Expert Speak Raisina Debates
Published on Dec 12, 2017
For New Delhi, the China FTA came as a surprise as less than a year earlier, Yameen had declared that Maldives’ first FTA, whenever signed, would only be with India.
Yameen’s China deals: Need for India to revisit its IOR neighbourhood policy

Maldives President Abdulla Yameen has once again taken international friends and domestic detractors by surprise by rushing the Free Trade Agreement (FTA) with China through Parliament, in a short-notice special session before it recessed, and following it up with his equally short-notice state visit to China, 6 to 9 December.

On his return, Yameen, as if predicting possible concerns in the shared IOR neighbourhood, especially India, justified his decisions, saying it was nothing like Sri Lanka’s Hambantota debt-turned-equity deal, as the latter flowed mostly from war-time weapons purchases, while his nation was spending Chinese funding only on development projects, capable of high returns, hence repayment.

However, it did not stop with the FTA. During Yameen’s visit, when he met with counterpart Xi Jinping, and the two feted together at the 45th anniversary of bilateral ties in Beijing, Maldives also signed on into China’s more prestigious OBOR scheme, which they had agreed upon long ago. The “Framework Agreement on Cooperation in Relation to Joint Development of Airport Economic Zone Development in Hulhumale” and the “Protocol on Establishment of Joint Ocean Observation Station” were the two other agreements that should be of interest/concern not only to India, but possibly also to Maldives’ other neighbour, Sri Lanka.

Sovereignty ‘compromised’

Yameen does not face much opposition on the political plane, and more so in Parliament. For him, to surprise his domestic adversaries, to be able to defeat or even delay the parliamentary passage of the China FTA. Whatever reservations the people may have on this score, as with other decisions of Yameen, before and after the deal, would also have to await the direct elections to the presidency, due by November 2018, and is also held as the constitutional scheme commands at present.

For his part, self-exiled former president and opposition MDP chief, Mohammed ‘Anni’ Nasheed said that Maldives’ maiden FTA not only militates against the nation’s ‘sovereignty’ but was also weighed heavily in favour of China and could push the nation too into a ‘China debt-trap.’ Earlier too in Colombo, where he met Sri Lankan Prime Minister Ranil Wickremesinghe and discussed ‘political developments’ in Maldives, Nasheed and other opposition critics had pointed to procedural deficiencies with the FTA passage, as has been the case with the Yameen government almost on every issue and decision, and wanted the FTA kept ‘suspended’ under a proper feasibility study was undertaken, and results made transparent.

Yameen’s bravado on not possibly taking the nation into a debt-trap of any kind viz. China’s involvement and investment, there is no knowing if any future leadership in the country could move away quick and fast without hurting the nation even more. In Sri Lanka, despite pre-poll protests and protestations to the contrary on the China front, the incumbent Government of National Unity (GNU) could not stop walk into the trap from the previous Rajapaksa regime era, and settled for an even more dangerous debt-for-equity swap.

‘No intrigue’

In a delayed media message, Maldives Fisheries Minister and Government spokesman, Dr. Mohamed Shainee, said that the China FTA would bring in ‘major developments’ to the country. He said it will not affect bilateral relations with neighbours. Maldives already have trade pacts with India and Sri Lanka and would want to do it with other countries, too, he said. At the same, he did not clarify if FTA would be among the ‘many agreements’ that the two nations would sign during Yameen’s state visit to China.

In a none-too-provocative despatch ahead of Yameen’s visit, China’s Global Times had said that India would ‘do nothing but upset itself’ if it tried to prevent closer trade ties with Maldives. The Global Times denied ‘political intrigue’ behind the FTA but added: “Political relationships are sometimes a barometer of economic ties.” Or, is it the other way round when it comes to China, as used to be the case with the US and the erstwhile Soviet rival at the height of the ‘Cold War’ — ‘buying political loyalty’ by paying upfront, to host, often third world governments, in terms of development funds that could create jobs and family incomes?

According to the Chinese Commerce Ministry, as FTA signatories, the two countries would reduce tariffs for over 95 percent of goods to zero and commit “to opening the service market such as finance, healthcare and tourism and agreed to cooperate practically in key areas.” The Global Times observed: “It won’t be easy for India to maintain its political influence in South Asia if its own economic presence is weakening. If India thinks its position is threatened, it should consider how it can give more benefits to its neighbours through win-win economic cooperation.”

Going global

According to media reports, for New Delhi, the China FTA came as a surprise as less than a year earlier, Yameen had declared that Maldives’ first FTA, whenever signed would only be with India. Though the subsequent announcement on his State visit to China did offer some explanation for the FTA-speed, that alone did not say all in terms of bilateral relations with the Indian neighbour and/or with the region as a whole.

