China’s investment turned into debt issue for Maldives’ Ibrahim Solih: European think tank

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The Maldives has incurred huge debts under the presidency of former president Abdullah Yameen, which has created loads of difficulties and issues for current president Ibrahim Solih, said think tank European Foundation for South Asian Studies (EFSAS) in its recently published reports.

A week after Solih took charge of the country as the president, it came to light that the country is facing financial loss and its finances are in the worst shape, and amounts owed to China are still being assessed, according to EFSAS reports. EFSAS has quoted former president Mohamed Nasheed saying that the Maldives has been sold off to China.

According to ANI news reports, Nasheed, who now serves as Solih’s advisor, highlighted the risk of China’s influence on the Maldives’ economy. He said, “Foreign powers, among them, China, are engaged in a ‘land grab’ of Maldivian islands, Key infrastructure, and even essential utilities. Shrouded in secrecy, all manned of projects have been awarded to foreign state-run companies.”

Claiming that China already has seized around 16-17 islands in the Maldives through an “opaque leasing process”, Nasheed said, “it always starts with a real estate projects, but it can be turned into something else”. He concluded, “As I watch my country in exile, I fear that piece by piece, island by island, the Maldives is being sold off to China.”

He also claimed the Chinese ambassador to Maldives Zhang Lizhong have held a meeting on October 6, when he offered Solih an invoice for USD 3.2 billion, which estimated USD 8,000 for each citizen of Maldives.

Nasheed said, “… it was an invoice. It just had a figure, $3.2 billion. It was shocking. It was not just a conversation, it was a written note handed over, it was clear, you owe us this much.” He further said, “… direct debit or direct bilateral government-to-government debt is one thing, but there is on top of that sovereign guarantees for the private sector. And there is also on top of that our state-owned enterprises that have gone into debt.”

The EFSAS report stated: “The Yameen government is also suspected to have pocketed a part of the grants and earned commission on soft loan.”

According to media reports, another member of Solih government has said he had been told about the Chinese report submitted last month and that the amount figure might have expanded because of sovereign guarantees given.

He said, “We are trying to unravel this. It looks like lots of IOUs were issued, pieces of a report. We are trying to find out, how many and to whom.”

Maldives are facing huge debt with annual revenue of about USD 1.5 billion and an annual GDP of about USD 3.9 billion.

Another member from a team reviewing liabilities of state-run enterprises claimed: “We cannot go into default. We will face a default situation if we agree the debt to be what the sovereign guarantee are saying.”

The Free Trade Agreement (FTA) said Yameen had signed during his visit to China in December 2017, and the 2015 law, which allows foreigners to own lands if they reclaimed 70 percent of that from the sea and also if invest USD 1 billion in the country, a particular concern to Solih.

EFSAS report stated: “The FTA, as per which humongous China and the tiny Maldives agreed not to impose tariffs on imports from each other, was pushed through without even providing the opposition time to read its contents and has resulted in completely skewing the balance of trade against the Maldives.”

While referring that China will not be buying anything from the South Asian island country, Nasheed said, “The trade imbalance between China and the Maldives is so huge that nobody would think of an FTA between such parties. China is not buying anything from us. It is a one-way treaty.”

The report stated: “Indoctrinated by fundamentalist Maldivian clerics returning from Madrassas in Saudi Arabia, Egypt, and Pakistan who have brought back a puritanical version of Wahhabi Islam and Salafism, members of these groups capitalized on the protection they received from the Yameen regime and were allegedly used by the regime against its opponents.”

China will not be only seeking to leverage its financial assistance (investments) in the Maldives, but will also use its preferred debt-trap diplomacy to demand further concessions.

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