Berbera, in the breakaway republic of Somaliland, is perched on a narrow shipping lane leading to the Suez Canal and is just 260 nautical miles from Yemen’s civil war. Since antiquity, the town’s strategic shore has been coveted by military and maritime powers. Described by colonial-era travelers as the "key to the Red Sea,” the port became an Ottoman stronghold and later a British colonial outpost.

That explains why United Arab Emirates, Saudi Arabia’s strongest ally, pledged close to $450 million to take over the port here. Elsewhere along the Horn of Africa, allies Saudi Arabia and U.A.E. have snapped up ports and military bases at sites in Somalia, plus farther north in Djibouti and Eritrea.

Qatar and Turkey, which support a different model of political Islam and are closer to Saudi Arabia’s arch-rival Iran, are building in Somalia and Sudan. China is positioned with a military base and a container port, for which it paid $700 million, in Djibouti and is exploring sites in Somalia. The U.S., meanwhile, conducts Africa operations and directs drones in the Persian Gulf from Camp Lemonnier in Djibouti, the largest U.S. base on the continent.

The scramble to lock down critical sites like Berbera is unscrolling all along the Horn and northward into the Red Sea. At stake is the precarious peace in one of the world’s most volatile and strategic corners, and the balance of power in the Middle East. The nearby Suez Canal, meanwhile, is the fastest and most heavily used shipping lane connecting Asia with Europe. It handles about 10% of the world’s seaborne trade, including roughly 10% of the world’s oil trade, according to the United Nations and the U.S. Energy Information Administration.

"We have new kids on the block…competition in the Middle East between the Sunnis and the Shias, and the Americans, the Russians, the Turks, the Qataris,” said Saad Ali Shire, Somaliland’s foreign minister. "It’s a poisonous meeting of interests coming together.”

Berbera and other sites along the northern coast of the Horn are important because of their proximity to Yemen, a stage for the rivalry between Iran and Saudi Arabia that is playing out across the Middle East. Saudi Arabia has been fighting a war there against Iran-backed Houthi rebels since 2015 with the support of allies like the U.A.E. Iran denies arming or training the Houthis.

The United Nations and independent investigators say Iran has used ports in Sudan and Somalia to smuggle weapons to Hezbollah and to allies in Yemen. In support of the other side in Yemen, a vast U.A.E. military base erected in isolated and secretive Eritrea in 2016 has been a launching pad for drones and jet strikes into the battle zone.

Other complications abound. Saudi Arabia and its allies are concerned about jihadist groups, including Islamic State and al Qaeda affiliates, gaining strength in the Arabian peninsula.

And Saudi and U.A.E.’s break last year with Qatar, claiming the Gulf state supports terrorism, upended traditional alliances. The diplomatic crisis spurred a realignment of deals on the poor and conflict-prone African coast, where Somalia, Djibouti, Eritrea and Sudan have welcomed more than $2 billion in investments from the richer Middle East nations since 2016.

"Turmoil in the Gulf has sharply escalated the Horn’s already dangerous militarization,” said Rashid Abdi, an expert on the region at the International Crisis Group, a Brussels-based global geopolitics think tank. "Gulf powers want to control this region to support an economic future that doesn’t fully depend on oil production, and to be ready for a potential future war with Iran.”

The situation has left Washington in a diminished position of influence, Western diplomats say. The U.S. has few commercial investments in the region but has spent tens of billions of dollars on military programs, including efforts to fight piracy, in recent decades, and has increased drone strikes and special-forces deployments against jihadists in Somalia.

"There’s no evidence that there’s a coherent U.S. strategy to deal with divisions in the Horn and the militarization of the Red Sea,” said Payton Knopf of the United States Institute of Peace, a Washington-based nonpartisan think tank.

Tensions flared in May when Chinese military personnel at its Djibouti base used a high-powered laser to harass U.S. flight crews from Camp Lemonnier, the Pentagon said.

The maneuvering for territory has drawn a motley crew of actors, including U.A.E. state-owned shipping giant DP World; a Turkish conglomerate owned by the family of President Recep Tayyip Erdogan’s son-in-law; and Navy-SEAL-turned-businessman Erik Prince, who wants to develop a port south of the capital Mogadishu. France and Japan have military bases, and Russian entities are scouting for deals.

Sudan, which ditched a longstanding alliance with Iran to secure desperately needed investments from Saudi Arabia, is contributing some 5,000 troops to the war in Yemen, and has been carefully straddling both sides of the Middle East rift in a bid to save itself from economic collapse.

In December, Turkey secured the rights to develop Suakin Island, a former Ottoman outpost in Sudan. Qatar in March reached a preliminary agreement with Sudan to spend $4 billion developing a nearby port on Sudan’s mainland that hosts a passenger ferry to the Saudi port of Jeddah. If finalized, it will be the biggest single planned investment in the area’s ports to date.

