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Dubai warns of action against China on Djibouti trade zone

AFP  |  Dubai 

today threatened to take legal action against for building an international free trade zone in on a terminal disputed with the strategic Horn of nation.

The warning came one week after launched the first phase of Africa's biggest free trade zone, developed by China, months after scrapping a concession agreement with Dubai's global DP

China, which has the only foreign military base near the terminal, is developing and financing the free trade zone as it considers an important part of its USD 1 trillion "Belt and Road" global investment initiative.

"DP reserves the right to take all available legal actions, including claims for damages against any third parties that interfere or otherwise violate its contractual rights," the said in a statement.

The tiny nation of Djibouti overlooks the at the mouth of the on the key shipping lane through the to from the Gulf and beyond.

In February it terminated a 50-year concession agreement with DP over the Doraleh container terminal, claiming flagrant violation of state sovereignty and national interests.

has already sought arbitration in the dispute before the

reiterated today that its concession agreement over the terminal "remains in force" and warned that the "illegal seizure of the facility does not give the right to any third party to violate the terms of the concession agreement".

DP World, which operates 78 ports in more than 40 nations, has increased its interest in the Horn of and nearby with contracts to manage ports in and the breakaway Somaliland.

Djibouti in 2017 unveiled three new ports and a railway linking it to landlocked Ethiopia, as part of its bid to become a global trade and logistics hub.

The trade zone, which is connected to Djibouti's main ports, aims to diversify the economy, create new jobs and lure foreign investment through tax-free incentives and full logistical support.

The new spat comes with Chinese scheduled to visit the next week. The free trade zone is being run by Djibouti, the majority shareholder, along with three Chinese companies.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, July 12 2018. 19:35 IST