Opinion: Maldives Should Avoid China's Debt Trap

As the furore over Indian tourists cancelling travel plans to Maldives erupted over a photograph of Prime Minister Narendra Modi at a beach in Lakshadweep, Maldivian President Mohamed Muizzu was on his way to China for his meeting with President Xi Jinping. The archipelago faces catastrophic climate change impact and its economy is dependent on China, its largest external creditor, for its economy.

Amid the Indian pushback against the controversial comments by some Maldivian ministers, one of the key agreements that Muizzu signed with China focuses on tourism. Another agreement frontlines infrastructure. However, China has a checkered history of delivering on infrastructural promises, something the Maldives has to tolerate as a pawn in the Asian giant's Belt and Road Initiative. With the unequal relationship defined by escalating Chinese strategic interests in host nations, Maldives can look to other central Asian partners of China to see how their participation in the BRI has progressed at the cost of high debt and low development. Nepal's foreign minister has said despite signing for the BRI in 2017, over six years later not a single project in the mountain country is completed.

Mohamed Muizzu, a candidate supported by jailed former Maldivian President Abdulla Yameen, led the "India Out" campaign, in a reversal of former President Ibu Solih's "India First" policy. Unlike India's approach of development-led lending to partner nations, though, Chinese strategic investment allowed the economically mighty nation to lease 17 islands prior to a controversial law enacted by Yameen's administration before 2019. The encroachment of land belonging to BRI partners by China is a tested method, and the expansionist power claims much land outside its own borders. In 2022, a leaked report with the Nepal government showed significant encroachment on Nepali territory by China, But the debate lost its sheen quickly since the country's administration is indebted to its creditor, China.

In case of Maldives, however, foreign interference could mean halted infrastructure development, and debt-trap "diplomacy" (the country owes close to $ 1.3 billion), and a major security threat to India even beyond China's String of Pearls agenda to encircle India in the Indian Ocean Region. The leased island of Feydhoo Finolhu provides an insight into how rapidly China can work at utilising its leases to threaten India. The island, leased by China till 2066, has grown two and a half times its original size to 100,000 square metres, less than 700 km from India.

While allying with China, the country has also remained the hub of radical Islamic terror, sending more Islamic State fighters per capita than any other nation. Some Maldivian survivors are held in camps in Syria, while the country takes in a massive population of foreign workers, often from Bangladesh, which makes up close to 20% of its small population. The country is now host to narco-terror syndicates operated out of Pakistan, another terror-sponsoring partner to the Chinese, and these syndicates aid in promoting radical Islamic terror to young Maldivian men. Despite former home minister P Chidambaram's intervention in 2010 to extract a promise to not host Lashkar-e-Taiba operatives, Maldives has functioned as a base for terror operations. Intelligence shows that the radicalisation functions in concert with anti-India messaging, along with the drug and trafficking operations, all of which China is happy to turn a blind eye to, and sometimes even tacitly support. It has operated to revive such organizations in Pakistan-Occupied Kashmiri territory despite Chinese citizens being major victims of terrorism in Pakistan.

The Maldivian economy exists in a fragile balance between tourism, agriculture, fisheries and Chinese debt. Amidst its row with India and President Muizzu opting for China as his first stop, the island nation wants Chinese tourists to make up for losses due to Indian cancellations. Indian tourists were the largest group of visitors in 2023, making up 11% of the country's tourism market. It is unlikely that China will be able to compensate in this department, considering its own slowing economy due to Covid lockdowns that are showing long-lasting effects. At the same time, the climate-endangered country had discussed renewable power transmission with India under the One Sun, One World and One Grid initiative. In 2022, the Government of India had offered a USD 100 million line of credit for infrastructure projects under former President Solih. The country's inorganic "India Out" platform that brought Muizzu to power will cause much of the promises to go unrealized unless the President is able to draw a clear balance, which seems more and more unlikely at this stage, despite Maldivian assurances that New Delhi remained a strategic partner.

As China hypocritically calls out "external interference" in Maldives, it is significant that its anti-India messaging found root in a country where civil society had already been engaged with radicalization, and its youth embroiled in drug trade. It is to the detriment of India-Maldives ties that there was no equal but positive messaging to counter any of the sentiments, and a simple yoga event conducted by the Indian High Commission in the country was attacked by Islamists, while it had been welcomed in 44 other Islamic nations. Soft messaging and government-to-government ties can hardly be sufficient in protecting Indian interests, despite it being the least interfering and most legitimate means of building ties amongst nations.

As the Indian government keeps its doors open to the new Maldivian President, it remains to be seen if Male's belligerence is incited by an openly hostile China, and if it suits the Maldives to remain a pawn in a larger game, or set conditions for Beijing, with more luck than other BRI partners have managed so far.

(Sagorika Sinha is a columnist and podcaster with experience in foreign policy analysis and international relations. She also writes about domestic policy when not working on her fledgling YouTube channel)

Disclaimer: These are the personal opinions of the author.