Relations between the two countries are generally good and the historical relationship between Ethiopia and Djibouti is deeply rooted, dating back to the formation of their modern states. Throughout history, the two nations have shared cultural, ethnic, religious, and linguistic connections, shaping their enduring bond.
Africa's Thorny Horn
Historical Context
The origins of their relationship date back to ancient times when Djibouti was part of Ethiopia before being occupied by the French. The long-standing connection between Ethiopia and Djibouti gained significance after the opening of the Suez Canal in 1869. This event elevated the coastal region of Djibouti in terms of importance, leading to the attention of foreign powers.This bond can be traced back to antiquity, where historical connections between the people of Ethiopia and the region that would later become Djibouti existed. The northern part of Djibouti was originally inhabited by the Afar people who had their origins in eastern Ethiopia. Later, the Issa Somalis migrated from Somalia and settled in the same area. Over time, the Issa Somalis have become an integral part of the Ethiopian population.
The Somali and Afar clans of Djibouti have maintained a close connection with the Arabian Peninsula for centuries, resulting in their early adoption of Islam on the African continent. As a result, Sunni Muslims make up nearly 94% of the country's population today. The remaining percentage is comprised of Christians and other indigenous African followers who practice various religions.
Djibouti was ruled by the Ethiopian Muslim Sultanate of Adal from the 12th century to the mid-17th century. Belete Belachew noted that Djibouti has a long history of connecting with Ethiopia, dating back to ancient times when Ethiopians fought against foreign invaders to protect it. Ethiopians continued to defend Djibouti against external threats even in the 16th century and beyond. Before Emperor Menelik II came to power, the Sultanates of Tajura and other Djiboutian Sultanates paid tribute to the Ethiopian government as well.
Location of Djibouti in the Horn of Africa.
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French Colonial Influence
In 1862, a French businessman purchased Obock, which was then the northern area of what is now known as Djibouti, from Ahmad Abu Bakar, a local Afar chief. This acquisition laid the groundwork for France's later annexation of the region. While Obock was initially used as a coaling station for French ships traveling along the East African Coast, it began to decline in importance after the colonial capital moved to Djibouti in 1891.In 1884, Leonce Lagarde assumed the role of French governor of Obock and subsequently established a series of treaties with Djibouti's sultans. In 1888, the French government officially claimed the region and appointed him as governor of Djibouti. Eight years later, in 1896, French Somaliland was created by merging Obock, Tajoura, and Djibouti and the capital was established in Djibouti.
The relationship between Ethiopia and Djibouti was altered by France's acquisition of Djibouti, resulting in contact between an independent Ethiopia and a colonized Djibouti under French rule. This relationship lasted from 1897 to 1977, with the French government signing an agreement with Ethiopia in 1897 to construct a railroad linking Djibouti to Addis Ababa. This agreement marked the beginning of official relations between the colonial governor of Djibouti and Ethiopia.
The European powers' annexation of neighboring regions left Ethiopia without access to the sea. France supported Ethiopia's independence after observing Britain and Italy's actions. In 1897, France recognized Djibouti as Ethiopia's official outlet and permitted duty-free transit of weapons through Djibouti.
The Ethio-Djibouti Railway
The construction of the Ethio-Djibouti railway, which lasted from 1897 to 1917, represented Ethiopia's greatest technological achievement during this period and served as its main gateway to international trade. The railway also played a crucial role in ending Ethiopia's centuries-old isolation from the rest of the world and in transforming social relations between Ethiopians and nations of the globe. In 1917, the railway reached Addis Ababa, Ethiopia's capital. However, railway transport between Djibouti and Dire Dawa had begun four years earlier in 1902/3.
Map of the Ethio-Djibouti Railway.
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Post-Cold War Era
The post-Cold War era witnessed a significant upswing in the Ethiopia-Djibouti relationship, with Ethiopia increasingly dependent on Djibouti as its gateway to the sea, particularly after the Ethio-Eritrean war. After the fall of the Derg regime, the EPRDF government has forged robust ties with Djibouti through the signing of various agreements in the realms of economics, politics, and military. Since 1991, Ethiopia and Djibouti have been strengthening their historic relations.
The outbreak of war between Ethiopia and Eritrea marked the beginning of a new era in their relationship. Djibouti became Ethiopia’s only link to the sea. The war diverted all imports and exports from Eritrean ports to the Port of Djibouti, thus accelerating Ethio-Djibouti relations.
Eritrea’s independence in 1993 left Ethiopia landlocked, forcing it to rely on the ports of neighboring countries, Eritrea and Djibouti. Before the outbreak of war between Ethiopia and Eritrea in 1998, almost all of Ethiopia’s export/import trade, or 80%, relied on the port of Assab in Eritrea.
