Why is Australia opening a High Commission in the Maldives?

By Selam Kumlachew, Research Intern

The Maldives plays a critical yet overlooked role in the Indo-Pacific. As a small island nation just south of India’s coastline, the country of just over a half a million people is uniquely challenged by increased competition between India and China for maritime dominance in the Indian Ocean.

The Maldives is at the centre of Indo-Pacific geopolitical competition.

Its geographic location and vicinity to key Indian Ocean shipping routes makes the archipelago strategically significant – opening it up to power competition. As China seeks to expand its regional influence, and India looks to maintain its longstanding partnership with one of its closest neighbours, the Maldives has gained international attention. And now Australia is starting to direct its interests toward these power dynamics – with the opening of a High Commission in Malé later this year.

In recent years, Maldives’ alignment with India or China has shifted depending on political leadership. As the Maldives prepares for presidential elections in September, the outcome will have a major effect on the region.

A competition for influence

India is the Maldives “closest ally”, and this relationship is critical for its national security and economic prosperity. Current President Ibrahim Mohamed Solih is a champion of the India-Maldives relationship – during his tenure, India has invested in a number of big-ticket infrastructure projects.

India and the Maldives have a strong history of defence ties, underscored by their 2009 Defence Cooperation Agreement. Due to its vulnerable geography, small population, and limited military capacity the Maldives is dependent on India for its protection.

India contributes towards capacity building for the Maldives’ defence forces, including investing in the Maldives’ Uthuru Thilafalhu naval base, military aircraft and training facilities. Since 2009, India and the Maldives have participated in an annual interoperability-focused joint military exercise, “Ex Ekuverin”, or “Friends”.

On the economic side, India has invested in several infrastructure projects including the Greater Malé connectivity project and the Hulhulmalé cricket stadium. And these investments are substantial – for example a $500 million package of support India announced in 2020 included not just the Greater Malé Connectivity project (at a price tag of $100 million) but also a $400 million line of credit.   

At the same time, China is also stepping up its engagement with the Maldives. Under former President Abdulla Yasmeen, the Maldives signed onto China’s Belt and Road Initiative in 2014 – making it the first South Asian country to do so. Since then, the Maldives has become one of China’s greatest debtors – currently owing about 30 per cent of its gross income. Former President Yameen also pushed for the amendment of the national constitution in 2015 allowing for foreign ownership of land, which was interpreted by many as a step toward the development of a Chinese naval base in the Maldives.

The Maldives plays a major role in maritime trade, with a number of major shipping lanes intersecting its waters. This is of great interest to China as it seeks to gain maritime dominance to ensure the security of its shipping routes and supply chains – 80 per cent of China’s oil supplies pass though the Indian Ocean. It has also invested in various infrastructure projects including the Velana international airport project, which saw a Chinese company expand the airport with a new terminal and dock – becoming the world’s largest seaplane operation. China is also involved in a Maldives land reclamation project and the development of several five-star resorts.

The Maldives’ alignment could shift at the upcoming election

Recent developments in the Maldives’ political landscape have complicated the nation’s decision-making on foreign policy. While current President Solih has been consistently pro-India, a growing effort by the pro-China opposition to quash his re-election leaves the Maldives’ future uncertain.

Further complicating things, the Opposition’s presidential candidate, former President Yameen, is currently serving an 11-year jail sentence for money laundering and theft. Despite this, Yameen remains the candidate of choice, hoping that his court ruling is overturned by August 2023, just in time for the election. Yameen’s administration was responsible for the pivoting of the Maldives’ foreign policy to an “India Out”, pro-China rhetoric that welcomed Belt and Road Initiative projects, as well as early talks of a China-Maldives free trade agreement.

While it is difficult to predict the outcome of the upcoming elections, it will undoubtedly have a major impact on whether the Maldives aligns more closely with India or China. Although it is yet to be seen exactly how these political developments will impact the Maldives’ relationships, it is certain that the country will continue to be subject to ongoing geopolitical competition in the future.

Given these rising tensions, Australia’s decision to establish a High Commission in the Maldives is a sound one. Now more than ever, Australia must be attentive to small Indian Ocean states, and the vital role that they play in the region.

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