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MANTRAYA ANALYSIS#07: 30 NOVEMBER 2015

Maldives: Helping China counter American design 

Jhinuk Chowdhury

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Abstract

Strategically located Maldives plays an important role in alternative maritime routes that China is seeking to build through initiatives like One Road One Belt. Much of Beijing’s growing assertion in the Indian Ocean is projected towards the US centric club China perceives Washington is building along with India. However Maldives will need to align with multiple powers if it were to meet all its needs and hence China cannot expect any ‘exclusivity’ for its regional alliances.

 

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Strategically located Maldives, sitting along major sea lines in the Indian Ocean, including the East-West shipping route that transports oil from Middle East to East Asia, has drawn attention of many major powers like the US, Russia, UK and quite naturally India. The latest great power that has set its eyes on this island nation is China. maldives_map

It is interesting how China’s foreign policy towards Maldives has been directly commensurate with its Indian Ocean strategy. Till the early 2000, most of the People’s Liberation Army – Navy (PLA-N)’s operational patterns in the Indian Ocean has been non combatant and focused on protecting its sea lines of communication (SLOC). China’s restrained posture in the Indian Ocean Region (IOR) was for two reasons.

Firstly, the feasibility assessment made it evident for China that bases in South Asia would be vulnerable to air and missile attack. Also defending Chinese home waters while launching a simultaneous major combat operation in the Indian Ocean will be cumbersome for the PLA-N due to distance. Secondly, as per its own assessment of strength in the IOR vis-a-vis other powers, the PRC felt it is far behind the US in terms of maritime power and does not enjoy geographic advantages that India does. Therefore a strategy of ‘moderation’ and ‘maintaining the status quo’ of realizing its existing inferior position in the IOR formulated China’s ‘constructive engagement’ in the region.

Until the first decade of 2000, China maintained that its investment in the littoral states of the Indian Ocean including Sri Lanka and Maldives was purely economic and commercial in nature. In fact it was India, with the pro-New Delhi government led by Mohamed Nasheed (2008– 2012), that played an upper hand in Maldives even in security matters. In 2009, India signed a pact with Maldives as per which New Delhi committed to set up a network of 26 radars across the Maldives’ 26 atolls to be linked to the Indian coastal command. Further, New Delhi also said it will build an air force station from where Dornier aircraft will carry out surveillance flights. As per reports the station was also intended to host Indian military helicopters. In 2012, further deepening its defense cooperation, India announced that it will jointly fight ‘terrorists and non- state actors’ with Male. Additionally, New Delhi also decided to extend the Indian ALH Dhruv helicopter, operating in Maldives since 2010, by two years. Apart from sending a team to train the Maldivian Air Wing personnel, India also decided to station a defense attaché at Male.

On the contrary China, despite establishing bilateral relations with Male since 1972, opened a full-fledged embassy in Maldives only in 2011. However Beijing has always been watchful of the US presence in the IOR and hence the ‘America-India axis’. In fact although India has for long been suspicious about the Chinese presence in the IOR region, much of Beijing’s growing assertion in the region could be indirectly projected towards the US centric club China perceives Washington is building in the Ocean along with India. Interestingly there are mentions about India’s “Look East Policy” and the “U.S-India axis of relation in Indian Ocean region” in the Blue Book released by Chinese Academy of Social Sciences (CASS), China’s premier think tank, in 2013. It pointed out that the rising of the strategic position of the Indian Ocean has prompted the US to conceive the “Indo-Pacific” concept where Washington is pushing India to integrate itself into this system to contain China. It observed that China’s Indian Ocean strategy based on ‘maintaining the status quo’ needs to change due to the changing dynamics of international relations in the region.

With over 80 percent of its energy import through the IOR, China views any disruption of its SLOC in the region directly affecting its growth, and therefore a concrete strategy for the Indian Ocean became mandatory. This hint at the shift instrategic focus was first visible in the Chinese Defense White Paper in 2013, where it stresses on “protecting national maritime rights and interests” and “armed forces providing reliable support for China’s interests overseas.” Interestingly this was also the time when the phrase ‘Indo Pacific’ comprising partners like Australia and Japan apart from India and the US started doing frequent rounds in the Western diplomatic circles.

As Robert Kaplan asserted in his book, Monsoon: The Indian Ocean and the Future of American Power, originally published in 2010, that the US Navy’s domination in the world’s maritime routes and China’s dependence on its energy imports through these routes presented  a ‘deadly vulnerability’ in the Chinese eyes. Beijing responded in two ways: first by building up its own naval power, and second by seeking alternative maritime routes that are less vulnerable to any punitive measures that the US may target towards Beijing.

Launching of the One Belt One Road (OBOR) initiative in 2013 is one such step by China to seek an alternative trade route. And Indian Ocean littorals are an important part of this initiative not just because of their strategic location but also to check America’s influence in the IOR by roping in these nations to the Chinese side.

It is no wonder that despite decades of bilateral relations, President Xi Jinping became the first head of state to visit Male only in 2014 after more than forty years. This was the first visit by a Chinese head of state since Maldives’ independence as a British protectorate in 1965. The relation between the two reached the next level as Maldives, following the visit, officially joined China’s 21st century Maritime Silk Route (MSR) – part of OBOR which envisions development of a sea route from China’s Fujian province to the Mediterranean Sea via South Asia and East Africa.