Economic Interdependence
The Ethio-Eritrean war gradually escalated the economic interdependence between Ethiopia and Djibouti. Djibouti is Ethiopia’s largest African trading partner, with Ethiopia serving as a major destination for Djibouti. Djibouti’s main export items to Ethiopia are salt, sugar, and rice while Ethiopia’s major export items to Djibouti include foodstuffs such as vegetables, meat, livestock, and khat.
Hundreds of thousands of all types of livestock and foodstuffs, including coffee and cereals originating from Ethiopia, are smuggled into Djibouti. Khat, vegetables, and fruits are largely exported to Djibouti by official traders since they are perishable and less attractive in unofficial channels. These items nearly represent the total value of Ethiopia’s exports to Djibouti. Ethiopian traders also unofficially import new and used clothes, electronics, cigarettes, manufactured food items, vegetable oil, and pharmaceuticals from Djibouti, which arrive there from Asia and Europe through illegal means.
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Ethiopia’s dependence on Djibouti as its sole outlet to the sea has brought tremendous economic benefits to Djibouti, with profits from Ethiopia’s use of Djiboutian ports estimated to top $1 billion annually. These profits are a key source of government revenue for Djibouti.
Challenges in Trade Relations
There are several factors responsible for the growth of illicit cross-border trade around the Ethio-Djibouti borderlands. These include the absence of adequate integration between the borderlands and the central government of Ethiopia, a lack of suitable outlets for livestock and other products for people around the borderlands, government trade policies, and the absence of strong border patrols and checkpoints. These factors have contributed to the growth of dynamics in illicit cross-border trade and are the main challenges facing Ethio-Djibouti trade relations.
Djibouti's Strategic Importance
Djibouti's unique geostrategic advantages stem from its coastline spanning the meeting of the Red Sea and the Gulf of Aden. Djibouti has successfully exploited its prime territory on the Red Sea to offer both port access and military bases to foreign countries. The United States also has longstanding security interests in Djibouti, including the only permanent US military base on the continent-a vital component of US counterterrorism operations in East Africa and the Arabian Peninsula.
Map of Djibouti showing study sites.
Ethiopia and Djibouti have traditionally maintained a close political and economic relationship out of mutual necessity. Since then, Ethiopia has overwhelmingly relied on Djiboutian ports to process its imports and exports: some 95 percent of Ethiopian imports transit through Djibouti. Djibouti, too, relies on its larger neighbor, from which it imports freshwater and electricity.
Recent Developments and Tensions
In recent months, Ethiopia has been at loggerheads with some of its neighbors, including Eritrea and Somalia, as it seeks access to the sea, besides the installation of critical military hardware across the Horn of Africa. Closer ties between the two, while not necessarily a done deal, could usher in a new era of peace and prosperity for the Horn of Africa, resuming a thriving trade relationship and granting landlocked Ethiopia access to a new port. Unfortunately, nearby Djibouti-which has successfully exploited its prime territory on the Red Sea to offer both port access and military bases to foreign countries-stands to lose.
Ethiopia finds this arrangement deeply flawed, and is interested in more diverse, and better, deals for port access. The United States, as well, is deeply dissatisfied with Guelleh’s partnership. Eritrea and Djibouti have a more restive history, and unresolved tensions could flare up again. Djibouti’s shipping and land lease profits directly supplement Guelleh’s tight political control over the country.
Ethiopia-Eritrea peace talks are bad news for Guelleh, who has staked his country’s growth on its role as the port of choice for economic giants like Ethiopia. Assuming normalization efforts continue, Ethiopia could soon have the option to use Eritrea’s ports, which are closer and more convenient than Djibouti. While it is unlikely that Ethiopia will cease using Djiboutian ports altogether, it will have options-and thus will be less inclined to settle for usurious port usage rates.
In recent years, the UAE’s increasing interest in the Horn of Africa adds a new complication to Djibouti’s predicament. The UAE has acquired rights to a naval base in Eritrea, a military base and commercial port in Somaliland, and a multi-purpose port in Puntland. But relations between Djibouti and the UAE have been fraught since February 2018 when the Djiboutian government cancelled the contract of Emirati firm Dubai Ports World (DP World) to operate Djibouti’s main container shipping terminal.
Ethiopia's Pursuit of Maritime Access
Since Eritrea’s secession in 1993, Ethiopia has endured the geopolitical challenge of becoming a landlocked country, severed from direct access to the Red Sea. Consequently, Addis Ababa has relied overwhelmingly on neighboring ports - most notably Djibouti’s, which facilitates over 90% of Ethiopia’s foreign trade. The pursuit of sovereign maritime access is thus not merely a government initiative but a deeply entrenched national concern. The loss of coastline following Eritrea’s independence and the contemporary international response - or lack thereof - toward Ethiopia’s status as a landlocked nation has been broadly perceived as inequitable.
