Following President Abdulla Yameen’s surprise defeat in the Maldivian election, the air of self-congratulation in New Delhi risks obscuring the challenges. India ought to learn from its experience with Sri Lanka, where China has retained its influence and leverage even after authoritarian President, Mahinda Rajapaksa, was thrown out by voters in early 2015. In the Maldives, China may be down, but it’s not out and could, as in Sri Lanka, re-establish its clout through debt-trap diplomacy.
The Maldivian archipelago, despite its tiny population, is of key importance to Indian security, given that it sits astride critical sea lanes through which much of India’s shipping passes. From the Indian naval station on the Lakshadweep island of Minicoy, the Maldives’ northernmost Thuraakunu Island is just 100 km away.
The election victory of the opposition candidate, Ibrahim Mohamed Solih, against an increasingly autocratic Yameen cannot roll back China’s deep strategic inroads during the incumbent president’s rule. To be sure, the outcome represents a triumph of Indian patience. Had India militarily intervened in the Maldives, it could have provoked a nationalistic backlash and strengthened Islamist forces in a country that has supplied the world’s highest per capita number of foreign fighters to terrorist groups in Syria and Iraq.
After Yameen in February declared a state of emergency and jailed Supreme Court justices and political opponents, India came under pressure, including from the Maldivian opposition, to intervene militarily, as it did once before — in 1988 when it foiled an attempted coup. But unlike in 1988, no legitimate authority was inviting India to send in forces. By erring on the side of caution and holding out an intervention threat if the voting were not free and fair, India aided the electoral outcome.
Contrast this with Indian missteps in Nepal, where India woke up belatedly to the political machinations in Kathmandu that led to a flawed new Constitution being promulgated. India then backed the Madhesi movement for constitutional amendments — an agitation that triggered a five-month border blockade of essential supplies to Nepal. The resulting Nepalese grassroots backlash against India eventually contributed to the China-aided communists sweeping Nepal’s 2017 elections.
The restoration of full democracy in the Maldives after, hopefully, a smooth transfer of power on November 17, will be a diplomatic boost for India. However, in India’s larger strategic backyard, China continues to systematically erode Indian clout. Indeed, the Maldivian election result coincided with a major development underscoring Nepal’s pro-China tilt. After implementing a transit transport agreement with China to cut dependence on India, communist-ruled Nepal — under Chinese pressure — has reversed its previous government’s cancellation of the $2.5 billion Budhi-Gandaki Dam project. China bagged the project without competitive bidding. It massively inflated the project cost, which will leave Nepal struggling to repay the Chinese debt.
Yameen, who signed major financing and investment deals with Beijing, will be departing after pushing the Maldives to the brink of a Chinese debt trap. Can the Maldives still escape debt entrapment by emulating the example set by Malaysia’s Mahathir Mohamad, who recently cancelled Chinese projects worth almost $23 billion? Or is the Maldives, like Sri Lanka, already so indebted that it will remain under China’s sway? Nearly 80% of the Maldives’ external debt — equivalent to about one-quarter of its GDP — is owed to China.
Even without any new contracts, the Maldivian debt to China will rise because of the Chinese projects already completed or initiated, thus allowing Beijing to retain its favourite source of leverage. Indeed, Beijing will seek to court Yameen’s successor just as it has in Sri Lanka wooed Rajapaksa’s successor, who has disclosed that China has “gifted” him $300 million “for any project of my wish,” besides constructing South Asia’s largest kidney hospital in his electoral district.
In this light, the post-Yameen Maldives — like Nepal, Bangladesh and Sri Lanka — would likely seek to balance relations with India and China, thus reinforcing how Beijing has fundamentally altered geopolitics in a subregion New Delhi long considered its natural sphere of influence. As Maldives’ closest partner, a proactive India must leverage its ties. India should assist in infrastructure development and be willing to refinance Maldives’ Chinese debt so as to achieve lower costs and a longer-term maturity profile.
India will have to closely watch China’s activities in the unpopulated Maldivian islands it managed to lease during Yameen’s reign. China is muscling its way into India’s maritime backyard, including sending warships to the Maldives and signing an accord for an ocean observatory there that could provide critical data for deploying nuclear submarines. The new Maldivian government should be left in no doubt about India’s “red lines”.
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