It was political change in the Maldives that prompted Prime Minister Narendra Modi to make his first visit to the Indian Ocean archipelago last weekend.

The Maldives was the only member of the South Asian Association for Regional Cooperation (SAARC) that Modi had yet to set foot in after more than four years in power. New Delhi’s relations with Male had steadily deteriorated, as China cultivated ties with Abdulla Yameen, the strongman president who many believed was in Beijing’s pocket. Chinese firms poured money into infrastructure projects, including an US$830 million upgrade of the airport and a US$400 million bridge linking the airport with the capital. Simultaneously, the Maldives had squeezed out Indian firms and workers from the country. Then, in elections in September, Yameen lost to a consensus opposition candidate, Ibrahim Mohamed Solih – and for his inauguration, Modi finally decided to visit.

Why the Maldives matters

The Maldives remains an important component of New Delhi’s plan to preserve its influence in the Indian Ocean. The Indian Navy oversees the waters between Qatar – the forward headquarters of the United States Central Command (Centcom) – and the Strait of Malacca, beyond which lies the hotly contested and militarised South China Sea. Each year, more than 100,000 ships carrying oil, minerals and manufactured goods travel the international shipping lanes running through the northern Indian Ocean. The Indian Navy has dominated these waters, thanks to two Indian archipelagos: the Lakshadweep Islands to the west and the Andaman and Nicobar Islands in the eastern Indian Ocean.

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However, a Chinese base in the Maldives, not far from Lakshadweep, would enable a countervailing Chinese naval presence. New Delhi worries that Beijing – having obtained naval basing rights in Djibouti, in East Africa, while also building a port at Gwadar in Pakistan – is also flexing its financial and commercial muscle to create bases in Myanmar, Bangladesh, Sri Lanka and the Maldives. These bases would be China’s vaunted “string of pearls” – a potential maritime chokehold on India.

New Delhi has openly taken sides in the domestic politics of the Maldives. It welcomed Yameen being replaced by a more accommodating leader, evidenced by the joint statement released by Modi and Solih.

“The two leaders, while noting the resilience of the relations between India and the Maldives, expressed confidence in the renewal of the close bonds of cooperation and friendship with the election of Mr Solih as the President of the Maldives,” it said.

The statement also emphasised “the importance of maintaining peace and security in the Indian Ocean and being mindful of each other’s concerns and aspirations for the stability of the region”.

Beijing’s influence over Yameen illustrates the raw power of financial incentives and how they can override physical proximity – the Maldives is barely 100 miles from the southern tip of Lakshadweep – traditional links and also long-standing security ties.
India has long been the security guarantor for Indian Ocean island states – not just the Maldives, but also Seychelles and Mauritius – providing them patrol vessels, helicopters and training. Throughout the region, New Delhi has supported democracy but remained politically pragmatic. It backed the authoritarian Maldivian president Maumoon Abdul Gayoom for three decades, even flying in armed paratroopers to the Maldives in 1988 when Sri Lanka-based mercenaries launched a coup against Gayoom. But this influence waned in the face of a concerted Chinese push.

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In 2012, China did not even have an embassy in Male. Yet, that year, Indian construction firm GMR, which was building an airport at Hulhule, found its contract annulled and its personnel asked to leave. Chinese firms were awarded the contract instead. By early this year, India’s influence in Male was neutralised.

In February, with the political opposition united and the Supreme Court ruling against the president, Yameen imposed a 15-day state of emergency and ignored New Delhi’s protests. Even as former president Mohamed Nasheed called for Indian military intervention, Yameen ordered an Indian Navy detachment operating two helicopters gifted by India to leave the country. An estimated 2,000 Indian workers were told their work visas would not be renewed. Foreign Policy magazine carried an article entitled: “Is Abdulla Yameen Handing Over the Maldives to China?”

