China asks Maldives to repay loan, an eye-opener for all debtor-nations?

Even as the Government of President Ibrahim Solih is battling Covid-19 pandemic, facing heat from the opposition for the government’s India front, and deciphering when to reopen its tourism sector, other issues are beginning to dog the nation. Now, the Solih leadership should also be concerned 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.
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, ‘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. Now, the issue is that such repayment of a private debt can devalue the Maldivian Rufiyaa and impact on its foreign trade and forex reserves.
On 26 July, leaders of the opposition PPM-PNC combine, identified with former President Abdulla Yameen, who has been jailed for graft, staged the ‘One Voice’ protest rally, calling 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.
MDP parliamentary group deputy leader Hussain Shameem in a tweet said 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 jailed.
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, Abdulla 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.
At the delayed hearing of his appeal, 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.
The 26th report of a United Nations 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 that Parliament Speaker Mohammed Nasheed’s placing the report of the Presidential Commission on Deaths and Disappearances on the table of Parliament has jeopardized 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.
In this background, President Solih in his Independence Day address, called upon political actors to prioritize 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.
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 democratization in 2008.
Yet, the President and the MDP have been caught in politically embarrassing situations. 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 criticized 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.’
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 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 honor the Yameen era agreement to purchase a ‘Dornier’ aircraft from India for humanitarian operations.
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.’
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 said that India would soon be announcing a ‘substantial package’ for the archipelago-nation.
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.
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 neighborly relations’ with our closest neighbor,” 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 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.