On Monday, PM Narendra Modi announced $1.4 billion in financial aid to the Maldives after talks with President of Maldives, Ibrahim Mohamed Solih who is on his maiden state visit to India. In a significant move, Solih has chosen India for his first state visit. PM Modi has also attended President Solih’s swearing-in ceremony on November 17.
“The declaration was signed as part of India’s policy of ‘Neighbourhood-First’ to support the island country to further its socio-economic development,” said India’s ministry of external affairs in the joint statement. Besides signing several MoUs, the two countries also vowed to work on strengthening peace in the Indian Ocean Region (IOR).
The announcement of massive assistance is being seen as part of India’s effort to steer the Maldives away from China as the previous government led by Abdulla Yameen was perceived close to Beijing.
India’s decision to announce massive assistance a few days ahead of the Chinese state councillor and foreign minister Wang Yi’s visit to India at the end of this week.
Chinese developmental assistance: A debt trap in disguise?
In recent years, China has been providing financial assistance and undertaking massive infrastructural projects with countries such as Maldives, Bhutan, Sri Lanka, Pakistan and Nepal and several other Asian and African countries to advance its geostrategic interests.
Countries like Maldives, Bhutan, Sri Lanka and Nepal have been known to be traditionally within India’s orbit, however, China has developed considerable influence in these countries over the years.
However, China’s assistance to smaller countries has seen criticism as it pushes them in millions of dollars of debt. Nothing demonstrates this debt trap better than the situation experienced by the country that China calls its natural friend and ally – Pakistan.
China is building China-Pakistan Economic Corridor (CPEC) that runs from Karakoram region near China border to close to Pakistan’s western border near Iran.
Pakistan is facing the pressure of massive Chinese debt and seeking support from IMF and other agencies to bail it out, however, US President Donald Trump has made it clear that Pakistan can’t use assistance from multilateral agencies like IMF to repay the Chinese debt.
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In December 2017, Sri Lanka was forced to give up its Hambantota port and sign a 99-year lease with China after it was unable to repay loans taken under the Rajapaksa Government to develop the project.
A November 2018 report by Reuters had said that Chinese ambassador to the Maldives on October 2018 had handed the new President Solih a $3.2 billion bill, alleged Mohamed Nasheed, a former president who is now serving as an advisor to the President.
The Chinese Government, however, in a statement to the local media, deemed it “untrue and “deeply exaggerated” and put the bill at $1.5 billion.
Recently, Mohamed Nasheed, the advisor to the new President Mohamed Ibrahim Solih.announced that they were thinking of pulling out of the Free Trade Agreement (FTA) with China citing the agreement as a one-way treaty.
China had warned the Maldives against the move and hoped that it will “make a right choice” before deciding to pull out of the Free Trade Agreement (FTA) with China.
India and the Maldives: New dynamism in traditional friendship
Bilateral relations between India and the Maldives worsened after then-president Abdulla Yameen imposed an emergency in February 2018 that lasted for 45 days. India had criticised the move and asked his government to release political prisoners and restore the electoral process in the country.
Recent political developments and a massive assistance announced by India are a clear indicator that the Maldives is strategically very important for the country and India’s leadership is willing to walk extra-mile to maintain better ties.