Djibouti

Djibouti city demonstrates how geographic chokepoints create concentrated value extraction opportunities. The Bab el-Mandeb strait, just 26 kilometers wide at its narrowest point, funnels approximately 30% of global container traffic and 10% of petroleum shipments between the Red Sea and the Indian Ocean. Control of this passage enabled a nation smaller than Massachusetts to become one of the world's most concentrated military staging grounds.

The region hosts military installations from the United States, China, France, Japan, and Italy, generating approximately $300 million annually in base rental fees, roughly 10% of national GDP. Camp Lemonnier houses over 5,000 American personnel, paying $63-70 million per year. China's presence includes infrastructure investments totaling $14 billion, though this has created debt dependency, with over half of Djibouti's $2.6 billion external debt owed to Chinese institutions.

The port dominance is even more striking. Djibouti serves as the primary gateway for landlocked Ethiopia, generating 86% of public revenue. The 2024 Red Sea crisis, when Houthi attacks disrupted regional shipping, paradoxically benefited Djibouti as transshipment demand for its services increased. Yet this concentration creates fragility: youth unemployment exceeds 75%, and international observers note limited trickle-down benefits from foreign military rents. The region operates like a cleaner station at an ocean crossroads, extracting fees from passing traffic while remaining remarkably insulated from the wealth that transits through. GDP grew 6.5% in 2024, but the gains concentrate in the port and military sectors rather than spreading through the broader population.