New Delhi’s weak hand

If the situation has improved from New Delhi’s perspective, Modi’s government can hardly take the credit. Rather, Beijing’s clumsy pursuit of strategic economic objectives in the Indian Ocean region has tipped the scales. This has been evident also in Myanmar, Pakistan and Sri Lanka.

Colombo could not resist China’s offer to build a US$500 million container terminal at Colombo Port but China Merchants Holdings International now owns 85 per cent of it. China’s overhaul of Hambantota – including a port, airport, economic zone and motorway network – was supposed to transform the economy of one of Sri Lanka’s least developed areas. Not coincidentally, it was also the political base of then president Mahinda Rajapaksa. Instead, with little traffic or economic activity to justify the billions spent, Colombo has been forced to lease the port and 15,000 acres of land around it to China for 99 years. Maithripala Sirisena, Sri Lanka’s new, more India-friendly president, says Hambantota would never be used for anti-India activities but the fact remains China has control of a key port next to India, with one eye on the shipping lanes.

India’s interests in Sri Lanka were salvaged not by clever strategy but because a pro-China leader happened to be voted out of power, when Sirisena defeated Rajapaksa in the 2015 elections. India’s advantage is tenuous and temporary. Last month, Sirisena joined hands with Rajapaksa to try and reintroduce him as prime minister, a move narrowly defeated in parliament. Elections in January may decide the foreign balance of power within Sri Lanka.

Even Pakistan, China’s “iron brother”, has discovered the pitfalls that accompany Beijing’s largesse. The China-Pakistan Economic Corridor (CPEC) initially seemed a godsend for Pakistan’s development but a closer look at the fine print convinced Islamabad that high-interest loans baked into the project would eventually benefit China more than Pakistan. Newly elected Prime Minister Imran Khan visited Beijing earlier this month and reportedly urged projects be scaled back. However, China’s vice foreign minister Kong Xuanyou declared: “There is no change at all. If there were, it would only be to increase, not decrease [the number of projects].”

Shyam Saran, the former Indian foreign secretary, said countries accepting loans from China will need to learn this lesson the hard way.

“Like other countries, Pakistan is discovering the difficulty in walking back from China’s economic proposals, especially those related to the Belt and Road Initiative,” Saran said. “A reduction of China’s role is possible only at heavy political cost. Pakistan can limit its further exposure but not reduce what it has already committed to.”

What can India do?

Political good fortune notwithstanding, India has not developed the strategic capability to confront and turn back China’s geo-economic offensive. The harsh reality: it simply cannot match China’s financial resources. New Delhi has some countervailing advantages, including geographic proximity to the countries being wooed and, in economic terms, it can promote regional connectivity as the largest transit country for all its neighbours.

This would require the building of not only physical infrastructure but also the dismantling of tariff and non-tariff barriers that delay delivery of goods and services. At the Indo-Nepal border, for example, trucks queue for miles, awaiting clearance.

India also must also address limitations in creating connectivity structures with its neighbours. Many outreach initiatives founder against the politics of local economies. Bangladesh, for example, seeks to export textiles and fishery products to India but Indian trade lobbies object, preferring to protect the same sectors locally.

Politically, New Delhi has yet to pursue and sustain high-level political interaction with its neighbours. Relations with key interlocutors, such as Pakistan, remain episodic and mired in confrontation. With India’s Ministry of External Affairs woefully understaffed, there is a lack of commitment to coordinating strategic, commercial and military initiatives.

The United States embassy in New Delhi reportedly has more diplomats than the Indian foreign ministry’s offices in that city. If India is to challenge China’s advances in the Indian Ocean region, practical capability creation will count for more than mere political good fortune.

During Modi’s visit to Male, President Solih gave him a detailed brief on what the joint statement termed “the dire economic situation facing the country as he takes office”. Solih asked for Indian help in building houses, and establishing water and sewerage systems in the outlying islands.

Such projects are well within India’s capability, even though they are a far cry from the grandiose infrastructure projects the Chinese are so good at.

But then, look at where that got them.