Djibouti is the only country in the world that hosts the military bases of America and China. France and Japan also maintain military bases in Djibouti. Terrorism and maritime piracy provided an impetus to the burgeoning foreign military presence in and around Djibouti. Over the years, the tiny state has deftly managed strategic rivalries and competition between major powers. While the tiny state has agreed to host the Chinese base, it refused Russian overtures. Despite hosting an American base, Djibouti has not allowed Washington to conduct anti-Houthi operations. The presence of Chinese and Japanese bases and the sharpening US-China competition in Djibouti contribute to Indo-Pacific geopolitics. For a small state, Djibouti enjoys outsized strategic importance. Djibouti is stable and yet vulnerable at the same time. The stability could be at risk due to the great power presence and jostling. Djibouti’s future depends on its domestic stability as well as on the shape of the great power politics.