Unclenching China’s talons in Maldives is no easy task for India

The electoral defeat of president Abdulla Yameen in Maldives and the win by Ibrahim Mohamed Solih came as a pleasant surprise for India. It had been believed that Yameen’s win was a fait accompli with his backing from China. The results surprised Yameen as much as they did the international community.

But aside from his legacy of violence, intimidation and endemic corruption, perhaps the tipping point was a massive corruption scandal: US$79 million stolen from tourism revenue and used to bribe legislators, judges and government officials.

Yameen did concede defeat but ordered the police to raid Solih’s election offices, with his Progressive Party of Maldives (PPM) challenging the election results, while the Supreme Court canceled an order to reinstate opposition lawmakers. The conduct of courts for fair trials is being questioned but a move calling for experienced foreign judges to restore trust and legitimacy appears unviable. Also, the view that the opposition’s unity may not last long indicates that the worst may not be over.

Located 600 kilometers off India’s coast, Maldives’ geo-strategic value to New Delhi lies in its location astride three of the most important sea lines of communications through which most of India’s trade and oil requirements pass. This is apart from being 750km from Sri Lanka. For China, Maldives is a maritime pivot along its Belt and Road Initiative (BRI). Chinese President Xi Jinping visited Maldives in September 2014 and secured Yameen’s support for China’s 21st-century Maritime Silk Route. Since 2016, China has been developing Gadhoo island, 437km from Malé – a likely future supply-berthing-maintenance base, similar to what China has in the outer islands of Seychelles.

China indebted Maldives by $1.3 billion during Yameen’s five-year regime, representing more than a quarter of its gross domestic product. China will extract its value in strategic terms, with Chinese companies engaged in some 17 projects in Maldives. These financing mechanisms imply China gaining control of large areas of Maldives.

Yameen’s finance minister Ahmed Munavvar told Parliament in April that public debt would be around 43 billion rufiyaa ($2.75 billion) or 60% of GDP by the end of 2018. But the International Monetary Fund predicts Maldivian debt to reach 121% of GDP by 2020. Maldives has signed a free-trade agreement with China, the second country in South Asia after Pakistan to do so. And Maldives’ markets are flush with Chinese goods coming in without any import duty.

Tourism is the largest industry of Maldives, accounting for 28% of its GDP and more than 60% of its foreign-exchange receipts. More than 90% of government revenue comes from import duties and tourism-related taxes. China is the biggest source of tourists, averaging more than 300,000 annually, which is equivalent to about 70% of Maldives’ population. During 2017, 306,530 Chinese tourists arrived in Maldives. In comparison, Maldives receives around 60,000 Indian tourists annually, according to industry estimates.

Chinese investments in Maldives, along with being the biggest contributor of tourists, places it firmly in China’s grip. But that is not all. Maldives has been under the specter of Islamic radicalization, believed to be backed by Pakistan and Saudi Arabia. Since the early 2000s, youth from Maldives have been going to Pakistan for training under the Lashkar-e-Taiba (LeT), which is a protégé of Pakistan’s Inter-Services Intelligence (ISI). The rapid growth of Islamist radicalization can be gauged from the fact that by end of 2017, Maldives had sent some 400 ISIS fighters to Syria and Iraq.

At present, there is euphoria in Maldives over the “victory” of democracy. Many are aware of China’s debt trap and the economy’s dependency on China by way of goods and tourists, and realize the need to retain the country’s sovereignty. The need to balance ties with India and China is also being talked about.

But these are no easy tasks with the dragon having dug its talons deep into Maldives and likely to dig even deeper. China can be expected to exert more and more pressure at multiple levels to keep Maldives firmly in its clutches diplomatically and economically, and may even attempt to break the fragile opposition unity through political warfare.

There is speculation in the media that Indian Prime Minister Narendra Modi is likely to visit Maldives in November. Yameen has turned Maldives policy with respect to India from the “No 1 friend” to “No 1 enemy.” Rectifying this position will be the foremost task for Indian diplomacy.

Islamist radicalization in Maldives also casts a dark shadow over south India. Rather than relying on one-off agreements during official visits, India needs to emulate China in sustained engagement with Maldives at multiple levels. Maldives also needs monetary help so as to get out of China’s clutches. India is still in talks with the US about the latter’s plans for $113 million worth of Asian investment to compete with China’s BRI, which US lawmakers want to raise to $60 billion. But it will be prudent to put part of this investment in Maldives.

Chinese consumer products lack durability but are cheap and based on the “use and throw away” principle. India is yet to focus on exporting consumer products, and not just rely on the government-assisted khadi (hand-spun, handwoven natural fiber) industry and so forth. Japanese Ambassador Kenji Hiramatsu‘s statement that India must provide high-quality products that meet the expectations of Japanese consumers is indicative of the same.

India needs to assess public expectations in foreign countries and export high-quality consumer products accordingly. The private sector must similarly be encouraged to invest in Maldives’ development. The need of the hour is sustained engagement at multiple levels. Pressure from the US-backed “Quad” and strategic partnerships need to be exerted on Maldives to save it from becoming a protégé of China and a pariah state like Pakistan.