A month after China’s EXIM bank called in debt repayments on a huge infrastructure loan to the Maldives, the tiny archipelagic nation has signed a defence co-operation agreement with the US, signalling a shift in maritime fault lines in the Indian Ocean region.
The agreement is significant for setting a framework for broader US defence co-operation with a nation that just a few years ago seemed firmly in China’s camp — and even more so for having the tacit approval of India, which has traditionally looked darkly on Washington or Beijing exerting influence in its security sphere.
Just seven years ago, New Delhi stymied a US status of forces agreement with the Maldives, fearing it could pave the way for a US base on its doorstep despite repeated denials by both countries.
But India’s concerns over heightened US engagement in its backyard have melted away with the rise of Chinese influence and aggression in the Indian Ocean region. India and China are embroiled in one of the most serious and deadly military face-offs on their largely undemarcated Himalayan border. The dangerous dispute shows no sign of abating, despite the looming winter.
New Delhi has watched with alarm as Beijing has courted one South Asian neighbour after another — Pakistan, Sri Lanka, Nepal — with conditional loans under its Belt and Road and Maritime Silk Road initiatives that have led to its takeover of two ports (Sri Lanka’s Hambantota and Pakistan’s Gwadar) that will in future likely host Chinese naval vessels.
Until the 2018 election of the pro-western administration of President Ibrahim Mohamed Solih, the Maldives looked also to have chosen sides. The nation clocked up at least $US1.4bn in Chinese infrastructure debt under former president Abdulla Yameen, now jailed for money laundering.
But with its $US5bn ($7bn) tourist-dependent economy at a standstill from the pandemic, that debt — including hundreds of millions of dollars in private loans underwritten by the Yameen administration — raised fears the Maldives may be the next victim of China’s debt-trap diplomacy.
Alarm bells rang last month when China’s Export Import Bank called in repayments on a government-guaranteed $127m loan, despite a G20 pact to reschedule debt during the pandemic.
David Brewster, an Indian Ocean expert and senior fellow at ANU’s national security college, says India has given an “unprecedented” $US2bn in infrastructure and pandemic-related aid to its neighbour under Mr Solih, indicating its level of concern over the Maldives’ vulnerability. Japan this week also announced a major loan for the struggling nation.
“Broadly speaking, the Quad countries are stepping up — minus Australia — in the case of the Maldives,” Dr Brewster told The Australian, adding a note of concern over Canberra’s failure to secure its own defence agreement with a nation critically located midway between Australia and the Persian Gulf. Foreign ministers of all four Quad nations will meet for only the second time in Tokyo next month.
“The US Defence Co-operation Agreement is an important statement that signals the US will provide defence and security assistance to the Maldives to deal with particular security issues, such as illegal fishing and violent extremism” — the latter a rising concern in the majority-Muslim nation,” Dr Brewster said.
“The fact the Indians have not complained about the agreement is an indication of how much they feel they have their backs to the wall in the region, and probably also that they now trust that whatever Americans do will not be directed against Indian interests.”
Maritime analysts have described the Maldives as positioned like a “toll gate” between the western Indian Ocean chokepoints of the Gulf of Aden and the Strait of Hormuz on one side, and the eastern Indian Ocean chokepoint of the Strait of Malacca on the other. It is 700km from southern India’s Kerala state and the closest island chain north of Diego Garcia, which hosts one of America’s most important military bases.
A World War II-era former British naval and air force base on its largest island Gan has long-been eyed by competing powers, including Russia, Iran, India, the US and China.
A US announcement heralding the new defence deal this month said the two countries would use the framework to “deepen engagement and co-operation in support of maintaining peace and security in the Indian Ocean”.
US ambassador to the Maldives and Sri Lanka Alaina Teplitz told the Nikkei Asian Review this week it would pave the way for the Maldives to join other nations with “a shared responsibility to uphold the rules and values ensuring a free and open Indo-Pacific.”
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