Djibouti

Djibouti City is the only place on earth where the United States, China, France, Japan, and Italy maintain military bases within kilometres of each other. The American installation, Camp Lemonnier, is the largest US base in Africa with 4,000 personnel. China's base, opened in 2017, is Beijing's first overseas military facility. France has maintained troops since Djibouti's independence in 1977. Japan built its first-ever overseas base here in 2011. Combined, these foreign powers pay approximately $300 million annually in base rent — roughly 10% of Djibouti's entire GDP.

The product Djibouti sells is geography. The city sits at the Bab el-Mandeb strait, the chokepoint between the Red Sea and the Gulf of Aden through which 15,000 ships transit annually carrying 25% of the world's seaborne oil. Every vessel moving between the Suez Canal and the Indian Ocean passes Djibouti's coastline. When Houthi attacks reduced container traffic through the strait by 50% in 2025, the strategic value of having military assets positioned at the chokepoint became impossible to dispute.

The economic model is pure rent extraction from an unreplicable geographic position. Ethiopia, a landlocked nation of 120 million people, routes over 90% of its trade through Djibouti's port — generating roughly $400 million annually in transit fees. The military bases generate another $300 million. The bidding dynamic between competing powers drives rents upward: China reportedly pays $94 million per year, more than the $63-70 million the United States pays, reflecting Beijing's willingness to pay a premium for its first overseas military footprint.

Djibouti has the economic structure of a keystone species that maintains ecosystem stability through its position rather than its size. The country is smaller than New Jersey. Its population barely exceeds one million. It produces almost nothing for export. But remove Djibouti from the map and the consequences cascade: Ethiopia loses port access, military powers lose their Indian Ocean staging ground, and the world's most important energy shipping lane loses its closest surveillance point.

The vulnerability is the mirror image of the advantage. A rentier economy that monetises geography rather than production has no fallback if the geography becomes less valuable. A canal through Saudi Arabia, a shift in global energy routes, or a decline in Red Sea traffic could erode the revenue base that funds half of the national budget. Djibouti contains more than half of the country's population because it is the only place where the rent payments create employment. The city is not a capital that happens to host military bases — it is a tollbooth with a population attached.