India Loses Out the Maldives to China

At the end of 2017, the Free Trade Agreement was signed between China and the Republic of Maldives – an insular country situated in the Indian Ocean, not far from Sri Lanka and southwest of India. This deal became an untoward surprise for India.

The capital of the Republic of Maldives, Malé, is the only city and port on the territory of the country. Like all ports in the Indian Ocean, Malé is included into China’s area of interest due to its project ‘The 21st-century Maritime Silk Road’, which is aimed to unite all the navigable routes between Asia, Europe and Africa and covers the whole of the southern coast of the Eurasian continent.

According to China’s announcements, the project titled ‘The 21st-century Maritime Silk Road’, which is part of One Belt and One Road Initiative (OBOR), pursues exclusively economic goals aimed at the development of the trade and co-operation in the region. However, several countries feel skeptical about these projects, if OBOR and ‘The 21st-century Maritime Silk Road’ contribute to over-intensification of political leverage of China globally. Among the opponents of OBOR is the main rival of China in Asia and the closer neighbor to the Maldives – India.

Apart from the concerns regarding global Chinese domination, India also has its regional reasons to treat suspiciously both OBOR and ‘The 21st-century Maritime Silk Road’. The matter is that within the framework of these projects, China is actively developing its collaboration with the neighbors of India, such as Bangladesh, Nepal and Sri Lanka, trying to turn them into its zones of influence. The Republic of Maldives is also included into this list. Also, China is collaborating with Pakistan, which is the long-time political opponent of India. China has made large investments into the transport infrastructure of these countries, including investing into the development of the sea ports of those countries that have access to sea.

India is particularly unhappy with the attempts of China to build military collaboration with these countries. Officially, China is not aiming for military dominancy in the zone of ‘The 21st-century Maritime Silk Road’, however in August 2016, the first Chinese military base was opened in Djibouti, an African country at the coast of Bab el Mandeb, a strategically important area of the marine passage between Europe and Asia. Also, the ROC Navy periodically call at ports participating in the project ‘The 21st-century Maritime Silk Road’, such as Sri Lanka. In August 2017, three Chinese warships called at the port of Malé, which caused quite a negative reaction of New Delhi.

The relations between China and the Maldives have been developing steadily for 45 years already. The two countries are actively collaborating in the economic sphere. The Maldives regarded the OBOR initiative and its subproject ‘The 21st-century Maritime Silk Road’ with enthusiasm. In 2014, the Chinese leader Xi Jinping visited the Maldives. During his visit, he received the consent of the Republic of Maldives to participate in the OBOR initiative and become part of ‘The 21st-century Maritime Silk Road’. In the same year, the mutual volume of business between China and the Maldives exceeded $100 million, after which they started negotiations regarding creation of a free trade area, where the customs tariffs would be reduced to zero for more than 95% of goods. India, that would anxiously treat the Chinese activity in the Maldives, was watching closely the course of negotiations, however concluding of the Chinese-Maldives FTA has caught it off balance.

As per the reporting in the Indian mass media, on 29th November 2017, the government of the sitting Maldivian President, Abdulla Yameen, rushed the law on FTA through the People’s Majlis with gross violations. Thus, it was reported that the minimum number of parliamentarians were not present at the sitting (43 out of 85), which was necessary to adopt the law, and there were no representatives of the opposition: only the members of the ‘Presidential’ Progressive Party of Maldives were present. Also, the Indian side maintains that about an hour was spent to study and sign the voluminous document. Overall, the Indian mass media characterize the situation as the diplomatic failure of their country and the final evasion of the Maldives from India’s influence. Also, in their opinion, the situation demonstrates the wish of China to spread its influence across South Asia by any means.

On 7th December 2017, the Chinese-Maldives FTA was signed by the Maldivian President, Abdulla Yameen, and President of the People’s Republic of China Xi Jinping during the official visit of Abdulla Yameen to Beijing.

According to the words of the Chinese politician, the relations between China and the Maldives are developing successfully, with China welcoming the active participation of the Maldives in the OBOR initiative and considering this country an important partner in the creation of ‘The 21st-century Maritime Silk Road’. Also, Xi Jinping advised that China is counting on the further rapprochement and mutual development with the Maldives.

In response, Abdulla Yameen stated that China is an important partner of his country and noted the role of OBOR in the development of many small states. He expressed the support for the principle of ‘one China’ and the wish to develop further the amicable relations and the economic co-operation.

A week after signing of the agreement by the Chinese and Maldivian leaders, India officially voiced their opinion too. The spokesperson of the Indian Ministry of External Affairs, Raveesh Kumar, announced that India assigns high priority to their relations with the Maldives, and therefore would expect greater attention to their concerns, related to the growth of economic influence of China in the Indian Ocean. He noted the old-established historical and cultural relations of the Maldives and India and noted that his country is advocating democracy, development and stability in the Maldives. Moreover, Raveesh Kumar expressed his surprise regarding the fact that the Maldives signed the agreement with China so hastily, even though Abdulla Yameen, during his recent visit to New Delhi, announced that the Maldives would first sign such an agreement with India. He also raised his hope that the Maldives would be more considerate for the interests of their neighbor and partner, India, in the future. Nevertheless, as a conclusion, he summed up that India would maintain the evolution of the relationship between the Maldives and China, if they facilitate peace and stability in the region.

One should note that many experts believe that the FTA with China is necessary for the economy of the Maldives. The main sources of income in the Republic of Maldives are tourism and fishing industry. Until 2013, the main importers of the Maldivian fish products were the EU countries. However, in 2013, the EU deprived the Maldives of trade preferences, which significantly reduced the revenues of this country. Now, the main importer of the fish products from the Maldives is China, and due to the FTA, the Republic of Maldives is expecting to build up sharply its fishery exports to China.

We should also remember that tourism as the primary source of income of the Maldives now also depends on the relations of that country with China. Most tourists visiting now the Maldives, are citizens of the People’s Republic of China. Thus, the two key sectors of the Maldives economy depend on the co-operation with China.

It is no wonder that the Maldives are turning around hotfoot towards China, even despite its old-established ties with India. China is taking energetic efforts to strengthen its influence in all countries of the region, which are accepting co-operation because it promises the real benefit. Possibly, India should get a load of the actions of China if it wants to retain its positions in South Asia.


By Dmitry Bokarev
Source: New Eastern Outlook

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