Berbera, a coastal city of about 200,000, is a focus of the military and commercial buildup. The Soviets erected a major military base here during the 1960s and 1970s, which flipped to the U.S. in the 1980s after the Soviets stopped supporting dictator Siad Barre, and he switched sides. The U.S. arranged for access to Berbera’s airport runway, one of Africa’s longest, as a potential emergency landing strip for the space shuttle.

When DP World, the world’s third-largest port operator, struck a $442 million deal to modernize and manage Berbera’s port in mid-2016, a more-lucrative military agreement between Somaliland and the U.A.E. quickly followed. The deal will see the U.A.E. refurbish the old military base as well as a small port nearby for military use for 25 years.

DP World said it boosted traffic at the commercial port by more than 20% in the past year. It recently brought in modern cargo equipment to speed up the loading and unloading of vessels, and this month the company plans to start extending the quay.

"We have no doubt this place and the broader area will look very different in a few years’ time,” said Supachai Wattanaveerachai, the port’s chief executive.

DP World said Berbera’s expansion is part of a strategy to secure more points of access along the Horn and further inland, helping to increase trade with fast-growing economies like Ethiopia and tapping East Africa’s swelling consumer class.

Mr. Shire, the Somaliland foreign minister, said as part of the deal U.A.E. will build new roads to connect the commercial port to the Ethiopian border and fund education and health-care programs.

Somalilanders, long isolated after declaring independence from Somalia in 1991, said they hoped the first major economic recognition will connect them to regional trade and help bolster a fledgling army. Somaliland is treated as de facto independent of Somalia by many countries, although it hasn’t been formally recognized as such.

"I am hopeful improvements to the port will bring more people here…business is already getting bigger daily,” said 24-year-old Hamda Abdirahman, who cooks at her mother’s restaurant in the town center.

DP World is by far the biggest private-sector employer in Somaliland, with some 2,200 workers. The company until recently hauled in the devalued local currency in trucks to pay salaries.

Property prices have risen as much as 100% along the waterfront, and compounds are being constructed near the ocean. Older hotels are getting upgraded.

On a recent day, Berberawis sitting cross-legged and chewing the narcotic khat leaf said the investments provide a shield for their breakaway state. "As Somalilanders our passports aren’t recognized anywhere, we can’t travel,” said 28-year-old Mohamed Jama, a veterinarian who was in a shop nearby. "After this deal, the U.A.E. may accept our passports, and I could get a chance to work in Dubai.” U.A.E. officials didn’t respond to requests for comment.

Others fear the investments come with too high a price: being dragged further into conflicts across the Middle East and the Horn. Frictions between Somaliland and Somalia—a country war-torn for decades—have already been worsened by the Gulf’s diplomatic crisis over Qatar.

In a Western-backed model, Somalia has been divided into federal states. Outside Mogadishu, half of the states have broken with President Mohamed Abdullahi Mohamed, who critics say is aligned with Qatar despite formally being neutral in the Gulf spat. The states have declared support for the U.A.E. and Saudi Arabia, which are pouring in dozens of millions in investment to help sway opinion.

The Mogadishu government has called the U.A.E.’s Berbera investment illegal and has complained to the U.N. "If you become part of a bloc against another bloc, you gain friends, you make enemies,” said Somaliland’s Mr. Shire. "It’s as simple as that.”Somali-U.A.E. relations broke down spectacularly in April, when Somali agents boarded a U.A.E. airplane in Mogadishu and confiscated $9.6 million in cash. In a Hollywood-style operation, the Somali agents held U.A.E. security personnel at gunpoint, seized the aircraft and removed the money in large bags.

U.A.E. said the funds were flown in to pay salaries and costs at its military base in Mogadishu, where its forces since 2014 have trained Somali soldiers to fight against al-Shabaab, the local al Qaeda-affiliated Islamist insurgency. After the incident, U.A.E. suspended aid and the training program in Somalia and left the base. Later, Somali soldiers trained by U.A.E. skirmished with officers loyal to Somalia’s president.

Officials from U.A.E. and Somalia didn’t respond to requests for comment.

In January, 103 unmarked containers arrived at Mogadishu’s port from Jeddah, Saudi Arabia. Puzzled officials examined the manifest, to discover the containers held millions of rounds of Chinese-made ammunition, for AK-47 assault rifles, DShK machine guns and shoulder-mounted rocket-propelled grenades, people familiar with the matter said. In the past few weeks, another 57 containers with similar contents arrived from Saudi Arabia.

The shipments were intended for some part of the Somali forces under a deal between Saudi Arabia and the previous Somalia administration, according to two senior international-community officials briefed on the matter. Saudi officials didn’t respond to requests for comment.

Now guarded by the ragtag Somali National Army, most of the containers have been languishing in temperatures higher than 100 degrees for months, raising concerns the ammunition will be siphoned off to warring militias or to al-Shabaab, or explode in the heat."This is just the perfect example of how things could literally explode in the current environment,” said a senior Western diplomat. "If there’s conflict…it will spread like wildfire.” source:wsj