Lending money to another country is a well-established tactic to build geopolitical influence and project power. Whether it takes the form of a loan, financial assistance and/or development aid, it brings with it conditions, obligations and ties.
In the Maldives, new president Ibrahim Mohammed Solih and his coalition partners face a tough challenge. His controversial predecessor Abdulla Yameen relinquished office in November 2018 after a bruising election. Accusations of corruption, cronyism and authoritarianism abounded. Yameen’s government borrowed from China, as part of a series of deals to build infrastructure for the country’s 440,000 population. In 2018, a so-called China-Maldives Friendship Bridge was completed and the main airport expanded.
When we speak of the Maldives, more often than not, the low-lying archipelago is framed as a frontier of and for climate change. At one stage, former president Mohamed Nasheed spoke of purchasing land overseas in the event that the country was adversely affected by sea level change. The land-purchasing strategy was ditched in favour of geo-engineering, including the construction of elevated artificial islands closer to the nation’s capital, Male. When not borrowing money from China’s Belt and Road Initiative infrastructural funding, the government of the Maldives has turned to other parties such as Saudi Arabia and United Arab Emirates. Both countries have lent money to the Maldives and Saudi Arabia has been eager to invest in the country’s fisheries sector, airport and port infrastructure. There has been talk of leasing and purchasing some of the smaller islands in order to facilitate direct foreign investment in tourism.
The net result of this borrowing and investment is to further speculation about regional power in the Indian Ocean. On the one hand, questions have been posed about why Saudi Arabia and the UAE are willing to loan money to the Maldivian government. Last year was an eventful one for the Maldives, as the former president oversaw a state of emergency, with accusations aplenty about radical Islamist infiltration and corruption and bribery within and beyond the national government. On the other hand, India and China are eager to ensure that their strategic presence is made manifest in the Maldives. China signed a free trade agreement with the Maldives and recognises only too clearly that the country’s geographical location is significant.
For India, China and Saudi Arabia’s financial presence in the islands is not welcome. The Maldives are around 450 miles from the tip of southern India and what worries its prime minister, Narendra Modi, is that either China or Saudi Arabia might develop a military presence in the future. An indebted and politically fragile Maldives could be pressurised into accepting further conditions. In November 2018, India let it be known that it was contemplating making loans of up to $1billion to the Maldives. The ‘offer’ should be seen as a geopolitical counter-measure. And news reports coming out of India were quick to stress the conditionality of the loan offer; that the Maldives would have to push back against the overtures made by China and Middle Eastern countries.
Alongside the offer of loans/financial support, it was reported that the Indian government wanted to speak with President Solih about the possible presence of Indian troops and naval personnel in the Maldives. India, bluntly speaking, would be deeply alarmed by a Chinese naval base and has no doubt looked on with alarm at other areas of the world, such as Greenland, where Chinese investment (or the promise of it) has made itself felt. At present, it is estimated that the Maldives owes China around $3billion, so the offer of $1billion from India is really designed to help the country service the debt and leverage influence in the process. The Indian offer is very much in keeping with the country’s plans for a ‘free and open Indo-Pacific’, working with security partners such as Australia, Japan and the US.
The Maldives are caught up in a series of geopolitical projects of extra-territorial states. The country’s vulnerability captures well the sort of opportunism at stake. It also creates modest opportunities for the Maldives to work between these great power ambitions. India will not wish to see it become indebted further to China, or fall into the geopolitical orbit of Saudi Arabia or do any further deals that might weaken their sphere of influence over the Indian Ocean. One unsettling aspect of this situation is that no one in the Maldives is quite sure how much money is really owed to China. The latter has said that the true amount is closer to $1.5billion rather than $3billion. Either way, the new government in Male has claimed that much of the recent deal-making remains murky. The annual GDP of the Maldives is only around $4billion.
Ten years ago, China did not even have an embassy in Male, and 30 years ago Indian troops were in the Maldives helping to prevent a coup against the then government. Strategic competition involving India, China and others is only just beginning.
This was published in the February 2019 edition of Geographical magazine
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