The recent acquittal of former Maldives President Abdulla Yameen in the million dollar money laundering conviction certainly complicates matters for India-Maldives relations. The unanimous verdict of a bench of three Supreme Court judges removes the disqualification of Abdulla Yameen from running in the presidential election scheduled for 2023. In his speech at a PPM-PNC rally, Yameen claimed full owned by the “India Out” campaign which seeks to drive Indian military personnel from Maldivian soil. The term of current President Ibrahim Solih comes to an end in 2023 and this propaganda campaign targeting India appears to be an early manifestation of the electoral strategy of the opposition coalition. In attempting to influence the educated tech-savvy class with the help of an Islamist nationalist political agenda centered on anti-Indian rhetoric, the strategy of the pro-China PPM-PNC coalition seems clear. Through a sustained spread of xenophobia, hatred and mistrust, he seeks to brush aside his own misdeeds when he was in power under the previous regime. The end state is to subvert the young democracy and lead it into the arms of a waiting dragon.

That the Yameen-led opposition party is once again dancing to Chinese tunes is nothing new. It should be mentioned that the 2013 elections were preceded by a similar anti-Indian campaign and to some extent helped Abdulla Yameen to take power. Immediately after that, we witnessed the very first visit of a Chinese head of state to the Maldives. The Chinese investment boom in the Maldives also began soon after, and included a building for the Maldives Ministry of Foreign Affairs, a national museum, housing projects, airport expansion and various investments in renewable energy, tourism and telecommunications. Data from the Maldives Ministry of Finance shows that more than $ 1 billion in loans were made in the four years following Xi’s visit, all borrowed directly or guaranteed by the government of Maldives. Chinese state-owned enterprises have loaned $ 547.9 million to finance the construction of 11,000 apartments in high-rise buildings that would be built in the second phase of development on Hulhumale Island. They loaned an additional $ 180.9 million for extension work on the new island’s power grid and $ 421 million to expand the airport serving Malé and Hulhumale. The most celebrated project was the $ 210 million Friendship Bridge, funded primarily by a $ 126 million Chinese government grant and a $ 68 million loan from the Export Import Bank of China. In addition, against normal business sense, large commercial loans to private institutions / businessmen have been granted on sovereign guarantee. The five years from 2014 to 2019 left the Maldives in the trap of Chinese debt, a state of emergency, as well as large-scale human rights violations, including the targeted killing of journalists who dared to expose the situation on the ground.

The Chinese debt trap has cast a shadow over the Maldivian economy, with some estimates suggesting that the island nation currently owes Beijing up to $ 3.1 billion, which is almost equivalent to 60% of its GDP. The figure includes government-to-government loans, money given to state-owned enterprises, and private sector loans guaranteed by the Maldivian government. The current Speaker of the Maldives Parliament, Mohamed Nasheed, believes his country has fallen into a debt trap as the business plans of none of these projects, funded by Chinese investments, indicate viability generate enough profit to repay the loan. Former Maldivian officials and Chinese officials have come up with the figure Male owes China between $ 1.1 billion and $ 1.4 billion, which in itself is a huge sum for a country with a GDP of just 4.9. billions of dollars. The gap in the actual debt owed by the Maldives is the result of the lack of transparency with which the contracts were formalized, leaving the current Maldivian administration struggling to organize the payment of these loans.

Nasheed fears the Maldives will suffer the same fate as Sri Lanka, where the Chinese debt trap led a Chinese state-owned company to acquire a 70% stake in the port of Hambantota on a 99-year lease in 2017 The fears of the Maldivian governments have come true. on July 20, when Chinese bank Exim asked the Maldivian government to pay $ 10 million (MVR 154 million), when Ahmed Siyam, former parliamentarian and owner of Sun Siyam Resorts Pvt Ltd, defaulted on repaying the loan from $ 127 million guaranteed by the previous administration with sovereign guarantee. While the previous government issued more than MVR 9 billion in sovereign guarantees, Sun Siyam Resorts Pvt Ltd was the only private company to receive such a grant. The “sovereign guarantee” mechanism is generally only available to government institutions / public enterprises and the guarantor state has to repay the loan with interest in the event of default. If the current Solih government refuses to pay, it could affect the state’s credibility in global credit markets. On the contrary, such a repayment of a private debt can devalue the Maldivian Rufiyaa and impact its foreign trade and its foreign exchange reserves.

Former President Abdulla Yameen also introduced a controversial land acquisition law in 2015 that allowed foreigners to own land in perpetuity, if they invested more than $ 1 billion and got 70% of it back from the sea. The decision of the then pro-Chinese government fueled fears that foreign powers could use the land for military purposes. Even though the law was repealed by the Maldives’ parliament in 2019, reports suggest Chinese developers leased up to 17 islands before the controversial law was overturned. It suffices to study the massive facelift undergone by the Maldivian island praised by China, Feydhoo Finolhu, to realize the Chinese roots in the Maldives. The island, located just 684 km from India, was leased until 2066 by China to the Maldivian government for the paltry sum of $ 4 million. Since 2018, the island has seen a dramatic increase in size from 38,000 square meters to 1,000,000 square meters and is also undergoing rapid construction. The construction on this island as well as the facelift reflects Chinese actions on the Spratly Islands in the South China Sea. Fears that China will use these leased islands for military purposes cannot be dismissed.