🇩🇯 Djibouti

Djibouti is a tiny Horn of Africa nation of just 1 million people, but its location at the mouth of the Red Sea — where 30% of global shipping passes — makes it one of the most strategically important pieces of real estate on earth. GDP is about $4 billion. The country hosts military bases from the US, France, China, Japan, and Italy — more foreign military bases per square kilometer than anywhere else. China's first overseas military base is here. Djibouti is essentially a city-state: the capital holds about 70% of the population. Temperatures regularly exceed 45°C, making it one of the hottest countries on earth.

Port services and military base rents drive the economy — the port handles about 95% of Ethiopia's trade (Ethiopia is landlocked). The Djibouti-Ethiopia railway, financed by China, opened in 2018. Services account for about 80% of GDP. The country has taken on significant Chinese debt for infrastructure projects, raising debt sustainability concerns. There's virtually no manufacturing or agriculture to speak of.

Djibouti's Lake Assal is the lowest point in Africa (155 meters below sea level) and the third-lowest on earth. Its salt concentration is 10 times that of the ocean — saltier than the Dead Sea. The Afar Triangle where Djibouti sits is one of only two places on earth where a mid-ocean ridge is visible above water.

Djibouti has turned geography into a business model, and it works. But the Chinese debt load and dependence on a single client (Ethiopia) are real vulnerabilities. It's a one-trick pony, but it's a very good trick.