Djibouti, town (1995 est. pop. 383,000), capital of the Republic of Djibouti, a port on the Gulf of Tadjoura (an inlet of the Gulf of Aden). It is the nation's only sizable town and its administrative center. Its importance results from the large transit trade it enjoys as a terminus of the railroad from Addis Ababa, Ethiopia, to the sea and from its strategic position near the shipping lanes that carry the Suez Canal traffic. Activity at its port declined when the Suez Canal was closed (1967'75) after the Arab-Israeli War of 1967. Its rail lines were severely damaged by bombing during the Ethiopian civil war in 1977. The only important industry is the production of salt from the sea. There is a camel market in the town. Djibouti was founded by the French c.1888 and became the capital of French Somaliland in 1892. There was severe rioting in Djibouti in 1967 after the territory voted to retain its ties with France.