Maldivian President Mohammad Muizzu, known for his pro-China stand, assumed power in November last year, defeating the pro-India Solih government. Breaking the traditional norm whereby the newly elected President takes the first official overseas visit first to India, Muizzu visited Turkiye and then went for a five-day visit to China. Calling the communist nation, “a valued ally and integral collaborator”, Muizzu signed several agreements with China.
Muizzu, however, is not the first Maldivian President who is known for being pro-China. His earlier close associate Abdulla Yameen (2013-2018), too, exhibited a pro-China approach during his presidential tenure. The archipelago nation of 1,200 islands in the Indian Ocean saw a change in the government recently. This change naturally entails curiosity among countries with an interest in the Indian Ocean region as to what new policies and approach Male would adopt under the new leadership and how it would serve the island nation and its neighbours. It is predicted that Muizzu’s presidency, given his pro-China attitude, is likely to strengthen China’s significance in the region. In this context, it is important to look into China’s interest in Maldives.
Even though diplomatic relations between China and Maldives were officially established in 1972, Chinese involvement in the region, so far limited, has undergone a change during the last decade when it inaugurated its embassy in Maldives in 2011, while the latter was undergoing a democratic transition and political crisis. However, Beijing’s influence in Male rapidly strengthened when Abdulla Yameen assumed the presidency in 2013. The 2014 historic visit of Xi Jinping in Maldives paved the way for the signing of a joint agreement—the Maritime Silk Road (MSR)—which also indicated Maldives’ entry into China’s Belt and Road (BRI) initiative. Thus started China’s investment in the archipelago nation, mainly in two sectors—infrastructure and tourism—to realise its aim of utilising the island’s ports, given Maldives’ strategic position in the Indian Ocean region.
The Chinese investments witnessed its peak during Abdullah Yemen’s presidential tenure as the latter had an ambitious plan of expanding the size of the island. China assumed the position of Maldives’ biggest creditor and got involved in Chinese-funded projects in Maldives, prominent being the construction of 11,000 apartments ($549.9 million), electricity grid ($180.9 million) in Hulhumale and airport expansion ($ 421 million) serving Male and Hulhumale. A $210 million flagship project launched in 2015, known as China-Maldives Friendship Bridge, completed in 2018 was also majorly funded by China ($126 million) which also provided an additional $68 million concessionary loan. The confidentiality of the agreement of the flagship project raised concerns for Yameen’s successor Ibrahim Mohammad Solih government regarding the island nation’s debt to China as its Finance Ministry found out that Chinese loan provided mostly in the form of sovereign guarantees to Maldivian companies amounted to $935 million, in addition of $600 million directly owed to China. However, Chinese sovereign loans of $646 million to Maldivian state company Housing Development Corporation, responsible for Hulhumale development, raised the biggest concern for the clueless Solih government.
Under Yameen’s tenure, Maldives became a signatory of Free Trade Agreement (FTA) with Beijing in 2017, whereby both agreed a reduction of tariffs of over 95 per cent goods to zero and a commitment to boosting Maldives’ fishing industry. The real concern, however, is that the agreement was Yameen’s unilateral decision. No prior access was given to MPs of the 1000-page document for review, a move perceived by the then opposition as a compromise with sovereignty and towards a debt-trap with China. Ex-Maldivian President Mohammad Nasheed (2009-2012) also claimed that Maldives’ Chinese debt stood at $3.4 billion during Yameen’s tenure, which is over 70 per cent of its foreign debt. It soared to one-fifth of its GDP. This debt burden was later inherited by the Solih government. These debts included government-to-government loans, loans to state enterprises and Maldivian government-guaranteed private sector loans. Moreover, Nasheed opined that Chinese-funded projects costs were deliberately inflated on paper and only about a billion dollars were received in reality. This was naturally disputed by Beijing which claimed Nasheed’s figure to be “highly exaggerated” . China continued to claim that Male owed Beijing about $1.1-1.4 billion. Considering Maldives’ GDP was around $5 billion during Yameen’s tenure, Beijing’s ‘demand’ is quite significant.
The World Bank, in its October 2023 report, warned Maldives of repercussions the island nation would face by taking more loans from China as Male already owes the Asian giant $1.37 billion, the public debt share being 20 per cent. These investments on infrastructural projects also happen to be on islands which are popular tourist destinations.
In fact, in 2015 Yameen made a controversial constitutional amendment to overturn the prohibition on land ownership by foreigners and permitted foreigners to purchase land in Maldives only if they can invest more than $1billion, which critics claimed to benefit only China as it is the only country to possess both finance and land ownership experience. Chinese companies thus seem to receive 50-year lease on tourist destination islands at excessively cheap prices which were found to be dredged for possible military activities under the guise of commercial development.
Former Maldivian President Mohammad Nasheed has alleged Beijing of acquiring 17 northernmost atolls from Maldives at lower price for the development of these tourist sites while at the same time providing no clarity of its activities in the islands to Maldives’ local authorities. Yameen’s conviction on charges of corruption and money laundering tells of China’s involvement in the rising corruption cases in the island nation. Yameen’s tenure saw a surge in corruption as per Transparency Corruption Index, especially in 2017 and 2018.
The current Maldivian President, Dr. Mohammad Muizzu who was the Interior and Housing Minister during the presidency of Abdullah Yameen, in 2021 was summoned by the Anti-Corruption Commission for questioning on the corruption cases during his ministerial ship. Earlier in 2019, Muizzu was probed in Noomadi case on accusation of giving false statements in the arbitration case against the Resort and Residences company. Given China’s predominant investment in housing projects, building more than 10,000 housing units, the charges against Muizzu also reflect Chinese connection in Maldives’ corruption cases. During his previous Male city council mayor ship, Muizzu received gift of 3000 street lights from Beijing in 2022 and last year, with China’s support, launched ‘Smart Street Lights’ installation across Male city, equipped with free Wi-Fi, digital LED screens, speaker systems, CCTV cameras and anchoring sensors that can detect climate change. This, however, raised concern of possible mass surveillance and threat to public privacy, which only aggravated when Muizzu refused to disclose specifications of the street lights, and further expressed his intention of selling the Chinese-donated street lights in the market.
It remains to be seen how China-Maldives relations will unfold under President Muizzu’s tenure. The past tells that China has done more harm than good for the island nation when the leadership overtly took a pro-China approach. The previous Solih government has done much damage control to save Maldives from its Chinese debt trap as well as corruption seenYameen’s tenure. The apprehension now is that under Muizzu, given its pro-China stand, Maldives is going to fall into the verge of another debt trap by China, coupled with corruption, which might escalate into another political crisis in the island. Muizzu’s decision of revising the FTA is apprehended to be the first step towards that downfall.
The writer is an author and columnist and has written several books. His X handle is @ArunAnandLive. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.
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