Expert Speak Raisina Debates
Published on Jul 30, 2020
The Solih government is under tremendous pressure on multiple fronts — the China factor is one on which it may have the least control.
China asks Maldives to pay up ‘private loan’, an eye-opener for all debtor-nations? Even as the Government of President Ibrahim Solih is battling Covid-19 pandemic and yet taking courage to reopen the famed ‘resort tourism’ sector, Maldives’ economic mainstay, other issues are beginning to dog the nation. While the opposition is busy with itself in a way and is also targeting the Government on India front, the Solih leadership should be concerned even more about the short, medium and long-term fallouts of China asking the Maldivian state to repay at least an instalment of a massive loan granted to a local resort-owner. In what clearly is an unprecedented development, China’s Exim Bank has asked the Maldivian government to pay up $10 million (MVR 154 million), possibly an unpaid instalment from the total $127 million loan to former Yameen ally and parliamentarian, ‘Sun’ Ahmed Shyam against ‘sovereign guarantee.’ Generally, the facility is available only to governments and the state sector, and except the Sun Group, all debtors with ‘sovereign guarantee’ for a total $9 billion Chinese loan were public sector undertakings.

With or without Covid-19, such repayment of a private debt can devalue the Maldivian Rufiyaa and impact on its foreign trade and forex reserves.

Generally, ‘sovereign guarantee’ is extended only to government sector loans, and the guarantor-state has to repay the loan with interest in case of default. If the Solih government refuses to pay up, it could affect the state’s credibility, in global credit-markets. With or without Covid-19, such repayment of a private debt can devalue the Maldivian Rufiyaa and impact on its foreign trade and forex reserves.

‘One Voice’ protest

Coinciding with the nation’s Independence Day on 26 July, leaders of the opposition PPM-PNC combine, identified with former President Abdulla Yameen, who has been jailed for graft, staged what they called the ‘One Voice’ protest rally — Enmen Eh Adakun in Dhivehi. They called the Solih government a ‘failure’ and demanded the president’s resignation. They also said the government was planning to allow an Indian military aircraft to be based in Maldives. The police arrested two protestors, and said in a statement, that “freedom of expression be exercised in an appropriate manner,” during a ban on mass-gatherings in Covid times. For an Islamic nation, the government had cancelled mass prayers for Eid al-Fitr earlier and ordered likewise for Eid al-Adha. MDP parliamentary group deputy leader Hussain Shameem tweeted that the opposition was “afraid of justice, regarding the Assets Recovery Commission (ARC) report.” After submitting the report to President Solih, the ARC promised to initiate action against the culprits in the ‘MMPRC’ scam’ — in which Yameen was jaied — for conversion of embezzled cash into assets and for destruction of documents. However, opposition PNC president Abdul Raheem Abdulla complained that President Solih had not given them time for three months. Other state institutions too acted likewise, he said, referring also to justice Shujahu Usman at the Male High Court for a meeting to seek fast-tracking of hearing Yameen’s appeal against five-year jail and $5 million in fine. The opposition had earlier demanded transferring Yameen from prison to house arrest, as allowed under the penal laws. At the delayed hearing of his appeal, attributed to Covid-19, Yameen claimed that his Fisheries Minister Ahmed Shainee and impeached vice president Ahmed Adeeb — whom he imprisoned and impeached for an ‘assassination attempt’ — had received $5 million in political donations. In a separate case, the High Court declined Adeeb’s plea after the state appealed against a lower court quashing pending charges against him. In a separate development, the PPM-PNC combine inducted another Yameen-impeached vice president, Mohamad Jameel Ahmed, as their advisor, after he led Yameen’s legal defence. returning to Yameen’s fold, Jameel was the president of the Jumhooree Party (JP) of billionaire businessman Gasim Ibrahim. The two sides are alive to Jameel’s presidential prospects in 2023 if Yameen is disqualified, depending on the final verdict on his conviction and sentence.

IS terror links

The 26th report of a UN monitoring team has since said that a “network of extremists (in Maldives) are colluding with the international terror group, IS. The report pointed to the IS claiming responsibility for the blaze in Alif Dhaalu Atoll’s Mahibadhoo island, on 15 April. Days before the UN report, police chief, commissioner Mohammed Hameed, claimed in a TV debate that Parliament Speaker Mohammed Nasheed’s placing the report of the Presidential Commission on Deaths and Disappearances on the table of Parliament has jeopardised investigations into the cases concerned. The report claimed the presence of Al Qaeda and breakaway IS affiliates in the country. Commissioner Hameed also denied Nasheed’s charge that the police was keeping a tab on individual MPs and was planning to raid their properties.

