Ibrahim Mohamed Solih, Maldivian presidential candidate backed by the opposition coalition

Chinese loans for projects already account for around 70 percent of the Maldives’ national debt

NEW DELHI: Maldives, a Southern Indian Ocean Region country, bears huge strategic significance due to its geographical location influencing Beijing to invest huge political and economic capital in an area where India has been the traditional power.

As part of Beijing's push to gain strategic influence and carve out new trading routes in the Indian Ocean and beyond, it has lent billions for huge infrastructure projects in Maldives, Pakistan and Sri Lanka, and operates key ports in those countries.

Under Yameen, the Maldives welcomed Chinese money for major projects and signed a free trade agreement. More tourists from China now visit the Maldives than from any other country. Before the vote, analysts said that Beijing feared any change in government that could affect its interests.

However, it appears now that Beijing, which received a setback with Yameen’s defeat has to rethink its strategy for the island nation. The biggest challenge for the new government in Male is to balance ties between India and China and in many ways reset ties with Delhi that has been net security provider for Maldives for decades.

Yameen in many ways defied India something that even Mahinda Rajapaksa did not fully do during this 10-year-reign in Sri Lanka. He did not partner India in any of the Modi government's maritime initiatives for the region despite Delhi's decades old defence ties with Male.

Solih’s Maldivian Democratic Party has taken an anti-China stance. Former Maldives president and party founder Mohamed Nasheed previously told news agency Reuters China has pulled his country into a "debt trap" and that a future opposition-led government would renegotiate Chinese loans. Nasheed said China had provided more than $2.5 billion in loans to the island nation.

Chinese loans for projects already account for around 70 percent of the Maldives’ national debt. In 2014, China began to develop major infrastructure projects in the island nation, carried out by Chinese state-owned companies. One is a bridge linking the capital Male to a nearby island. The other is an expansion of the capital’s airport, a project awarded to a Chinese company in 2014. The Maldives has also leased an uninhabited island (Feydhoo Finolhu) to a Chinese enterprise for 50 years at a price of around $4 million, with plans to develop infrastructure for tourism. On December 7, 2017, China and the Maldives signed a free trade agreement.

It is understood that the Solih government could renegotiate the bridge that China has built in Maldives that would reduce financial burden on Male whose primary source of revenue is tourism. China’s massive loans to the Maldives raises questions on the island’s ability to repay its debts, as this translates into increasing political leverage for China. Maldives is critical to BRI and the mega project is not only about increasing economic ties but also about expanding China’s geostrategic goals.