Narendra Modi-Ibrahim Solih meeting: India needs to decide if it can go it alone, but remain aware of Maldives' debt to China

The images of Prime Minister Narendra Modi and newly-sworn in President of Maldives Ibrahim Solih walking virtually arm in arm at his swearing-in ceremony at Male, must have provided considerable solace to the Ministry of External Affairs. This state of satisfaction is likely to be more marked since less than 3 months ago, the somewhat mercurial former president Abdullah Yameen seemed to set on throwing out all Indians and their interests out of the archipelago, even while laying out the mat for China.

Indian media has, therefore, been gleeful in noting that Modi was the only foreign leader invited to the swearing-in, that the new president declared New Delhi as the closest ally, and even went so far as to ponder a review of the archipelago’s commitments under the Belt and Road Initiative.

While all this is no doubt a foreign policy win for the moment, the question is whether the bonhomie is durable given some hard facts.

One, is the question of Maldives' debt to China, which is equivalent to over 25 percent of their gross domestic product, and which is not likely to go away any time soon. The likelihood of this being re-negotiated is slim, though Male will probably have a try. The issue here is that most these contracts have been made with Chinese companies, and not in government to government deals. The Velana airport contract, for instance, is being carried out by the Beijing Construction Group Company, a mega construction firm with a declared asset based of 63 billion RMB and an annual turnover of 65 billion Yuan. These companies are there for profit, and will expect to be paid as per the terms agreed on.

When the media notes that Solih "briefed" the Indian Prime Minister on the economic distress of the country, it means that Maldives is basically asking whether India can come up with the dibs and get Male out of economic hot water. If New Delhi agrees, this will mark a sea change in the way we do diplomatic business.

A second aspect of Chinese projects in Maldives is the sheer efficiency that Beijing can bring to bear. The "China Maldives Friendship Bridge" opened to traffic on 31 August, just 33 months after work began. Both airport and bridge, first mooted by Indian companies, were thrown out without ceremony in 2015 by the then government. Not only that, Male was able to secure a preferential buyer credit loan agreement from Beijing which reportedly also took care of the arbitration costs that GMR imposed on the country. This is not just about a heavy Chinese purse. This is about the speed at which Beijing moved into Male ( 2011) grabbed the contract ( 2015) and executed it (2015). Contrast this to the snails pace at which the Indian bureaucracy moves. GMR went into the country in 2010. Our embassy has been around for decades, and that too, with a virtual monopoly in foreign involvement until recently. If India expects to be able to deliver in Maldives, its embassy has to be far more nimble than it is now. For instance, a look at the embassy web page shows it hasn’t been updated since 2017. Bilateral trade figures are similarly dated. That’s no way to do business.

Prime Minister Narendra Modi with Ibrahim Solih. Image/PIB

Prime Minister Narendra Modi with Ibrahim Solih. Image/PIB

Even more difficult is the question of existing Chinese investments, like the 50-year lease of an uninhabited island Feydhoo Finolhu in late 2016. At the time not only were laws calling for competitive bidding set aside, the deal itself has been ridden with accusations of corruption. The atoll which had earlier been used by the police welfare company, benefitted considerably from the lease, with China promising a donation of $85 million for welfare.

The Maldivian police force is not going to be happy if that contract is cancelled. Curiously, the name of the Chinese company involved is not listed anywhere. What is known is that it is already in the process of building a “resort” on the island.

Lying just 75 nautical miles from India’s Exclusive Economic Zone, the island has the potential of being developed into a Chinese snooping station, which could endanger Indian coastal activity. A radar was also rumoured to be planned on another nearby atoll of Makhundoo. If such activities has to be ended, it will have to be through using Maldives own legal system to examine the processes whereby this, and other concessions were given. This will need political commitment especially when interested parties are likely to fuel opposition to winding up such lucrative contracts.

Conversely, it is assumed that the Indian naval plans to install Coastal Surveillance Radar Systems along not only the Indian but also the Maldivian coast will be re-started. Part of a network of a reported 45, the Maldivian network was supposed to include 10. As of early this year, only seven were understood to have been installed with the fate of the rest uncertain given the hostile political climate. The system is supposed to be integrated with an Automated Identification System that allows all concerned – including Maldives, and Sri Lanka among others – to have a clear picture of all mercantile shipping in the area. Obviously, that also means Chinese ships. Male will need something really solid to agree to what is a virtual maritime surveillance system.

Meanwhile, the Joint Press Statement between the two sides has emphasised the priorities of the country, which includes the “the pressing need for increased housing and infrastructure development as well as for establishing water and sewerage systems in the outlying islands”. The Chinese Construction Third Engineering Co Ltd is already in the business of building affordable housing. Some 7000 such homes are being constructed on Hulhumalé, while other Chinese companies are building bridges and infrastructure.

No wonder then that while the Chinese Ambassador hastened to congratulate the new President the day after Modi’s visit, the Global Times editorial was almost Solomon-like in its language. Though it patronisingly conceded that China has “no objection” to neighboring countries having a close relationship with India it, however, also noted "China's cooperation with these countries was never meant to replace India's influence. Indian leadership is strengthening mutual trust with China over this issue, but some Indian and Western media have failed to follow the rhythm”.

Another article by the Director of a Centre for Indian Studies, China West Normal University, while observing that Chinese built infrastructure was good for Indian companies, also suggests the “2 plus 1” mechanism in Maldives. This had been earlier proposed during the visit of Prime Minister KP Oli to Beijing, where it seemed to suggest a China - India dialogue relating to any third South Asian country as a kind of big players dialogue. Clearly this cooperation mechanism is a way for Beijing to get India into the BRI, apart from indicating that Beijing had no intention of vacating its position of influence in these countries.

So the Wuhan Summit notwithstanding, India has to decide whether it has the will and standing to go it alone in Maldives – with of course a little help from its friends like Japan – and slowly but surely entirely replace China in terms of influence and projects in the archipelago. The only other option is that it could accept Chinese money as inevitable, and decide to simply use its reinvigorated influence to ensure that the Renminbi is kept within commercial limits, while staying away from security. Either way it’s a tough call. For the moment however, the second option seems to be the way to go. Meanwhile learn the lessons of the past well. As the Chinese themselves say “ A man grows most tired when standing still."


Updated Date: Nov 20, 2018 15:48 PM

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