India takes lead in Maldives with US$500 million aid package but China is not out of the game

India's US$500 million economic aid package for the Maldives, announced last week, comes in the middle of a game of brinkmanship between New Delhi and Beijing as they seek to establish dominance in South Asia.

The Maldives is the smallest country in Asia by both size and population, but the archipelagic nation is strategically located in the Indian Ocean - where it has in the past served as a diplomatic battleground for China and India.

Regionally, the assistance from New Delhi is widely seen as an attempt to consolidate its position in a country where it had until recently been banished to the margins by a pro-Beijing government. But the "India-first" policy of President Ibrahim Mohamed Solih - who defeated the pro-China incumbent Abdulla Yameen in the 2018 elections - has reversed the line pursued by his predecessor and restored New Delhi's traditional influence in the Maldives.

While India is undoubtedly back in the game, opinion is divided as to whether China has truly been marginalised on the Maldivian stage - with some arguing Beijing might be down but not out in Male's political calculus.

"How things pan out will depend on developments in Maldivian domestic politics," said N. Sathiya Moorthy, distinguished fellow and head of the Chennai Initiative at the Observer Research Foundation.

He said the Solih government might welcome Chinese investment, but it would not entertain any move that threatened India's security and destabilised the waters the South Asian nations shared with neighbouring Sri Lanka.

Solih and India's Prime Minister Narendra Modi have met four times, twice in each other's capital, sparking an intensive set of engagements between the two sides to cement ties and deepen cooperation in a wide range of areas.

The rivalry between India and China, meanwhile, has become sharper and more intense. Beijing bristled this year as India joined the likes of the United States in holding China responsible for the Covid-19 pandemic, but bilateral relations were to further deteriorate in subsequent months.

The face-off between their soldiers in Ladakh along the Line of Actual Control, ongoing since May, has only hardened their positions. Attempts are being made to resolve the crisis through negotiations, but India's decision to ban Chinese apps in a bid to pressure its neighbour to pull back its forces has also irked Beijing.

Even an Indo-Nepalese territorial dispute is now being seen by many in India as Chinese instigation, while other South Asian neighbours have remained neutral.

In this prevailing mood, New Delhi's US$500 million financial aid package to the Maldives has garnered additional significance, alongside other initiatives to reach out to Bangladesh and Sri Lanka. New Delhi dispatched a senior Indian official to Dhaka on Tuesday to convey a message from Modi, while the Prime Minister was the first to congratulate new Sri Lankan Prime Minister Mahinda Rajapaksa after a general election earlier this month.

While announcing the Greater Male Connectivity Project (GMCP), Indian foreign minister S. Jaishankar issued a reminder that the package consisted of a US$100 million grant and a new US$400 million line of credit. He was clearly attempting to indicate how India's offer allows easy loan repayment options, unlike the controversial Chinese projects that have drained the Maldivian exchequer and put the country in a dire economic situation. Male owed Beijing some US$1.4 billion as of December last year.

New Delhi is also likely to offer an additional US$250 million to Male to help it tide over the economic crisis, which in tourism-dependent Maldives has turned acute under the Covid-19 pandemic as visitors have kept away from its island resorts.

The GMCP will be the country's largest civilian infrastructure project, connecting Male via a bridge and 6.7km causeway with the neighbouring islands of Villingili, Thilafushi and Gulhifahu - where India is also building a port.

The China- constructed 2.1km Sinamale Bridge, which links Male with the islands of Hulhule and Hulhumale, was inaugurated in 2018. The fact that the proposed bridge and causeway India announced would be much longer was also stressed by Indian officials.

The Sinamale Bridge was built with major funding input from China. Photo: AFP alt=The Sinamale Bridge was built with major funding input from China. Photo: AFP

Besides this, the country's location along the major sea lanes of the Indian Ocean and its proximity to India's west coast - the Indian island of Minicoy is just 70 nautical miles away - add to its strategic weight as an ally, as does the potential to allow a third country's navy to be present in the waters.

"India will always require Maldives to be free of outside interference to deny any country from creating a base to carry out anti-Indian activities," said Anil Wadhwa, a retired Indian diplomat.

But New Delhi's importance to Male cannot be understated either.

As the net security provider in the region, India has intervened in every crisis the Maldives has faced so far. In 1988 it stepped in to thwart an armed coup against the country's longest-serving president, Maumoon Abdul Gayoom.

The Indian navy rescued large numbers of people from Male and other islands before the tsunami struck in 2004, while in 2014 India used military aircraft and ships to provide bottled water to the Maldives during a severe drinking water crisis.

The interventions proved the advantage of India's proximity and capacity to help out the Maldives in times of distress, allowing it to enjoy an uninterrupted phase of dominance in the country's politics.

According to Wadhwa, the former diplomat, India will work with any government in the Maldives and its geographical closeness will always remain important. "India's developmental aid is at the heart of its relationship with Maldives and will ensure inimical forces are kept at bay," he said.

But from 2012 to 2018, the approach towards India and the importance of New Delhi's strategic role in the Maldives changed, initially under the administration of President Mohammed Waheed Hassan and later under the Yameen presidency.

This was the time during which China rose in prominence in the region, and several infrastructure projects were constructed in the Maldives under the Belt and Road Initiative, including high-rise apartment blocks and the expansion of the capital's airport.

Indian Navy retired vice admiral Pradeep Kaushiva believes India has the adequate wherewithal to blunt threats to its current prominence with "continuous vigil and sharpened tools of business". But things can change again in this critical region and it remains to be seen how India can maintain its edge.

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.