Maldives- China relations: A Multidimensional Cooperation in the Indian Ocean

By – Shalini Singh;

Introduction

Maldives is a small archipelago nation that holds a crucial geo-strategic location in the Indian Ocean region. Influence over Maldives has emerged as a new bone of contention between India  and China. The Southern and the Northern parts of the island have three sea lanes of communication, which are the Gulf of Aden, Gulf of Hormuz (West Asia), and Strait of Malacca (Southeast Asia) that are pivotal for maritime trade in the Indian Ocean. Since its Independence in 1965,  Maldives has maintained cordial relations with India. Beijing, however, has only recently entered the fray, indicating its long-term goals in the Indian Ocean region through its Maritime Silk Road.

Friendly relations between Maldives and India witnessed uncertainty during the reign of former Maldivian President Abdulla Yameen Abdul Gayoom between 2013-18. President Gayoom favoured a pro-China policy that made Beijing’s entry in the Indian Ocean very swift. The presence of China in its backyard i.e. the Indian Ocean, has made India anxious about maritime security in the region where it has historically maintained the upper hand. After hostile relations in the northern part of the mainland, India is worried about the increasing engagement of China with the Maldives as well as Sri Lanka through investments, infrastructural projects, and trade agreements that are consolidating Beijing’s presence in the region.

Maldives: Crucial ‘Pearl’ of China’s Maritime Strategy

Maldives and China have enjoyed cordial relations since establishing diplomatic ties in 1972. The two nations have collaborated over a wide range of issues covering trade, defence, housing development projects biodiversity preservation and climate change.  In 2014, Chinese President Xi Jinping visited the Maldives, highlighting the emerging importance of the Indian Ocean and Maldives in China’s foreign policy. Xi was accompanied by a 100-member business delegation. He advocated the idea of increasing connectivity between China and Maldives by proposing the Maritime Silk Road Initiative (MSRI) (a part of the Belt and Road Initiative – BRI). The Gayoom regime agreed to participate in the initiative since it provided a major boost to sectors such as tourism, trade, culture, and infrastructural development.

The Xi-Yameen talks held in September 2014 yielded the following outcomes:

  1. Housing Project of the Maldives—Phase II to be financed through concessional loan financing by the government of China,
  2. Laamu Atoll Link-Road, to be constructed through non-reimbursable aid financing by the Chinese Government,
  3. An MoU on the construction of the Malé–Hulhulé Bridge Project,
  4. Contract agreement on the expansion and upgrading of Ibrahim Nasir International Airport,
  5. An MoU on the tourism infrastructure development project,
  6. An MoU on the Greater Malé power station project,
  7. An MoU on marine cooperation,

In December 2014, the China-Maldives Joint Committee on Trade and Economic Cooperation signed a Memorandum of Understanding (MoU) to bolster the MSRI stratagem. The second meeting of the Joint Committee in September 2015 resulted in another MoU to initiate discussions on a free-trade area. Moreover, China is also involved in other projects that include renewable energy projects, housing development projects, airport construction, building special economic zones, and building telecommunication networks. 

Maldives is central to China’s Indian Ocean strategy. Maldives is a part of the MSRI through the Ihavandhippolhu Integrated Development Project, or IHavan , which is located on the northernmost island. The project passes over the seven-degree channel that holds a key geostrategic location since it connects major shipping routes from Southeast Asia and China to West Asia and Europe. China has strategically placed a project in the region to take advantage of the US$18 trillion worth of goods transported across the seven-degree channel annually.

China  also manipulated diplomatic relations with Maldives to further its rebalancing strategy  in the Indian Ocean region. Given the recent strengthening of bilateral ties between the two countries, China aimed to replace the United States of America as a more reliable ally and consolidate itself as Malé’s all-weather friend. Also, China has India as a major competitor in in  Maldives. However, the upward trajectory of bilateral relations between China and Maldives faced its biggest hurdles in 2018 as Ibrahim Solih was elected President. The Soleh regime adopted a pro-India approach built on a “multifaceted, mutually beneficial partnership” Consequently, Maldives  retracted from the Joint Ocean Observation Station to be built by China located in Makunudhoo in North Western Maldives.   These developments rung alarm bells in Beijing.

However, China and Maldives have tried to maintain  relations by cooperating in different fields. In February 2022, Chinese Foreign Minister Wang Yi’s visit marked five agreements between both countries:

  1. Agreement on Mutual Visa Exemption between the Maldives and the
  2. Agreement of Economic and Technical on Grand Aid focusing on the development of key areas such as social, livelihood, and infrastructure projects.
  3. Letter of Exchange on the Feasibility Study of Management and Maintenance of China-Maldives Friendship Bridge,
  4. Implementation Contract for China Aided Micro-Grid Sea-water Desalination Project in the Maldives was signed.
  5. Agreement on Establishing a Hospital Assistance and Cooperation Programme

India- Maldives Relations  

Maldives’ India First policy has reaffirmed cooperation between both the nations. The establishment of  a joint working group on counterterrorism; countering violent extremism; de-radicalization; coordinated patrolling; aerial surveillance; exchange of information, and capacity building for maritime security in the region are areas that have reaffirmed bilateral relations between the two countries. New Delhi is further seeking to participate in climate change projects in the Maldives through the United Nations Framework Convention on climate change and the Paris Agreement.