Against this backdrop, Ethiopia has proactively sought to expand its maritime gateways beyond Djibouti, exemplified most notably by the January 2024 Memorandum of Understanding (MoU) with Somaliland to develop the Berbera port. In response, Djibouti’s subsequent offer of maritime access to Port Tadjourah has been widely interpreted as largely symbolic, lacking substantive commitment to alleviating Addis Ababa’s logistical and strategic concerns.
Compounding this contradiction is Djibouti’s simultaneous rejection of Ethiopia’s naval base requests alongside its hosting of numerous foreign military installations from global powers including the United States, China, France, Japan, Italy, Saudi Arabia, and the United Kingdom. These foreign bases yield hundreds of millions of dollars annually in rents, conferring economic stability and diplomatic leverage that far exceed Djibouti’s demographic and geographic scale.
Djibouti's Perspective
Djiboutian President Ismaïl Omar Guelleh’s recent public statements, in which he equated Ethiopia’s maritime initiatives to acts of territorial encroachment, epitomize a defensive posture that prioritizes exclusion and sovereignty in a manner that precludes constructive regional collaboration. Yet, Djibouti’s leadership persistently dismisses Ethiopia’s proposals for sovereign corridors and naval facilities, framing them as existential threats rather than opportunities for cooperative development.
Djibouti's Foreign Minister Mahmoud Ali Youssouf says his country has a proposal that could solve the dispute between Somalia and Ethiopia. He said Djibouti and other countries such as Turkey have been trying to solve the dispute between Somalia and Ethiopia, which ignited at the beginning of this year when Ethiopia signed a Memorandum of Understanding (MOU) with the breakaway region of Somaliland, a deal Somalia sees as an infringement to its sovereignty.
Youssouf said Djibouti is even ready to hand over a new port, a brand-new port that has been built, a brand-new corridor to the northern border of Djibouti, that corridor will be very helpful to Ethiopia, at least to decrease the cost of transport. Djibouti is even ready to consider a mix-management of the port with Ethiopia.
Egypt's Strategic Maneuvering
Complicating this landscape further is Egypt’s recent strategic maneuvering in Djibouti, which introduces an additional layer of complexity and competition. The November 2024 Egypt-Djibouti MoU, which establishes Egyptian logistics zones within Djibouti and integrates port infrastructure linkages between the two countries, fundamentally alters regional dynamics in a manner that directly challenges Ethiopian interests. Egyptian President Abdel Fattah al-Sisi’s April 2025 visit to Djibouti, during which both leaders underscored that Red Sea security should be led exclusively by littoral states, signals an intensification of this partnership.
From the Ethiopian perspective, Djibouti’s rejection of Ethiopia’s maritime requests amid this backdrop may be interpreted as politically motivated and manipulatively timed. Djibouti’s persistent opposition to the Ethiopia-Somaliland MoU further highlights a broader pattern of skepticism and resistance that calls into question Djibouti’s strategic intentions and its willingness to accommodate Ethiopia’s legitimate aspirations.
The Horn of Africa: A Contested Region
The Horn of Africa is often referred to in Western political circles as the "new Yugoslavia" due to its resemblance to the "Balkanization" that occurred in the Balkans during the conflicts and wars of the 1990s. The Horn of Africa, a strategic and vital region for international trade via the Red Sea and the Suez Canal, includes Eritrea, Ethiopia, Djibouti, and Somalia. It is one of the most contested regions for influence among global and regional powers.
Escalating Tensions On May 6, 2024, Africa Intelligence reported that a joint ministerial committee meeting between Ethiopia and Djibouti failed to yield any significant breakthroughs to improve the deteriorating relations between the two countries. The crisis began when Ethiopia, the most populous landlocked country in Africa, planned to diversify its supply routes to reduce dependence on Djibouti.
Abiy Ahmed expressed anger over the $1.5 billion in annual customs fees that Ethiopia has to pay Djibouti. Djibouti regularly accuses the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), a state-owned enterprise in Ethiopia, of non-payment or delayed payments.
According to DW, opponents of the agreement, responding to the formation of a bloc comprising Ethiopia, Somaliland, and the UAE, sought support from Saudi Arabia, whose relations with Abu Dhabi have soured due to competition for influence in the Horn of Africa and the Middle East. Consequently, a bloc consisting of Somalia, Djibouti, and Saudi Arabia is now forming under Cairo’s eyes, which has historically had challenging relations with Ethiopia.
Key Data and Statistics
The following table summarizes key data and statistics relevant to Djibouti-Ethiopia relations:
| Indicator | Value/Description |
|---|---|
| Ethiopia's Trade Through Djibouti | 90-95% of Ethiopia's foreign trade |
| Estimated Annual Profits for Djibouti | Over $1 billion from Ethiopian port usage |
| Ethiopia's Annual Customs Fees to Djibouti | $1.5 billion |
| Djibouti's Population | Between 466,900 and 650,000 (est.) |
| Ethiopia's Population (Projected 2030) | 150 million |
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