It’s Advantage China As India Loses Maldives Plot

Maldives & China inked the FTA in September. New Delhi could do precious little about it for over two months.

India’s loss of Maldives can intensify Indo-China tensions. 

(Photo: The Quint)

India is losing the Maldives plot and China has finally demonstrated the kind of sway it holds on the South Asian Association for Regional Cooperation (SAARC) nation.

Pakistan and Nepal have been increasingly under Chinese influence and as for other SAARC powers, China's juggernaut has been making inroads into other South Asian powers like Sri Lanka and Bangladesh, thus completing the dreadful Chinese string of pearls aimed at strategic encirclement of India.

PM Modi and Chinese President Xi Jinping meet on the sidelines of the G20 Summit in Hamburg. (File photo: PTI)

Maldives-China FTA

For years, the Indian Ocean archipelago has been experiencing the phenomenon of increasing Chinese influence but what happened on November 29 in the Majlis, the Maldivian parliament, would leave the Indian strategic establishment gasping for breath. On this day, China finally demonstrated the extent of its lengthening shadows in Maldives.

On 29 November, the Speaker of Maldivian Parliament called for an emergency sitting, to pass the nation's first-ever Free Trade Agreement (FTA) with China while the opposition was absent. The FTA was sent to the parliamentary oversight committee on national security affairs within three minutes of submission to the floor. The committee vetting the FTA took less than 10 minutes to give its nod.

The approval was conducted against parliamentary procedures and norms, with deliberations closed off for the public and to the media. Despite requests from the opposition, the MPs were not given access to the document in order to review it before passing. The government of President Yameen Abdul Gayoom (better known as YAG), allowed less than one hour for the entire Parliamentary process to approve the 1,000+ page document.

The Maldives-China FTA contained a number of technical details that should have been thoroughly reviewed and required consultation with the business community. It was approved with just 30 votes in a late evening session of the Parliament.  

Significantly, the Maldivian Attorney General had advised corresponding legislation for the FTA to be legally binding. The Maldivian Constitution requires 43 MPs attending to pass the legislation and the Maldivian government does not have the required votes. The FTA cannot be implemented until the legislation is passed.

The Maldivian Democratic Party (MDP), the main opposition, cried foul, stressing that the Yameen government is entering a trade deal that will have immense economic repercussions on the Maldivian economy. Moreover, details of the Maldives-China FTA has not been circulated to the public and there has been no information that a feasibility was done or the FTA was even discussed with the President’s own cabinet.

The MDP raised questions on the rushed parliamentary process, the Yameen government’s unwillingness to disclose information and why the deal had to be shrouded in such secrecy. The MDP has asked the Yameen government to suspend the implementation of the FTA until a proper feasibility study is conducted to ensure that it is in the best interest of Maldives, and also to ensure that this FTA does not place Maldives in a geo-politically vulnerable position.

What’s more, the Maldives-China trade balance remains considerably in favour of China, and the FTA will further increase the deficit. This will inevitably lead to entrenchment of Maldives into a Chinese debt trap and put additional stress on Maldives’ strategic national assets and exacerbate instability in the Indian Ocean region.

File photo of Prime Minister Modi and Maldives President Abdulla Yameen.(Photo Courtesy: Youtube)

Did Yameen Apply the Right Strategy?

The ideal position for the Maldivian economy in the long- run would have been to bring drastic changes to trade between the two countries and significantly increase Maldives’ access to the Chinese market and gradually reduce its trade deficit towards the much larger economy, something that hasn’t happened. The MDP is deeply concerned about the sudden and rushed Free Trade Agreement (FTA) with China.

Added to this is the question of propriety as the government of Maldives stands accused of unprecedented levels of corruption. Given President Yameen’s catastrophic economic policies thus far, the government’s evasive behaviour on any projects courting foreign trade or investment adds to public consternation.

President Yameen is committing the same mistake which the then Sri Lankan president Mahinda Rajapaksa committed just a few years ago by going overboard in wooing China – a mistake that cost him dear when he lost presidential election unexpectedly to Maithripala Sirisena and Sirisena became the Sri Lankan president in January 2015.

Yameen's Plan to Woo China Before Elections?

Maldives too is scheduled to have presidential election in less than a year. The current incumbent in Maldives, President Yameen, is also wooing China in a big way. Will it be the Rajapaksa moment for Yameen in the second half of 2018? Well, only time will tell. But the current political developments in Maldives rings the déjà vu bell!

As for India, it is a huge political and strategic setback as the development demonstrates the extent of the rapidly increasing Chinese influence in Maldives, India’s backyard. Significantly, Maldives and China had inked the FTA in September 2017 and yet New Delhi could do precious little about it for over two months. India has been slowly and steadily losing its Maldives plot over the years and has been ceding its numero uno position in the Maldivian diplomatic and strategic space in favour of China, a non-South Asian power.

(Rajeev Sharma is an independent journalist and strategic affairs analyst who tweets @Kishkindha. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)