Prioritise national interests

In this background, President Solih in his Independence Day address, called upon political actors to prioritise national interest and to rise beyond shared differences. Given that the nation attained its present freedom through peaceful means and foresight, the country’s national policy and political direction should also ensure that continued independence is maintained in similar, harmonious fashion, he said. Equally significant, Speaker Nasheed, who is also the ruling MDP boss, asserted that the Maldivian people and military forces will maintain the country’s independence. Nasheed, a former President himself, seems to be fashioning the Speaker’s office akin to that of the Majority Leader in the US scheme, whose ‘Executive Presidency’ model Maldives adopted at democratisation in 2008. He expanded the scope of his Independence Day address to touch upon foreign and security policy, his all-time interests, and highlighted the importance of peace in the Indian Ocean.

Political embarrassment

Yet, the President and the MDP have been caught in politically embarrassing situations in recent weeks, diverted party by the people’s pre-occupation with Covid. It began with Solih sacking all-important Tourism Minister Ali Waheed after a staff charged him with ‘sexual assault.’ Other complaints followed. One-time MDP Chairman who later became JP’s president before Jameel, Waheed’s deputy, State Minister Ahmed Solih, was charged with ‘misuse of official capacity’ with five other ministers as witness. In another instance, a parliamentary committee recommended the sacking of four members of the constitutionally-mandated National Integrity Commission (NIC), including its chair, for ‘incompetence.’ Recently, Human Rights Watch (HRW) and local rights groups criticised the government after immigration authorities threatened ‘peaceful’ migrant protestors with ‘expulsion’ and army chief, Maj. Gen. Abdulla Shammal, called them anti-national and their strike, a ‘threat to national security.’ The strike followed their Maldivian parliamentarian-employer not paying their wages for months — adding to their Covid woes.

Twin backgrounds

It is in this twin backgrounds of ARC report and Chinese loan-default that the Yameen camp’s protest needs to be viewed. It may be recalled that president Nasheed’s resignation (2012) was preceded by a massive opposition protest, with Yameen in the forefront. In turn, long before Yameen’s 2018 electoral defeat, the MDP-led opposition launched a similar protest for his resignation in December 2014, just one year after his election — but without success. The reference to ‘foreign military presence’ in the opposition demand may be aimed at whipping up ‘Maldivian nationalism’ — as they succeeded with the ‘GMR issue’ against the Nasheed presidency through the ‘23 December Movement’ of religious NGOs. President’s spokesperson Ibrahim Sood has since clarified that the government has only decided to honour the Yameen era agreement to purchase a ‘Dornier’ aircraft from India for humanitarian operations.

The reference to ‘foreign military presence’ in the opposition demand may be aimed at whipping up ‘Maldivian nationalism.’

In a nation where housing is a huge issue, the opposition also demanded the disbursement of 7,000 houses built by the Yameen administration to appeal to a larger audience. Separately, Spokesperson Sood denied media reports that the proposed second home project in H.A. Dhapparu is an Indian ‘colonial settlement.’ Appearing before Parliament’s National Security and Foreign Relations Committee, Economic Development Minister Fayyaz Ismail clarified that the pilot project was to allow foreigners to lease apartments without selling it to them. In an independent development, Indian envoy Sunjay Sudhir handed over a symbolic cheque worth MVR 85 million ($6 million), to Foreign Minister Abdulla Shahid, for nine projects under the High Impact Community Development Projects (HICDP) scheme. In a statement on Maldivian Independence Day, Amb. Sudhir earlier said that India would soon be announcing a ‘substantial package’ for the archipelago-nation.

Wise and shrewd

Speaking at the mid-July function for handing over India’s MVR 200 million cash grant and development projects, Speaker Nasheed reiterated his long-held belief that Maldives cannot grow or develop further — if it abandons its ties with India. “I am also certain that Maldivians and their elected leaders will be wise and make shrewd and sensible decisions regarding our relationship, the closest and dearest of whom is India.” On the occasion, Foreign Minister Abdulla Shahid underscored the strengthening of the traditional close bilateral relations between the two countries. “This is in no doubt due to the personal commitment of President Solih in developing ‘good neighbourly relations’ with our closest neighbour,” he said. Clearly, the Solih government is under tremendous pressure on multiple fronts, but the external China factor is one on which it may have the least control. Alternatively, it may have to consider ‘exposing’ Yameen’s unbridled credit-intake from China in its full measure, which could also be a way to ‘expose’ China, too, to the people of other debtor-nations. In its absence or delay in the matter, Solih and MDP may lose the current initiative ahead of the 2023 presidential poll.
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N. Sathiya Moorthy

N. Sathiya Moorthy

N. Sathiya Moorthy is a policy analyst and commentator based in Chennai.

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