As the GCC crisis erupted in the summer of 2017, it surprised audiences around the world with both the suddenness of escalation and the intractability of the ensuing conflict. As analysts and policy makers scrambled to interpret the causes and consequences of the unfolding conflict, governments in the Horn of Africa were amongst the first, and the few outside the Middle East, to publicly take a stance. Although the Horn of Africa is generally considered in its African context, the speed and intensity with which developments in the Middle East translated to the opposite shore of the Red Sea should come as no surprise. The Gulf and the Horn share a long and rich history. In recent years the Gulf states have become increasingly active in the Red Sea, partly in response to the war in nearby Yemen. They — especially Saudi Arabia, the United Arab Emirates (UAE) and Qatar — are again influential, capable and active actors in the Horn of Africa.
Some of the ties between the regions, such as the establishment of military bases on the Red Sea coast and the involvement of Horn states in the Yemeni conflict, have attracted significant attention, while others remain less examined. Specifically, the Horn of Africa is seeing increasing investments by international businesses, including from Gulf countries, which rank amongst the most significant export and import partners for many countries in the Horn. Although China dominates the fossil fuels segment (mainly from South Sudan) and thus tops aggregate statistics on Horn exports, the Gulf states are the main trading partner for goods other than fossil fuels from the Djibouti, Somali, South Sudanese and Sudanese economies (see figure 2). This picture of trade fits neatly into Vision 2030 and Africa Rising narratives, which stress the need for Gulf states to diversify their economies and the emerging opportunities in African states, but Gulf countries have been known to mix political, business and religious motives in their interactions. In addition, modalities can vary considerably, as can be seen in the contrast between investments through the Qatar Sovereign Wealth Fund, direct financial support to candidates in the most recent Somali elections and alleged displacement due to substantial land acquisitions across Sudan and Ethiopia by Saudi Arabia.
Exports from the Horn of Africa to selected partners
USD billions, excluding fossil fuels exports. Data drawn from Chatham House (2018), ‘resourcetrade.earth’, link, based on UN Comtrade data (accessed 7 March 2018). Inclusion of fossil fuels would move China to the top spot as export destination, mainly based on South Sudanese oil exports.
Horn actors themselves have hardly remained passive recipients. Economic drivers have been central to the outbreak, continuation and cessation of conflict in the region, and actors have at times actively courted Gulf countries for financing. A significant amount of the politics of the Horn of Africa can be understood through the metaphor of the political marketplace: political allegiances are traded for various resources, and additional sources of rent are quickly captured to support or alter the prevailing political settlement. In this context, combined with the Horn’s strong patterns of cross-border trade, the implications of the resources mobilised through investments, trade flows and political allegiances can have significant consequences on regional stability, and thereby on trade through the Gulf of Aden, migration patterns and security.
However influential, the extent of Gulf economic interests in the Horn is rarely explored; assessments of the impact of these activities are even more limited. This report looks into the extent of economic engagement by Gulf states in the Horn, and the linkages between these financial streams and prospects for stability in the Horn region. It sets out a comprehensive overview and political-economic analysis of Gulf-Horn economic relations, but does not purport to be exhaustive given the opaque nature of the business relations and financial transfer this includes. The report begins with an overview of historic ties between the regions to place current developments in context. It then examines the determinants of Gulf aid, investment and trade in the Horn from the perspective of the Gulf investors. Next, it maps the scope of Gulf investments in the Horn since 2000, comparing it with the more public official development aid (ODA) instruments before moving on to approach Gulf investments from the perspective of a recipient country in the Horn, Ethiopia, to highlight both motivations and implications. The report concludes with an assessment of Gulf-Horn economic relations and some of the implications for analysts and policy makers active in the region.
The report defines the Gulf as Kuwait, Qatar, Saudi Arabia and the UAE and the Horn of Africa as Djibouti, Eritrea, Ethiopia, Somalia, South Sudan and Sudan, but an in-depth exploration of the business ties between each of these highly diverse countries is beyond the scope of this report. As a consequence, examples are mainly drawn from Ethiopian, Sudanese, Saudi Arabian, United Arab Emirati and Qatari contexts. Such examples may be generalisable to a certain extent, but neither the Horn nor the Gulf forms a homogenous block. Extrapolations not taking into account the local context on either side of the Red Sea may therefore obscure important differences. The report focusses primarily on Gulf funding mobilised through foreign direct investment and foreign portfolio investment against the backdrop of the wider trade patterns, official development aid, macroeconomic support to Horn governments and direct individual payments. Although analytically distinct, these instruments are frequently mixed within individual projects or transactions, and cannot be neatly separated in most cases.
Cooperation Council for the Arab States of the Gulf. The group, formerly the Gulf Cooperation Council, consists of six member states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Weymouth, L. 2018. ‘Qatar to Saudi Arabia: Quit trying to overthrow our government’, Washington Post, 2 February,link (accessed 19 January 2018). Cooperation Council for the Arab States of the Gulf.