Apart from signing a deal to modernize Maldive’s Ibrahim Nasir International Airport (INIA) – after scrapping the deal with the Indian company GMR, Beijing also offered aid for building the Malé-Hulhule Bridge. Dubbed as the “China Maldives friendship Bridge”, the project will connect Male with the island airport Hulhule. According to reports, the project, awarded to Chinese contractor CCCC Second Harbour Engineering Company, is expected to be available for public use by 2017.

The investment pattern in the IOR littorals clearly point towards China ultimately trying to reduce its dependency on the security set up controlled by the US in the SLOCs of Indian Ocean. Through MSR China wants PLA-N to play greater role in controlling the security of Indian Ocean on the pretext of providing security for MSR ports and related facilities. For which the endorsement of its role, China hopes, will come from the growing base of MSR members which it has been building.

A case in point is China’s involvement in the Ihavandhippolhu Integrated Development Project or iHavan, a link to the MSR, which lies in the northernmost atoll of the Maldives on the seven degree channel through which the main East-West shipping routes connect Southeast Asia and China to the Middle East and Europe. iHavan, located centrally at the IOR, has over US$ 18 trillion worth of goods passing through its waters annually. Reportedly it gets huge concessional loans and aid financing from China. These financial aids, apparently, were given at a very high rate of interest that Male certainly would not be able to meet without a unilateral waiver. Experts say this is a common tactic applied by China to of relaxing loan conditions in exchange for control over maritime projects it helps finance. This also fits in well with Male’s ambition of transforming itself into an international trade hub on par with Singapore. By endorsing MSR, Maldives seeks to promote itself as a vital trade and transit port.

Signs have been visible for quite some time now. Both countries signed significant defence agreement in 2012. In fact many have speculated that China could be building a naval submarine base in Marao islands. Most of these reports remain unconfirmed. What is striking following the signing of agreement is the statement of Chinese Vice Admiral Su Zhiqian who stated that the Chinese navy would like to get actively involved in maintaining the peace and stability of the Indian Ocean. This push was stepped up when the Chinese Defense Minister Chang Wanquan met with Mohamed Nazim, minister of defence and national security of Maldives, in 2014, during which both nations expressed desire to deepen military cooperation in such fields as personnel training and maritime security. China has already started offering training to maritime personnel in Maldives.

China is also trying to keep its relation with Maldives, rated as one of the top 20 favorite island destinations for Chinese travelers, multidimensional – this could also be a move to divert attention from the growing bilateral military relationship. On one hand it seeks to continue deepening the trade ties. Taking the bilateral relation to the next level China and Maldives have begun a feasibility study on a free trade area (FTA) between the two countries. Trade between the two countries reached US$104 million, up 6.7 percent from 2013, as per official data.

Currently, the Maldivian government is formulating a Special Economic Zone Bill which aims to provide more incentives to foreign investors in terms of tax breaks, relaxed financial requirements and preferential land use. In its bid to step up Chinese investments the island nation also observed the Maldives Investment Forum, held in Singapore in 2014, and in Beijing in 2015. On the other hand, in multilateral platforms, Beijing got Maldives to pass the bill to seek full membership of the Asian Infrastructure Investment Bank (AIIB) in November 2015. Beijing is also encouraging smaller nations like Maldives and Sri Lanka to play greater role in the Shanghai Cooperation Organization (SCO). In turn Maldives supports Beijing’s bid to step up its role in the SAARC.

Taking in to the narrative of ‘sharing prosperity’ by helping smaller nations develop through its aid programs, Beijing in Maldives, constructed a building to house the Maldives Ministry of Foreign Affairs, a national museum, and is involved in the 1,000 Housing Units Project. Additionally, Beijing is actively involved in several renewable energy projects, tourism and telecommunication sectors.

However, many opine there are strings attached in the aids extended by China. Critics say these initiatives are a way to lay an infrastructural trap to feed Beijing’s expansionist ambitions. There aren’t any transparency on how these loans or aids would be repaid by the receiving countries. For instance, a study by Grison’s Peak, a London based boutique investment bank, says majority of 67 overseas loans committed by the China Development Bank and the China EXIM Bank are in areas defined by the “One Belt, One Road” strategy. Most of these loans are controlled by government held institutions. The concessional or free aid Maldives is seeking from China to build the bridge connecting the capital Malé and Hulhumalé, could be either in the form of grant aid or a loan facility from the Chinese EXIM Bank.

However, the Sri Lankan election, held in August 2015, may bring in a change in mindset in the IOR region. One of the key agendas of the Lankan election was corruption tied to the Chinese infrastructure projects. Therefore the current Lankan government promising a balance in foreign relations, took to mending ties with India. That Male has taken some clues from this is evident in its “India First” rhetoric. In a bilateral meeting, held in November 2015, the country’s foreign minister Dunya Maumoon told the Indian foreign minister Sushma Swaraj, “The Maldives’ relations with India has sufficient depth and will not be shaken by the presence of Chinese investors in the Maldives.”

Maldives’ needs from great power relations are complex. While it needs India for peace in the Indian Ocean for its own national security, it also needs the enormous Chinese investment to ensure its economic security. China is well aware that ‘choosing’ one nation over the other is not an option for Maldives or any of the IOR nations.

Given that exclusiveness is nearly impossible in the IOR, soon the oceanic region might have multiple alliances one that has the US and Japan in it, the other that has China in it. And in this, smaller nations – if they play their cards well – will emerge the largest beneficiaries.

 

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(Jhinuk Chowdhury is a project intern with Mantraya and is a lead researcher in Mantraya’s China and South Asia project.)

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