India Offers Maldives $1Bn in Soft Loans to Help Repay China Debt
India is currently advancing a vision for a “Free and Open Indo-Pacific” along with Japan, the U.S. and Australia (called the Quad), while the U.S. has announced its own infrastructure investments in Asia to balance China’s growing influence in the region.
NEW DELHI — India is considering providing up to $1 billion in loans to the Maldives to help it pay down its debt to China, but only if the island nation agrees to distance itself from Beijing, reports Nikkei Asian Review citing Indian government sources.
The report claims India is in talks with the Maldives, offering low-interest loans over several installments in exchange for stronger security ties, including the permanent deployment of Indian military personnel in the island nation.
The countries are expected to iron out the details before Maldivian President Ibrahim Mohamed Solih, who took office on Nov. 17, visits India in December–a move observers say is aimed at swinging the island nation into Western sphere of influence.
China has built bridges, airport and housing as part of Beijing’s Belt and Road Initiative.
However, India, which sees the Indian Ocean as its own backyard, is alarmed by the possibility that China could build naval bases on the islands, says the report.
Maldivian Foreign Minister Abdulla Shahid and Indian External Affairs Minister Sushma Swaraj has reportedly agreed to cooperate on economic and security issues at a Monday meeting in New Delhi.
Abdulla “reiterated that the government of Maldives will be sensitive towards India’s security and strategic concerns,” the Indian Foreign Ministry said in a statement, adding that India supports the Maldives “in ensuring fiscal and budgetary stability.”
China has funded over $3 billion in infrastructure development, the report says citing former President Mohamed Nasheed.
Solih is said to be cultivating closer ties with India, and plans to revise a free trade agreement signed with China under former President Yameen last year.
India is currently advancing a vision for a “Free and Open Indo-Pacific” along with Japan, the U.S. and Australia, while the U.S. has announced its own infrastructure investments in Asia to balance China’s growing influence in the region.
Last month, US Principal Deputy Assistant Secretary of State for South and Central Asian Affairs Alice Wells during her visit to Dhaka also discussed roping in the South Asian country in the Indo-Pacific initiative.
“Bangladesh, located at the crossroads of South and Southeast Asia, is also central to the administration’s Indo-Pacific strategy. It was evident in my meetings with government officials that the United States and Bangladesh are very much aligned in our visions for a free, open, rules-based, and interconnected region,” said Wells at a press conference in the Bangladesh capital.
Wells added, “In recognition of Bangladesh’s valuable role in supporting our Indo-Pacific strategy, we recently announced that we will be providing Bangladesh with $40 million in Foreign Military Financing to enhance its coastal radar system, modernize and enhance its patrol boat fleet, and provide training in support of expanded maritime interdiction – all part of our Bay of Bengal Initiative.”
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