The crisis broke on 5 June and Sudan promptly formally declared its support of Kuwaiti mediation efforts (and offered to mediate itself, though it informally leans towards the Saudi side). Meanwhile, Somaliland backed the Saudi-led coalition on 10 June, Eritrea on 12 June and Djibouti on 14 June. Discussions regarding the Somali position are ongoing. Ethiopia has formally remained neutral. See Al Jazeera, 2018. ’Qatar's blockade in 2017, day by day developments’, 18 February, link (accessed 20 March 2018) and Horn Diplomat, 2017. ‘Somaliland Supports Saudi-led Coalitions cut ties to Qatar’, 10 June, link (accessed 19 January 2018). For local views from both sides see Al Jazeera. 2017. ‘Africa and the Gulf crisis: the peril of picking sides’, 15 June, link (accessed 21 July 2017); for an Ethiopian perspective, see: The Ethiopian Reporter, 2017. ‘The rift in the GCC and diplomatic responses from the IGAD region’, 1 July, link (accessed 19 January 2018).
Richard, R. 2015. War in Yemen: The African Dimension, London: Oxford Research Group.
Abdi, R. 2017. A Dangerous Gulf in the Horn: How the Inter-Arab Crisis Is Fueling Regional Tensions, Brussels: International Crisis Group; Shiferaw, L. 2016. ‘The role of Gulf states in peace and security and development in Sub-Saharan Africa’, Working Paper 16, Roma: Instituto Afari Internazionali; Maru, M. 2017. ‘The rift in the GCC and diplomatic responses from the IGAD region’, The Reporter, 1 July, link (accessed 19 January 2018).
In recent years, several military bases have been constructed or planned in the Horn of Africa. Examples include basesd by the United Arab Emirate in Berbera Port (Somaliland), Mogadishu (Somalia) and Assab (Eritrea); Turkey in Mogadishu (Somalia); China in Obock Port (Djibouti); Saudi Arabia in Djibouti (planned). For other developments, see Richard, op. cit.; Anyadike, O. 2017. Updated rough guide to foreign military bases in Africa’,Irin, 15 February, link (accessed 19 January 2018).
Roxburgh, C., et al. 2010. ‘Lions on the Move: The progress and potential of African Economies’, McKinsey Global Institute; McSparren, J., et al. 2014. ‘Qatar’s global investment strategy for diversification and security in the post-financial crisis era’, Centre on governance research paper series (No. 02/17/EN), Ottowa: University of Ottawa; McSparren, J., et al. 2015. ‘Contours of Qatar–Sub-Saharan Africa Relations: Shedding Light on Trends and Prospects’, in: Mapping GCC foreign policy resources, recipients and regional effects, ed. Young, K., and Khatib, L., London, London School of Economics and Political Science; The Economist Intelligence Unit. 2011. ‘GCC trade and investment flows: The emerging-market surge’, Economist Intelligence Unit Report, London: The Economist.
See for instance: Gettleman, J. 2017. ‘Fueled by Bribes, Somalia’s Election Seen as Milestone of Corruption’, New York Times, 7 February, link (accessed 27 September 2017).
Examples of tensions over Gulf investments in agricultural land can be found in Middle East Business Intelligence, 2013. ‘GCC investors eye African farmland’, 23 June, link (accessed 27 September 2017); Hussein, W. 2016. ‘Will Saudi Agricultural Investments in Sudan leave Egypt high and dry?’, Al Monitor, 1 June,link (accessed 27 September 2017).
Clapham, C. 2017. The Horn of Africa. State Formation and Decay. London: Hurst.
Love, R. 2009. Economic Drivers of Conflict and Cooperation in the Horn of Africa: A Regional Perspective and Overview, London: Chatham House; Verhoeven, H. 2015. Water, Civilisation and Power in Sudan. The Political Economy of Military-Islamist State-Building, Cambridge: Cambridge University Press.
De Waal, A. 2015. The Real Politics of the Horn of Africa: Money, War and the Business of Power, Cambridge: Polity Press.
De Waal, A. 2016. ‘Africa’s $700 Billion Problem: Waiting to Happen’, Foreign Policy, 17 March link (accessed 19 January 2018).
While Turkish influence is substantially related to many of the dynamics discussed, it is left outside the scope of this report.
For instance, although Arabic is widely spoken in the Horn, it is not in Ethiopia, whereas in Djibouti French is the language of education and government, and in South Sudan the sole official language is English. Similarly, the proximity to the Arabian Peninsula has ensured that Islam has had a long and profound impact on the Horn of Africa. It would be a mistake, however, to label the region as Islamic. South Sudan has a larger Christian than Muslim population, while Ethiopia and Eritrea are split more evenly between the two religions. These differences influence the material relationships between each Gulf and Horn state. For example, the Saudi Arabia-based Islamic Development Bank runs projects in the predominantly Muslim countries Djibouti, Somalia and Sudan, but not in Eritrea, Ethiopia or South Sudan as they are not members of the Organisation of Islamic Cooperation.