The ongoing political crisis in the Maldives showcases how infrastructure-building is no longer an innocent activity and that large-scale Chinese investments can undermine democratic institutions. For India, this is a warning that Chinese investments in South Asian nations can alter India’s geopolitics by manipulating latent, unresolved hostilities.
The Maldives has traditionally been in the Indian sphere of influence. Over the last five years, since Abdulla Yameen was declared the winner of a contested election, it has drifted away from India into the Chinese sphere. Now, India must act to arrest and indeed reverse this trend. Not doing so will reveal a lack of resolve, undermine India’s claim of being a net security provider for the region, embolden hostile powers further and disappoint friends in ASEAN, the GCC and Indo-Pacific powers which seek a counterweight to China.
In his latest move, President Yameen of the Maldives undermined the Constitution, the Supreme Court and the Parliament by declaring an emergency and ordering the arrest of the Chief Justice and opposition parliamentarians. For doing so, he had to sack two police chiefs in as many days unwilling to do his bidding[1]. In carrying out this coup, he has received political cover from China, which has called upon the international community to refrain from actions that may ‘further complicate the situation’[2].
The Chinese interest in the Maldives came out in the open in 2012, when Indian corporate GMR’s contract to develop the Male’ international airport was scrapped, and was awarded to Beijing Urban Construction Group. Since then, there has been a surge in Chinese investments and aid to Maldives – multiple housing projects, a power plant, an expensive bridge, water and sewage treatment plants, hotels and airlines (See map). Beijing now has leases on 17 of the 1,200 islands that constitute the Maldives, alleges ex-President Mohamed Nasheed.[3] Gateway House research shows that the three largest Chinese projects are worth a total of $1.5 billion – more than 40% of the Maldivian GDP. This will inevitably cause repayment problems, as is being seen in Sri Lanka, another country deep in debt to China.
High-end tourism is the mainstay of the Maldivian economy, and the largest number of tourists into the Maldives now comes from China. The international airport into which they arrive is being developed by a Chinese company. The sea-plane operator which ships them to the island resorts is owned by a Chinese firm as are many of the resorts themselves.[4] All of this makes Maldivian tourism, which accounts for a quarter of its GDP, highly dependent on China.
The Gateway House Map of Chinese Investments in the Maldives shows the extent of China’s penetration of Maldivian economy.
For India, this has multiple implications:
- An undemocratic regime beholden to China can be manipulated against Indian interests. In future, it can provide military facilities and access – as has been done for Chinese ships and submarines by Sri Lanka and Pakistan in the recent past.
- Investments in the region can give China strategic and economic leverage over India. For instance, the Colombo Port is an important trans-shipment Port for India – and state-owned China Merchant Port Holdings owns an 85% stake in it. This gives China the ability to disrupt India’s foreign trade.
- India has an open border with Nepal, which has served as a conduit to smuggle Chinese goods into India. The Maldives has recently hurriedly concluded a free trade agreement with China and could play a similar role. This can undermine Indian manufacturing and Prime Minister Modi’s Make in India program.
- While China claims almost all of the South China Sea as its sovereign territory, it characterizes the Indian Ocean as an international waterway. Chinese companies have scouted for minerals in the Indian Ocean[5] in the past and have signed agreements with the International Seabed Authority to explore for minerals in the Pacific[6]. A physical presence in countries such as Sri Lanka and the Maldives will make it easier for China to exploit these resources in the future[7][8].
The situation in the Maldives has been converted into a challenge by China just as the Indo-Pacific concept was being articulated. India is hobbled from a military response in the Maldives because there isn’t a legal case for it in international law. Taking the case to the United Nations will be no help because China, which holds a veto in the UN Security Council, has already made its stance clear on external intervention in the Maldives.
However, India can and must undertake some actions:
- Vocally and materially help all democratic forces in the Maldives, including former President Nasheed and democratic groups within Maldives.
- Since SAARC is an ineffective forum because of Pakistan, India must mobilize the Commonwealth to issue a statement condemning the coup in Maldives.
- India and the US must issue a joint statement condemning the subversion of democracy, and impose sanctions on individuals and companies responsible. As a tourism dependent economy, Western sanctions can be very effective.
- Activate the Quad – US, India, Japan and Australia. This might effectively be the first crisis to speak out together.
The situation in Maldives has been developing since 2012 – when President Nasheed was overthrown. By not acting earlier, the only options left to India are the less dramatic, long-term options. India needs to work on these options now.
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Neelam Deo is Director, Gateway House.
Amit Bhandari is Fellow, Energy and Environment Studies at Gateway House.
This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.
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References:
[1] ‘Maldives acting police chief fired’, Maldives Independent, 3 February 2018, <http://maldivesindependent.com/politics/maldives-acting-police-chief-fired-135589>
[2] Ministry of Foreign Affairs, People’s Republic of China, Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference on February 7 2018, http://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/t1532736.shtml
[3] Ministry of Foreign Affairs, People’s Republic of China, Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference on February 13 2018, <http://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/t1534890.shtml>
[4] Bain Capital, Bain Capital Private Equity0lef consortium acquires Trans Maldivian Airways, (Boston: Bain Capital, 2017).
[5] ‘China’s deep-sea sub explores Indian Ocean seabed’, Xinhuanet, 2 January 2015, <http://www.xinhuanet.com/english/china/2015-01/02/c_133892691.htm>
[6] International Seabed Authority, Deep Seabed Minerals Contractors, <https://www.isa.org.jm/deep-seabed-minerals-contractors>
[7] Zhou, Viola, ‘China’s deep-sea mission to mine the wealth beneath the ocean floor’, 6 October 2016, <http://www.scmp.com/news/china/policies-politics/article/2025456/chinas-deep-sea-mission-mine-wealth-beneath-ocean-floor>
[8] Giri, Chaitanya, ‘China’s underwater defense strategy’, Gateway House: Indian Council on Global Relations, 6 July 2017, <https://www.gatewayhouse.in/chinas-ocean-expansion/>
[9] U.S. Department of State, Government of the United States, 2012 Investment Climate Statement – Maldives, <https://2009-2017.state.gov/e/eb/rls/othr/ics/2012/191192.htm>
[10] Library of Congress, Government of the United States, Maldives: People’s Majlis Passes Amendmentto Constitution Allowing Foreign Ownership of Land, <http://www.loc.gov/law/foreign-news/article/maldives-peoples-majlis-passes-amendment-to-constitution-allowing-foreign-ownership-of-land/>
[11] ‘Maldives acting police chief fired’, Maldives Independent, 3 February 2018, <http://maldivesindependent.com/politics/maldives-acting-police-chief-fired-135589>
[12] Foreign and Commonwealth Office, Government of the United Kingdom, Foreign Secretary statement on the state of the emergency declared in the Maldives, <https://www.gov.uk/government/news/foreign-secretary-statement-on-the-state-of-emergency-declared-in-the-maldives>