ECONOMYNEXT – The ruling Maldivian Democratic Party (MDP) stopped some Chinese “island projects” as promised in the run-up to the 2018 presidential poll and is now looking to repay a major chunk of its debt to China, the Indian Ocean Archipelago’s Speaker Mohamed Nasheed told EconomyNext in Colombo.
Not unlike its South Asian neighbour, the Maldives is caught in a geopolitical cold war between India and China. Former president Abdulla Yameen was close to China and allowed Chinese funding for many infrastructure projects in the islands.
Since he was ousted by MDP’s Ibrahim Solih in November 2018, the Maldivian government has gotten closer to India, even as Yameen started an “India out” campaign in 2021 claiming that the incumbent government had allowed the Indian military into the Maldives.
Before the election in 2018, Nasheed, who leads the MDP – a party widely considered pro-India – accused China of dragging the Maldives into a debt trap. He warned that a future MDP government will be unable to repay the loans unless a review cuts them to their real value.
Nasheed is the current speaker of parliament in which the MDP holds more than a two-thirds majority. Since it came to power, the government has already stopped some Chinese projects in island resorts in the Maldives, he said.
“The construction of resorts and ownership of these islands are again in question,” Nasheed told EconomyNext in an interview this week when he was in Colombo on a four-day official visit.
“There are about six to seven islands at different stages of construction by Chinese companies. But the construction work has now stopped for a long time and contractual ownership of these islands remains to be sorted in the courts.
“The investors themselves are not proceeding with the construction. These are Chinese constructions with Chinese investors,” he said.
The Maldives, with a population of 400,000 people and around 1,200 islands, best known as a tropical paradise for tourists, has experienced political unrest after Nasheed, its first democratically-elected leader, was forced to quit after a mutiny by police in 2012.
The unrest has ceased since the MDP came to power after the election.
Nasheed could not contest in the poll because he was exiled in 2018 after being convicted on terrorism charges in 2015 and sentenced to 13 years in prison following a controversial and widely criticised trial.
“Indian boots on the ground”
Sri Lanka under President Maithripala Sirisena who was seen as a pro-India leader also suspended many Chinese projects claiming that proper government procedure was not followed in their implementation during his predecessor Mahinda Rajapaksa’s administration.
The move angered China and led to strained diplomatic relations with Beijing.
Officials in the last government say Beijing dragged some of the promised loans for the Sirisena government even after the Chinese projects were allowed to resume.
Early in December, Yameen’s Progressive Party of Maldives (PPM) said its leader would travel to the atolls to step up the ongoing campaign resisting “Indian boots on the ground” in the Maldives. Nasheed’s ruling MDP has denied any Indian military presence.
Across the ocean, in 2014, increased Chinese presence in Sri Lanka with the visits of two Chinese submarines in October led to a regime change with India and the West backing Sirisena against Chinese friendly Rajapaksa.
Nasheed, however, said Maldivians will decide on the next government over what happens on the ground and not over any diplomatic relations.
“The people of the Maldives will have to decide on where they vote. I think that would be decided by their day to day affairs and not international relations,” he said.
The Maldives’ past borrowings had increased risk on its external debt repayment and Nasheed says 2022 will be a difficult year with China being the biggest lender.
“We have to pay back a lot of our debts. The biggest debt holder is China. Not only China; there are also sovereign bonds in the international markets,” Nasheed said.
“It will be difficult to pay these back this year. Usually we pay about 250 million dollars a year on debt repayment. But this year it is twice that amount. So it will be a challenge.
“But I think we can still pay it back. Tourism is improving. The resorts are again full. So revenue is flowing in.”
Nasheed also denied his government is favoring India in infrastructure development.
“That’s kind of a false allegation. Whatever we do is transparent. There is nothing that is decided without a proper tendering process,” he said.
“India has provided a line of credit, a very handsome one; and we are using that to see that our projects continue. I don’t think we are just necessarily giving everything to or having all the projects with India. That’s not the case.
“It’s open tender. Many Middle Eastern countries, many European countries, Sri Lankan investors – all of them are there and I don’t think it is just India. Everybody is investing in the Maldives.”
However, he said the Maldives has close links with India through historic traditions, culture, and due to close proximity.
“You can’t overshadow those links and those sentiments. Infrastructure is not everything. People tend to vote with other views.”
Nasheed has been trying to change the constitution to increase parliament’s powers, replacing the current president-led governance system.
Some government critics say Nasheed is fighting for his leadership and trying to dilute the presidential powers as Solih is now in the driving seat as president.
But Nasheed says the Maldives need a constitutional amendment before it goes into the next election.
“I am of the view that a parliamentary system of government would be more appropriate for the Maldives,” he said.
“It looks more efficient and effective than what we have in the Maldives, which is a straightforward presidential system.”
For that, the Indian Ocean archipelago will have to go for a referendum in addition to receiving parliament nod.
“It is very important that the MDP remains in government. So I will do everything to make sure that we remain in government,” Nasheed said when asked if he wants to contest as the MDP candidate in next year’s presidential election in place of Solih.
“I think [Solih] also understands that we have to remain in government. So we have to decide based on how the public feels and who should come out… That should be decided based on what is best for the party,” he said. (Colombo/Jan24/2022)