The ongoing conflict in the Middle East risks reshaping the balance of power in the Red Sea – a shift that could undermine Djibouti’s long-standing strategic advantage as a hub for global trade and foreign military powers, says NAI Senior Researcher Redie Bereketeab.

Located at the gateway of the Bab al-Mandab Strait, the chokepoint connecting the Red Sea to the Gulf of Aden and the Indian Ocean, Djibouti has built its economic and political model around one key asset: its position on one of the world’s most important maritime routes.

Lacking natural resources and with little manufacturing or agriculture, the country relies heavily on the Port of Djibouti, with services External link., including transport and logistics, accounting for around 85 percent of gross domestic product (GDP). While its location has helped place Djibouti one of the wealthiest, albeit highly unequal, countries in the Horn of Africa in terms of GDP per capita, it also leaves the state vulnerable to shifts in regional geopolitics.

Djibouti’s presidential election on 10 April is widely expected to confirm the rule of President Ismaïl Omar Guelleh, one of Africa’s longest-serving leaders.

“The country’s political system is highly centralised, with power concentrated around the presidency and a close governing circle”, explains Bereketeab, noting that systematic and long-standing state repression External link. prevents the emergence of meaningful political competition in the country.

The geopolitical importance of the Bab al-Mandab Strait – the 30-kilometre-wide stretch of water separating Djibouti from Yemen, through which an estimated 12 percent of global trade passes – grew significantly during the US-led “war on terror” and anti-piracy operations in the 2000s. Djibouti has emerged as one of the world’s most concentrated foreign military hubs, hosting rival powers such as the US and China, alongside France, Japan and Italy, which has enabled the government to leverage great-power competition External link. to strengthen its strategic autonomy.

Shifting geopolitics

The lucrative economic and security benefits of its crucial Red Sea port – through which an estimated 90 percent of landlocked Ethiopia’s trade flows – have helped insulate President Guelleh, in power since 1999, from internal dissent and external pressure. But this delicate balance may become harder to maintain as Djibouti’s pre-eminent position is challenged by the shifting geopolitics of the current Middle East conflict.

In December 2025, Israel became the only UN member state to recognise the breakaway region of Somaliland, which declared independence from Somalia in 1991, in a move some experts saw as an attempt to gain a military foothold in the region.

This followed a controversial memorandum of understanding External link. between Ethiopia and Somaliland, signed in 2024, under which Ethiopia would gain access to a commercial port and establish a naval facility on the Red Sea in exchange for potentially recognising Somaliland’s independence.

“An Israeli attempt to establish a military base near Berbera Port, just next door in Somaliland, would be a huge financial blow to Djibouti”, explains Bereketeab. “There has always been this threat that Ethiopia could switch port.”

“There is a belief in the region that the UAE [United Arab Emirates], Israel and Ethiopia are all promoting Somaliland as an independent state for their own strategic benefit. This emerging bloc would be opposed by Saudi Arabia, Egypt and Turkey”, he continues.

The UAE has expanded its influence in the Horn of Africa through strategic investments in port and logistics infrastructure, notably the development and operation of Berbera Port External link. by Dubai-based logistics company DP World, which is being positioned as a key trade gateway for landlocked Ethiopia. For Djibouti, the emergence of alternative ports such as Berbera could potentially challenge its long-standing dominance as Ethiopia’s primary maritime gateway.

“External confrontations”

In mid-March, Somalia’s minister for foreign affairs responded to media reports External link. of Israel’s preparations for a military base in Somaliland, warning External link. that it could pull the territory Somalia claims as its own into “external confrontations” or “further destabilise an already sensitive region”. Separately, the US has cautioned its citizens to steer clear of Camp Lemonnier, the US military base in Djibouti, following declarations by Iran-backed Houthi insurgents across the Red Sea in Yemen that they are preparing to enter the Middle East conflict.

“This is very dangerous, not only for Djibouti but the whole Horn of Africa”, explains Bereketeab, adding that the outcome of the war with Iran could have major repercussions for the Red Sea region.

“In recent years, Iran has provided a sort of balance in the Red Sea. As their relationship with Saudi Arabia improved, their main rivalry has been with Israel. If Iran loses this war, Israel could become the dominant force in the Red Sea – with a volatile reconfiguring of the region’s geopolitics. Whoever controls the Bab-al-Mandab controls the whole of the Red Sea, the Gulf of Aden and entry to the Indian Ocean.”

A rebalancing of power could have far-reaching political, economic and military consequences, embroiling much of the region, adds Bereketeab, citing Somalia’s 2024 defence agreements with Egypt and Turkey.

For Djibouti, such shifts could expose the fragility of an economic and political model built largely on its strategic location and the presence of foreign powers. While the presidential election is unlikely to alter the country’s political trajectory, the regional environment in which it operates may change rapidly.

“Djibouti has benefited from these geopolitical rivalries for decades”, says Bereketeab. “But if the balance of power in the Red Sea changes, it could also find itself far more exposed to the consequences”, he concludes.

TEXT: Tom Sullivan