal as a commercial infrastructure project rather than a military one. For Djibouti, however, competition is not a market challenge; it is an existential crisis for a rentier system under pressure.
Domestic Fragility: Risk of diversionary war
Djibouti's external posture mirrors its internal trajectory. In late 2025, constitutional amendments removed presidential age limits, enabling President Ismaïl Omar Guelleh to seek another term in the April 2026 elections. Opposition figures have described the move as deepening political stagnation. Freedom House continues to classify Djibouti as Not Free, citing restrictions on political competition and media freedom. High youth unemployment and rising debt compound domestic pressure. In such contexts, exporting instability can appear politically expedient. Guelleh has turned to a "wag the dog" strategy, manufacturing a foreign crisis to rally a disgruntled populace. By coordinating with regional intelligence to provide logistical corridors for anti-Somaliland militias, he is inviting a regional backlash that could precipitate his own regime's collapse.
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Conclusion
The Horn of Africa is no longer organized around a single gatekeeper. Ethiopia's drive for diversified access reflects structural economic realities. Somaliland's pursuit of recognition is grounded in decades of relative stability. For international partners, continued investment in monopoly and managed dependency is no longer stabilizing--it is destabilizing. The old order, characterized by the Djiboutian monopoly and the fiction of a unified Somalia, is in terminal decline.
As Ethiopia pursues its economic sovereignty and Somaliland secures its justly earned place in the community of nations, the foundations of the rentier fortress are crumbling. Rentier systems seldom survive the erosion of monopoly; they either reform, or they fracture. AS
Editor's Note: Adam Daud Ahmed is a political and security analyst specializing in the Horn of Africa, with a focus on democracy, regional geopolitics, and counterterrorism. He can be reached at aadan7333@hotmail.com
