Perspectives on India-China competition in Maldives

A tide of change in leadership has swept across South Asian countries such as Nepal, Bhutan, Maldives, and Sri Lanka this year, spurring academic speculation over relative gains and losses from the perspective of India-China competition.

As big powers in terms of size, economy and predominant roles that Indian and China have been playing in these small but strategically vital countries historically, they have shaped different scholars’ understanding and analysis of the internal political changes in the smaller South Asian countries.

While small South Asian countries have continuously looked for capital, investment and a reliable security provider, the roles of India and China have been understood primarily from a strategic perspective given the smaller states’ prized strategic location in the Himalayas (where both share land frontiers) or in the Indian Ocean (where sea-routes for trade pass through and naval strategies could be developed) and competed for influence through aid, investment and coercive measures as well.

New Delhi shares a long Indian Ocean frontier and considers the water body its strategic backyard due to its vulnerability to external threats and its dependence on sea routes for trade. On the other hand, Chinese stakes in the ocean are driven by the need to safeguard its maritime trade as well as expanding its influence through the Belt and Road Initiative (BRI).

Beijing has been pursuing various infrastructure projects in Maldives as well as Sri Lanka and Pakistan, legitimizing them by bringing in employment opportunities and facilitating long-term socio-economic development, although it has temporarily halted or withdrawn them in some cases. However, New Delhi perceives these projects as part of a strategy of “encirclement” because of their proximity to the Indian Ocean. China turned out to be the biggest investor in Maldives, accounting for US$2.37 billion out of the total FDI of US$3.22 billion this year due to ex-president Abdulla Yameen’s preference to move into the Chinese economic sphere of influence, which might have further contributed to Indian concerns.

In Maldives, political developments were projected to be favoring India when the archipelago state’s opposition leader won the presidential election and defeated Yameen. Apart from the country turning away from democracy when Yameen declared a state of emergency in the country on February 5, the leader had courted huge investment from China since coming to power in 2013 and signaled his proclivity towards Beijing, causing tensions with New Delhi.

Yameen signed a free trade agreement with Beijing towards the end of 2017, leading to an increase in the country’s imports from China, which were estimated at 18% compared to India’s 11% from January to June 2018.

It is worthwhile to recall that in 1988, India carried out a successful military mission in Maldives exemplifying a commendable effort by New Delhi in dislodging an authoritarian regime in the neighborhood, which created a tide of rising expectations among the pro-democratic forces in Maldives that India would replicate its previous role and oust the Yameen regime and release the democratic leaders from jail. However, India was cautious this time because it was not a coup like the past instance and secondly, there was growing Chinese influence on the current leadership.

However, with a change in leadership, India has shown an interest in forging close ties with the island country, and the response from Maldives has been equally warm. Maldives Foreign Minister Abdulla Shahid made his first visit to India and had a meeting with External Affairs Minister Sushma Swaraj, and the latter is reported to have remarked that “in line with the government of India’s Neighbourhood First policy, India stands ready to fully support the government of the Maldives in its socio-economic development.”

Meanwhile, India has extended its support for the country’s decision to rejoin the Commonwealth as well as welcomed it into the Indian Ocean Rim Association as its newest member. The Indian government led by Prime Minister Narendra Modi sought to forge close defense ties with Maldives and strengthen its oceanic defense, with the Indian Coast Guard taking part in an exercise with its Maldivian and Sri Lankan counterparts.

With a change in leadership, India has shown an interest in forging close ties with the island country, and the response from Maldives has been equally warm

It is India’s first defense engagement with the Maldives since the new administration came to power. Analysts and political leaders who underline the significance of the country’s debt burdens argue that the current economic tilt in favor of China must give way to a much-balanced relationship. For instance, Mohamed Nasheed, head of the Maldivian Democratic Party, which is currently part of the ruling coalition, and a former president who is now an adviser to President Ibrahim Mohamed Solih, has preferred to call Yameen’s economic partnership agreement with China a “one-way treaty” that favors China and instead pushed for strong economic ties with India as a way to balance the ties.

On the other side, news reports pointed to an alleged plan by New Delhi to provide loans (up to $1 billion) to the country to help it repay its debts to China as a way to pull the country into its sphere of influence. New Delhi has also been accused of misrepresenting Chinese efforts, which have included investment in cutting-edge technology and management skills required for the development of the country. 

Nevertheless, in an attempt to put a pause on analysts’ understanding of Chinese and Indian tilt of the new government, the administration led by Solih has clarified that it will not play India and China against each other and is committed to maintaining healthy bilateral ties with the two countries. Liu Zongyi, who is a senior fellow of the Shanghai Institutes for International Studies and a visiting fellow of the Chongyang Institute for Financial Studies, observes: “Solih is viewed as pro-India by the Indian and Western media. However, pro-India does not necessarily mean anti-China.” 

Even while the change in leadership is projected to be unfavorable to China by some analysts, there is wide-ranging speculation that it would not be easy to suspend or cancel the many Beijing-sponsored projects, which range from infrastructure development to upgrading and maintaining economically important airports and ports and housing estates, and the leasing of islands to Chinese companies for tourism use.

Maldives also owes around $2 billion to China. While at the beginning of 2018, China and the Maldives announced plans to build a Joint Ocean Observation Station in Makunudhoo, there was speculation that China would build a military port in Maldives, which concerned India. The new leadership would most likely find it difficult to roll back the Chinese projects; it may insist that the activities be limited to commercial purposes to allay Indian concerns.

India-China relations have been understood in the framework of a “zero-sum game” (each gain for one country is an equal loss for another and vice versa) in the island countries such as Maldives and Sri Lanka, primarily because of the trust deficit between the big powers. They can mold their relations into a win-win situation only by building trust.

Beijing must attempt to address New Delhi’s reservations concerning the BRI and other security-related issues, and New Delhi must reconsider its policies in light of the India-China economic partnership and its benefits. For instance, China has suggested the model of “two-plus-one” economic partnership, which can accommodate China and India plus another South Asian country.