In demonstration of India’s commitment to peace and stability in the Indo-Pacific Region, Indian Naval Ships Satpura and Kadmatt visited Sasebo, Japan from 12th to 15th October 2017

by Yusuf T Unjhawala 

There’s good news for India from the Indian Ocean nation of the Maldives. And it comes primarily in the form of its new president, Ibrahim Solih, being sworn in last Saturday after defeating the incumbent, Abdulla Yameen, against all odds. Solih, upon taking up president-ship, almost immediately sought a review of China-backed projects in the archipelago nation.

After Sri Lanka and Malaysia, Maldives is another country in the region whose people have expressed its opposition to their country’s leadership signing up for projects with China under the latter’s Belt and Road Initiative (BRI) and has led to a debt trap. Change in the Maldivian regime, however, isn’t going to bring any relief to countries that have taken substantial Chinese loans already and cannot service the debt.

Sri Lanka already lost the Hambantota port when it signed a lease agreement with China on a 99-year lease for $1.12 billion. Projects like the ‘Friendship Bridge’ in Male have already been completed, and others are underway. Already, over 70% of Maldives’ foreign debt is owed to China, of which the loan interest alone is more than 20% of the country’s budget.

Malaysia cancelled all its projects with China before they could reach a stage where pullout was impossible. Prime Minister Mahathir Mohamad described the decision to avoid “a new version of colonialism”. His statement quite appropriately sums up what China has been doing in countries that have signed up for BRI. This presents a problem for other powers such as India whose security is undermined by China’s ‘debt trap’ strategy.

There are genuine requirements in many countries to improve their infrastructure and boost economic growth. But lack of resources and requisite know-how hold them back. Many rely on foreign funding and companies to do this. China uses its economic muscle to pursue its ambitious BRI, reportedly a $1 trillion project. Its capacity to execute large projects at a fast pace makes ‘joining’ attractive for some countries.

India, the US, Japan and Australia who form the Quadrilateral — Quad —have pledged to help infrastructure and connectivity projects, and to keep the oceans free and open. In July, the US, Japan and Australia announced a trilateral partnership to build infrastructure, address development challenges, increase connectivity and promote economic growth.

India has extended line of credit to several countries, and has also executed infrastructure and capacity-building projects. India and Japan signed the Asia-Africa Growth Corridor (AAGC) with four main components: development and cooperation projects, quality infrastructure and institutional connectivity, capacity and skill enhancement, and people-to-people partnerships to promote growth and development. India has also initiated talks with the US to partner it in joint investment in infrastructure development, energy, transport, tourism and technology.

While members of the Quad either on their own, or in bilateral or trilateral forms, have announced funds to assist countries in the region, they need to come together as a group to synergise the effort. It is India’s opposition — due to its undue respect for Chinese sensitivities — which has so far prevented this. India should shed this fear.

The Quad will have to deepen its engagement with the smaller countries to understand their needs and aspirations that have been exploited by China so far. India faces issues in its neighbourhood, just like Australia has, of late, realised that it had neglected and failed to understand the needs of its neighbouring Pacific island nations — till the possibility of a Chinese military base there made it see reason.

The Quad must work together on infrastructure and connectivity projects, and capacity building for better synergies to avoid duplication of work and waste of resources. It should involve the private sector that invests and develops a sustainable business model. This will ensure investments or loans are viable, and not become white elephants for the recipient country. The Quad should also encourage tourism from the member countries to the places where joint projects are executed. It needs to encourage and strengthen democracy in the region, too. Remember, it’s democracy that has led to the backlash against Chinese projects.

India, the US, Japan and Australia should together work on helping smaller countries with their existing debt. It can be by grants, loans or through international lending institutes.

They can promote trade that helps these countries’ economy and fund their own needs in the long term. It is imperative for the Quad to formalise a joint strategy of investments and project execution. Without an effective alternative, smaller countries of the region will continue to line up before China, despite the recent ‘reverses’.