Promoting itself as a safe haven amid regional turbulence, President Ismail Omar Guelleh's regime faces a resurgent opposition and scepticism that it can juggle its new alliances.
Twenty-five years after the fall of the Berlin Wall, there is a new arena for high- stakes diplomatic rivalries – Djibouti in the Horn of Africa.
As the only French-speaking country in this region we feel terribly isolated
Some of the most powerful militaries in the world – China, France, Japan, Russia and the US – glower at each other across Djibouti's Gulf of Tadjoura.
Overlooking the Red Sea and the Gulf of Aden, the gateway to the world's busiest shipping lanes in the Indian Ocean, Djibouti has an unrivalled position.
It has the biggest deepwater port in the region and hosts the logistical hub for US military operations in East Africa and the Arabian Gulf.
Djibouti also houses the main US base for launching Predator drones outside Afghanistan.
France, the former colonial power, maintains its largest military base in Africa there, alongside its own facilities for launching drones.
In a more experimental mode, the EU has based its first joint anti-piracy mission, Operation Atalanta, in Djibouti.
Russia has negotiated operating rights for its navy there, and at Obock, on the north side of the Gulf of Tadjoura, China is building its own naval base after signing a military equipment and training deal with Djibouti in February.
Landlord-in-chief for the world's militaries and the would-be ringmaster in this new 'great game' is President Ismail Omar Guelleh, who has ruled Djibouti since taking over from his uncle, Hassan Gouled Aptidon, in 1999.
A canny operator, Guelleh has used Djibouti's strategic position to raise funds and dampen Western criticism of his government's record on democracy and human rights.
But a political crisis is looming as Guelleh, 66, faces a self-imposed deadline for his exit after the 2016 presidential elections.
In March, Guelleh told our sister publication, Jeune Afrique: "I am tired, and I know my limits [...] I think that my mission is about to be accomplished."
Reports of Guelleh's poor health, some more fanciful than others, circulate in the capital.
On 27 May he was flown to Paris for surgery at the Val-de-Grâce military hospital. Guelleh's cancellation of the traditional garden party on independence day, 27 June, reinforced concerns.
However, some senior officials are urging an apparently reluctant Guelleh to stay on.
"Despite my previous disagreements with the President, I recognise that he embodies the stability of the nation. There is no one else who is equipped to do so," says a former critic who is now a state functionary.
Local discontents about inequality and worsening unemployment are rising.
"Most of the population is against this regime because [it has] been there for so long," says Abdourahman Boreh, a businessman turned oppositionist who is embroiled in a tumultuous legal fight with Guelleh.
"If there were to be free and fair elections, anybody from the opposition will win against this regime. The successor doesn't have to come from his family or from the party, that's what democracy is all about," Boreh says.
Officials in Guelleh's government talk of a growing Islamist threat to Djibouti, a prime target given the concentration of Western military assets there.
They have also accused Boreh and activists inside the country of launching grenade attacks. Such charges are trumped up, insists Boreh, arguing that the people the regime labels as 'Islamists' are simply former government supporters who now want change.
The danger, says Boreh, is that the government's crackdown could provoke serious violence.
The government has banned the Mouvement pour la Développement et la Liberté because its Islamist policies contravene the secular constitution.
Its members have since joined the opposition Union pour le Salut National, where they are winning more support.
People returning from abroad often bring different ideas. Guelleh encouraged Djiboutians to return from Saudi Arabia, Sudan, Egypt and Libya in 1999 with a policy called Arabisation.
"As the only French-speaking country in this region we feel terribly isolated [...] The real problem emerged two years ago when the Islamists swept all the seats in the capital. The results were overturned, but the political role of the Islamists was now a reality," admits a senior presidential aide.
On the evening of 24 May, a bomb exploded outside a restaurant in Place Menelik, Djibouti city, killing three people.
The Islamists in the Somali rebel group Al-Shabaab claimed responsibility, saying it was revenge for Djibouti adding a battalion to the AU force in Somalia as well as hosting Western troops.
Arms from somalia
Djibouti is sandwiched between a hostile Eritrea and the ferment of Somalia, so its security worries are deepening.
Small arms are smuggled in from Somalia and used in firefights between rival gangs in the capital.
And in the countryside, rivalries between Afar and Issa pastoralists persist.
New military checkpoints, especially in the Dikhil Region in the south-west, have had some success in blocking the arms shipments: "Foreigners, especially Ethiopians, deposit their arms at military checkpoints and pick them up when they leave," explains Hassan Eleyeh, who sits on a local peace council in the border town of As-Ayla.
"Here, a small conflict even between individuals can very quickly become a political issue," he says.
As the neighbourhood gets rougher, Guelleh has pulled another rabbit out of the hat: economic ties and political cooperation with Ethiopia.
In May at a ceremony at Djibouti port to celebrate Ethiopia's reception of nine new Chinese vessels, Guelleh declared: "We believe that Ethiopia is Djibouti and Djibouti is Ethiopia – no difference at all."
These marriage plans with Ethiopia, known in local parlance as 'one country, two chiefs,' have the backing of Addis Ababa. Ethiopia has 94 million people, and Djibouti has just under a million.
Ballast against Islamists
Ethiopia assiduously backs the Guelleh government. When Eritrea's troops crossed the southern border into Djibouti in 2008, the Addis Ababa government sent 25,000 troops to defend what was once called Ethiopia's Afar and Issa region.
Those troops stayed in Djibouti to defend the port, through which almost all of Ethiopia's maritime trade passes.
"The idea, when we mooted it, was to create an economic community that would essentially prevent the rise of the kind of Islamist insurgency that has entrenched itself in southern Somalia. And it has been successful," says a former adviser to Ethiopia's late Prime Minister Meles Zenawi.
Back in Djibouti, Samir Aden, an aide to finance minister Ilyas Moussa Dawaleh, explains the government's closer ties with Ethiopia: "We initiated an integration of our infrastructure to better negotiate a wider regional integration ... [Djibouti] buys electricity and will soon be importing water from Ethiopia."
This refers to a new 70km aqueduct running from eastern Ethiopia to supply Djibouti with 100,000m3 of water per day.
Next October, the 900km electrified railway linking Djibouti port with Addis Ababa is to open.
Financed by Beijing, the railway is eventually to be extended to South Sudan.
Born in Dire Dawa, Ethiopia and a fluent Amharic speaker, Guelleh has a life-long affinity with Ethiopia, now reinforced by its growing regional weight.
And his bid for an ever closer union with Addis Ababa could be his final – and contentious – parting shot if he decides to quit his country's febrile politics. ●