In 2019, India provided $1.4 billion dollars as budgetary support to the Maldives besides an $800 million Line of Credit signed in March for “people-centric and socio-economic projects including water and sanitation for many islands”. India has also provided grant assistance equalling $5.5 million for the implementation of High Impact Community Development Projects and a cash grant of $ 6.9 million for the implementation of community infrastructure, access to education, and environmental protection. Moreover, Maldives was also the first country to receive Covid-19 vaccines from New Delhi in January 2021. 

India’s relations with Maldives have always been multidimensional based on mutual respect and transparency.  Bilateral ties include cooperation in areas such as economics, climate change, health, and counter-terrorism. India has viewed the Maldives as a strategic neighbour in South Asia. 

India has provided soft loans to Maldives in a bid to assist development. New Delhi has offered funds for infrastructure that include a cricket stadium and a hospital in Hulhumalé, a $300 million port project in Gulhifalhu, the redevelopment of an airport at Hanimaadhoo, and water and sewerage projects on 34 islands. Transparency and lenient repayment clauses are two of the most stand-out features about assistance from India. 

However, the domestic opponents of the current Solih government have  launched a “India Out ” campaign, accusing New Delhi of undermining Maldives’ sovereignty by stationing military personnel in the country and persistently seeking a naval base.  The anti-India entities have been reassured by the Solih regime about India’s honest intentions and how New Delhi has been Maldives’ closest ally and a trusted neighbour.

QUAD and Maldives – scope of delicate yet strategic cooperation

In April 2021, Maldives welcomed Quad for the greater cooperation and stability in the Indian Ocean. This statement opened the scope of collaboration between the QUAD nations and  Maldives. India, which is one of founding the pillars of QUAD, is already a close ally of the island nation. Other members of QUAD have also initiated efforts to strengthen bilateral relations with the country. In February 2022, Australia announced the establishment of a High Commission in the Maldives and investment of $36.5 million over five years in the region. India also welcomed the US-Maldives military agreement titled “Framework for a Defence and Security Relationship” for deeper engagement and cooperation along with maintaining peace and security in the Indian Ocean.

Japan also shares cordial relations with the Maldives. In November 2020, Maldives and Japan announced the Economic and Social Development Programme.  The Government of Japan provided a grant worth 800 million Japanese Yen (USD 7.6 million) to the Maldivian Coast Guard, the Maritime Rescue and Coordination Centre, Sub-Regional Centres, and Vessels.

Since Maldives shares friendly relations with all signatories of QUAD, there is scope for collaborative initiatives. In 2021, Japan and India were ready to collaborate in Sri Lanka for the development of the East Coast Terminal project. However, Sri Lanka unilaterally scrapped the deal and threw India and Japan out of the project without any discussion. However, since Maldives share cordial relations with both Japan and India bilaterally, there’s a huge potential for collaborative developmental plans by both the countries in Maldives. 

India or China?

China’s two Ocean strategy has gained momentum ever since the announcement of the ambitious Belt and Road Initiative. Even though the primary vision of the BRI focused on coastal cities such as the development of the Gwadar Port and the Hambantota Port. Recently, the focus has  shifted towards landlocked countries. China has denied the notion of “Indo- Pacific” as geographical concept constructed by the US and its allies to strategically target and hamper its presence and collaboration with the countries in the Indian as well as the Pacific Ocean. However, China’s increasing interest through investment projects in the Indian Ocean since the dawn of the 21st Century can’t be ignored. Both the oceans are home to China’s SLOCs – commercial and energy supply routes. 

The Malacca Strait is a major concern for China as a majority of its imports pass through the strait. China’s overdependence on Malacca has resulted in a dilemma within the Communist Party. The possible scenario of a blockade on imports has provoked China to take a proactive yet defensive approach in the region.  And Maldives’ dormant approach towards China has kept its multitude of investments in the country in the backseat. Chinese Infrastructure projects, initially seemed lucrative however they have come at the cost of stringent repayment clauses. Maldives’ central bank states that the government owes $600 million to Beijing. Further, loans worth $900 million were issued to private Maldivian companies under sovereign guarantees that warranted the Maldivian government to repay the loans if the lender companies were unable to pay back their loans. Moreover, the projects funded and developed by the Chinese have lacked transparency since the Maldivian government is not involved in contract distribution and price negotiation.

India, on the other hand, has  been Maldives’ all weather friend, not focused on economic interests. This is what makes India- Maldives’ relations special and makes their bond stronger. Despite the regime changes, the level of mutual respect and understanding between the two nations will continue as long as they maintain the policy of non-interference and cooperation. India, through its Neighbourhood First policy, must continue to engage with the Maldives to further its cooperation in different sectors. In the long run, India cannot deny China emerging as a major actor in the Indian Ocean  region, but constructive use of smart power with a focus on a diverse range of issues crucial to both countries, will help India strengthen its position in the region.

The Maldives needs to balance India and China and must not favour either. Even though MSRI is crucial for Maldives’ development, India has been its long-term ally in the neighbourhood. standing beside like an all-weather ally with all the cards on the table and no hidden cost. Economic benefits are not the only thing that has kept their relations strong. China, will need to extend its cooperation in more than just developmental projects to strengthen its relations  with Maldives. 

Shalini Singh is currently working as a Junior Researcher and Copyeditor​ at the Organisation for Research on China and Asia (ORCA). Earlier, she has worked with the National Maritime Foundation as a research intern and Political Risk and Threat Intelligence Analyst Intern with Horizon Intelligence. She has also worked with the Ministry of Social Justice and Empowerment as a Research Intern and Field Investigator. In addition, she has worked as an editor with Alexis Foundation and Hindustan Publishing Corporation. Her core interests lie in Energy Security, International Institutions, and China’s presence in Africa and the Middle East.

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