Be it Maldives, Sri Lanka or other neighbours, there is a message going beyond Chinese investments, and consequent politico-strategic influence that the latter may have over the former. There are those in these countries who actually believe that India has been half hearted in bilateral trade and investments, and an FTA with India would remain bilateral whereas a China FTA, like the OBOR Initiative, could take them ‘global’.

Quizzed, no one is clear as to how it could happen, but they seem obsessed with the possibility, when preceded by massive Chinese investments that comes with no political strings of the ‘human rights’ kind. This is an angle India has not addressed, leave alone tackled, since when China’s ‘String of Pearls’ ambitions/strategy became known.

Traditional allies/sphere

In a telephone interview to the Times of India ahead of Yameen’s China visit, Nasheed also said that the China FTA could upset Maldives’ ‘traditional allies’, implying India in particular. For long, India has brought the neighbourhood, at times including adversarial Pakistan, under a protective economic umbrella without impeding on their geostrategic and economic sovereignty in anyway.

In recent years, however, independent of parties and leaders in power in both countries, India is seen as compromising on the idea of ‘traditional sphere of Indian influence’, leaving once protected neighbours to their own fate and/or ways, especially in political matters after a point. This has since extended to economic ties. The reverse has also provided opportunities for cashflush China to intervene in geopolitical and geostrategic spaces impacting India and the US polices, whether jointly or severally.

On the one hand, post-Cold War Western allies/friends, exercising their sovereign powers have been making inroads into ‘India’s traditional sphere of influence’ that New Delhi was unaccustomed to in the Soviet era. Left to their elements, individual neighbours too have made their choice(s), seeking to balance between India and other, just as the latter has been doing, post-Cold War.

This has meant that neighbours have begun/been choosing between India and China on the ‘regional’ (?) front, and between the US and China, on the ‘extra-regional’/ ‘international’ front! The problem for and with India is that they continue to slot India only as a ‘regional power’ while naming China under both heads though it is not a ‘regional power’ by any stretch of imagination.

Since the Obama administration came to power in the US, India has been spreading its geopolitical and geostrategic wings in the larger Indian Ocean, and reaching up to the Pacific, after the earlier attempts to do so failed in the years immediately after the advent of the West-centred economic reforms. India’s immediate Ocean neighbours in Maldives and Sri Lanka are talking about ‘going global’ only in economic terms still, but their Chinese creditor/partner could drag them into the geopolitical and geostrategic arena, too, unwillingly or otherwise.

Geopolitical protection

For India’s smaller neighbours, barring possibly Pakistan, the 2014 change-of-leadership meant a new and refreshing hope for change of relationship with India. It did not happen in the case of Maldives, as Prime Minister Narendra Modi cancelled his maiden visit to the country at the height of the ‘Nasheed arrest and conviction’ crisis in that country in March 2015.

Only months later, former Sri Lankan President Mahinda Rajapaksa declared that Indian agencies had worked with their western counterparts to have him defeated in the advanced polls of January 2015. Though Rajapaksa has since amended his script so to say, but going beyond personalities, state structures in these countries were/are upset that India was (still) seeking to influence or interfere with domestic politics.

Similar views are expressed by India’s smaller, northern neighbours too, from time to time. This includes Bangladesh, Bhutan and Nepal though in the case of the first two, much of the past misgivings have been erased, if only over years. The fact however remains that Indian leaderships, particularly Prime Ministers Modi and Manmohan Singh before him have not found as much time as the neighbourhood relations demanded, especially or mending and maturing them.

Leaving land borders aside, months ago, Sri Lankan Prime Minister Ranil Wickremesinghe said that the US was the ‘elephant in the room’ that cannot be wished away in the Indian Ocean geostrategic space. He did not say the same of it about China, but it is already the ‘elephant in the room’ as the economic landmass of these nations are concerned.

Despite implied protestations to the contrary when in the opposition, PM Ranil has only gone ahead and complied with China’s longheld wishes to convert the Hambantota project debt into equity. After the current FTA, China should be completing the much-hyped ‘Friendship Bridge’ across the sea in Maldives next year, to be able to capture the imagination of the civilian population — and no future leader of Government is going to undo it, despite protestations to the contrary.

There is no denying the geostrategic space that Maldives and Sri Lanka nations occupy in the Indian Ocean, especially for India, and the geopolitical consequences for all three. From India, they expected and continue to expect ‘geo-political’ protection on matters such as democracy and human rights, to be able to partner with India — and as near-equals in terms of decision-making — on the geostrategic front.

All of it means that India may have to reprioritise and also revisit the Indian Ocean neighbourhood policy and reshape the same, to be able to recapture the spirit called the ‘traditional sphere of influence.’ Ironically, it was more of an imagery that was struck in global strategic thinking when India did not have the image of an emerging superpower, but may have lost the image when it actually may be in a position to assert itself more than at any time during the ‘Cold War’ past.

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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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