On Saturday, Chinese soldiers engaged in a fistfight with Indian troops along the border in Sikkim. In August 2017, troops from the two sides threw punches and at each other in the Ladakh region. A 73 -day standoff in on the Doklam plateau happened the same year.

Aside from recurring border face-offs with its neighbour, Beijing has scaled up its activities in the Indian Ocean region and its growing interference in Nepal and Bhutan is no secret either. But new evidence from open-source intelligence suggests how China has now expanded its presence in the Arabian Sea.

The Maldives, a small island nation in south-west of India, is highly strategic because of its geographical location. Satellite images show how a Chinese company has face-lifted a Maldivian island close to Malé airport.

The Feydhoo Finolhu island was leased out way back in 2016. It was primarily used as a picnic spot by the Maldivians from Malé and by schools and police for trips and drills.

Let us see how the island used to look before it was leased to Chinese investors:

Recently, an OSINT specialist handling the Twitter account @detresfa_ released a series of satellite images capturing the transition of the island from being uninhabited to a modern beach resort.

A further time-lapse consisting of 109 satellite pictures that capture its complete transformation in almost four years.

The lease for this Island was done without a legal tender process owing to the proximity of the then Abdulla Yameen government with China. Now, a firm named Pearl Atoll is managing the island.

The firm is owned by an unknown Chinese investor and is believed to be a sister company of the Shenzhen Mireach Industries Limited based in China.

Strategic Impact

The Maldives is a strategic point of the Arabian Sea. The northernmost point of the Maldivian waters is only 100 km from the Indian island — Minicoy; around 380 km from Kavaratti; and only 425 km from the nearest point of the Indian mainland — the coast of Thiruvananthapuram.

The Feydhoo Finolhu island is 437 km from the Minicoy island, 695 km from Kavaratti and 589 km from Thiruvananthapuram.

China was looking to involve the Maldives a lot in its Belt and Road Initiative during the Yameen regime.

The Maldives have not signed any big deals post 2018 after the new government headed by President Ibrahim Mohamed Solih took over.

But it remains to be seen how long they can fight off the financial muscle of China.

In 2019, the Maldives put the Establishment of Joint Ocean Observation Station in Makunudhoo on hold leading to a sigh of relief from India and it remains to be seen if this will go ahead.

Makunudhoo is one of the closest islands to India and would have enabled the Chinese to access the shipping route channel via the Indian Ocean.

The observatory could have been turned into a Chinese submarine base or helped China acquire accurate hydrological data to track sub-surface operations of India like deployment submarines.

Despite having only 290 square kilometres of actual land, the Maldives is an island that spans across 900,000 square kilometres in total, making it a hotbed of strategic power games.

India needs to raise its game and claim the closeness and the advantage it once enjoyed with Maldives and in the Arabian Sea respectively.

India-Maldives Ties

India was one of the first nations to recognise the Maldives’ independence in 1965 and has maintained a key interest in the well-being of the tiny nation.

India’s action during its 1988 Operation Cactus saved the Maldives from an attempted coup.

The Achilles’ Heel

Ever since the ousting of then president Mohamed Nasheed and the election of the new President Abdulla Yameen in 2013, the relations between India and Maldives suffered a nosedive.

Yameen was very interested in establishing a closer relationship with China owing to the scales of economy involved. This resulted in the two nations signing a free trade agreement and a host of other MOUs for China to get involved in numerous infrastructure and construction projects.

One of the most significant items was the leasing of the Feydhoo Finolhu Island, very close to the Malé airport in 2016. This was a 50 year lease to a Chinese company for a paltry sum of $4 million — the cost of a luxury apartment in Hong Kong.

This closely developing relationship between the Maldives and China was causing concerns in the Indian establishment as it was aware of the threat China could cause seeing from their exploits in the South China Sea.

The Change of Guard

In 2018, the Maldives saw a change of guard again. President Abdulla Yameen was defeated by the current president Ibrahim Solih in an election that saw a lot of drama.

President Solih was seen as someone wary of the Chinese influence in the ongoing projects across the Maldives and also of the dues his country owes to China.

Nasheed, who in 2019 was an advisor to the Solih government, opined that foreign powers like China were engaged in a “land grab” of Maldivian islands during the Yameen government.

Many deals involving key infrastructure and essential utilities were shrouded in secrecy, with various projects having been awarded to foreign state-run companies.

He also stated that China had already seized around 17 islands in the Maldives through an “opaque leasing process”, which meant that it was something that always started with a real estate project, turning into something else.

This became visible in 2016 when the island of Feydhoo Finolhu was leased off to China despite massive displeasure among the local Maldivians.

The Solih government was a democratic front and was seen to be trying to repair the damage done by the previous government on the relationship between India and the Maldives.

Media outlets presented the election as a victory not just for Solih over Yameen, but also for India over China.

Both its President and the Foreign Minister Abdulla Shahid chose India as their first foreign trip back then.

India’s Prime Minister Narendra Modi too visited the island nation for the swearing in ceremony of President Ibrahim Solih.

The Cost Involved

The estimated amount owed by the Maldives to China as overall debt in 2018 was said to be around $1.5 billion, roughly amounting to around $4,000 per Maldivian.

The Maldives has an annual revenue of around $1.7 billion and a GDP worth $4 billion. Hence, the new government headed by Ibrahim Solih is unlikely to dismiss the agreements signed with China by the previous government as that would mean them attracting large sums of penalties.

The FTA signed by the Yameen establishment allowed foreigners to own lands in the Maldives if they agreed to reclaim 70 percent of it from the sea and invest over $1 billion in the Maldives.

The law also states that the Maldives cannot impose tariffs on imports from China. The Maldives’ external debt owed to China amounts to 70 percent of its total external debt.

Chinese companies were awarded numerous infrastructure projects, such as the upgrading of the Velana International Airport ($830 million), construction of the Sinamale Bridge ($200 million) and the Hulhumale Phase II housing project ($434 million).

It has been estimated that the loan repayments cost the island nation $92 million a year in repayments – around 10% of its GDP.

Given this level of his country’s indebtedness to China, it’s yet to be seen how the Maldives under President Solih goes the extra mile in balancing ties with India, over and above the exchange of warm diplomatic pleasantries.

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