9 July 2020, NIICE Commentary 5535
Dr. Gulbin Sultana
The diplomatic relations between China and the Maldives started in 1972. Since then, the two countries maintained friendly relations, but the bilateral relationship flourished significantly after Chinese President Xi-Jinping’s visit to the Maldives in 2014. Maldives, under President Abdulla Yameen extended its support to China’s Belt and Road Initiative (BRI) in 2014. Since then, China emerged as the largest investor and the largest source of tourists for the Maldives. Free Trade Agreement (FTA) was signed between the two countries in 2017 to deepen the ties further . The period during 2014-2018 is considered as a watershed moment in the history of China-Maldives relations, as Maldives got further inclined towards China.
Post the 2018 Presidential elections, when Ibrahim Mohamed Solih became President and the Maldivian Democratic Party (MDP) took charge of the administration of the country, it was anticipated that there would be significant shift in the China-Maldives bilateral ties. The relationship between the two countries, however, has not gone through any major change in the last one and half years, even though China no longer enjoys the privilege of being the most important partner of the Maldives. The new dispensation which came to power in 2018 has adopted a balanced foreign policy where the country is not tilted towards one particular country, but rather maintains the policy of ‘friendship with all’. Under President Solih’s rule, China is one of the key partners, but not the only partner of the Maldives.
The MDP leadership, while in opposition (2013-18), was extremely concerned about the Chinese loans and investment in the Maldives. They were critical in the alleged corrupt practices of the Yameen administration while granting contracts to the Chinese companies for infrastructure development projects. There was a call for reviewing the Chinese projects during the Presidential election campaign by the MDP in 2018. After the election of the new President, a committee was set up by Maldives Attorney General’s Office in December 2018 to review and revisit agreements and loans during President Yameen’s period which reportedly affected the economic independence and sovereignty of Maldives. The Yameen administration took USD 3.7 billion in loans and guarantees out of which, USD 1.4 billion was from China. Both President Ibrahim Solih and Foreign Minister Abdulla Shahid confirmed that no Chinese projects signed by the previous administration were to be cancelled. But a review was planned to discuss the terms of those agreements through negotiations. The Foreign Minister of Maldives Abdulla Shahid also acknowledged that China continues to be the key development partner of the Maldives and it would continue to support the BRI.
Despite the allegations made by the MDP leader and former President Mohamed Nasheed, that China was pushing Maldives to a debt trap, agreements were signed in 2019 to initiate new projects such as setting up an ophthalmic centre; developing a new office complex in Hulhumale; a Concept Paper for Framework of Cooperation; Memorandum of Understanding (MoU) between the Ministry of Foreign affairs of China and the Ministry of Foreign Affairs of Maldives on Strengthening Cooperation; MoU on Sports Cooperation; the Agreement on the Economic and Technical Cooperation between China and the Maldives; and an agreement to construct a world class stadium in Hulhumale for the 11th Indian Ocean Island Games in 2023. The Asian infrastructure Investment Bank (AIIB) assured Solih Government of assistance in attaining Maldives’ development goals.
MDP was also critical about the FTA signed with the Chinese by the Yameen administration. In fact, the current speaker of Maldives Mohamed Nasheed demanded scrapping of the agreement. Foreign Minister Shahid, however, conveyed that even though the way previous parliament approved the FTA was flawed, the current administration should honour the decision. He said repealing the agreement without proper assessment of the content was unfair.
Unlike the previous administration, the current administration acknowledges the possibility of completele dependence on one country for its growth and development. It was also not possible to play one power against another to maximise its own interests. One of the foreign policy goals of Maldives is enhancing the security and national sovereignty of the Maldives through consolidating its bilateral relationships with key regional and global players. Another aim is to increase the economic resilience of Maldives. To achieve these, Maldives is focussing on promoting tourism, investment and export by concluding bilateral agreements with important countries. As per this plan, Maldives cannot ignore China which has both capital and willingness to enhance economic engagement and investment in the island. However, according to the Solih administration, it will be mobilising concessional financing for development projects in Maldives, so that the loans acquired cannot put heavy burden on country’s economy.
The new regime is trying to diversify its foreign policy and economic engagement while maintaining friendship with China. Special effort has been made to improve relations with India, as it declined significantly during 2013-18. Many commentators have speculated the revival of Maldives-India bilateral relations as Maldives’ tilt towards India. Nonetheless, Maldives, while has intensified its engagement with India, and has entered into several bilateral agreements, it is well aware of the fact that India cannot fulfil all its economic needs and demands. Hence, a balanced engagement with countries other than India and China too such as Singapore, Japan, Sri Lanka, Middle Eastern countries and so on are extension of its “friendship with all” policy.
The current administration of the Maldives is also mindful about its vulnerability in the midst of the big power rivalries in the region. The Solih administration is aware of its strategic importance for both India and China. Taking side of one country or allowing one power to have its influence will lead to security dilemma which would ultimately impact the strategic autonomy of the Maldives. Its neutral stand on issues of power competition between India and China and also between China and the United States of America (USA), silence on the India-China standoff in Ladakh, silence on the debate about the origin of Coronavirus and on the trade war between China and the USA, speaks volumes of its strategic orientation of balanced multiple engagement. Solih administration seems to have adopted a practical approach towards China and India compared to the Yameen administration and it is likely to benefit from it.
