China debt dogs Maldives’ ‘bridge to prosperity’

by BBC

Airport bridge in Male, built with Chinese investmentImage copyright
Anbarasan Ethirajan/BBC

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Before the bridge people had to travel to the capital by boat

For years Aminat Waheeda drove her taxi along the narrow lanes and congested roads of the Maldives capital looking for passengers. The most lucrative fares – airport arrivals – were out of reach.

The airport serving Male is on a different island and a speedboat was needed to get between the two.

In 2018, that all changed, as did Ms Waheeda’s life. And the single mother of two teenagers has China to thank.

A 2.1km (1.3-mile), four-lane bridge built with $200m (£148m) from Beijing means Male’s taxi drivers can now pick up passengers right from the airport entrance.

“After the bridge was built, transportation got easy for everyone,” she says. “[It] has helped taxi drivers like me to earn more money.”

In fact, her income doubled.

Image copyright
Anbarasan Ethirajan/BBC

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Amina Waheeda and other taxi drivers used to be unable to pick up fares at the airport

The bridge, the first built between any islands in the Maldivian archipelago, has also led to a boom in new property and commercial developments on the island of Hulumale where the airport is located, easing congestion in the capital for its 140,000 residents.

Chinese infrastructure projects in developing countries have been criticised, but the Sinamale bridge – or the China-Maldives Friendship Bridge as it’s also known – could be seen as a real success.

However the current Maldives government doesn’t see it that way. It is alarmed by how much money this tiny, tourism-dependent nation now owes China.

The bridge was one of several major projects built under Abdullah Yameen, a pro-China president elected in 2013. He wanted to kickstart the economy and borrowed hundreds of millions of dollars from China to do so.

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Getty Images

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Chinese President Xi Jinping (left) pictured with Maldives’ former President Abdulla Yameen

At the time Chinese President Xi Jinping was embarking on his grand “Belt and Road Initiative” to build road, rail and sea links between China and the rest of Asia, and far further beyond.

Mr Yameen’s tenure was also marked by allegations of human rights abuses, which he denies. Many opposition politicians, including the former president Mohamed Nasheed, were jailed.

But in September 2018, weeks after the bridge opened, Mr Yameen suffered a surprise election defeat to his rivals, the Maldivian Democratic Party, with the MDP’s Ibrahim Solih becoming president.

The change of guard also enabled Mr Nasheed to return and re-enter politics.

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Anbarasan Ethirajan/BBC

Image caption

Chinese money has brought a boom in new property and commercial developments in Hulumale

The new government soon began looking into the nation’s finances. What they found shocked them.

“The [Chinese debt] bill was $3.1bn,” Mr Nasheed, now Speaker of parliament, told me. The figure included government-to-government loans, money given to state enterprises and private sector loans guaranteed by the Maldivian government.

He is worried his country walked into a debt trap.

“Can these assets produce enough revenue to pay back the debt? The business plan of none of these projects has any indication to suggest that it will be able to pay back the loan.”

He argues the cost of projects was inflated and the debt on paper is far greater than the money actually received – which he says was only $1.1bn, although he hasn’t released documents to back up his sums.

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Getty Images

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Mohamed Nasheed is worried the country borrowed too much money

Former Maldivian officials and Chinese representatives point out his lack of detailed accounting. They put the figure Male owes China between $1.1bn and $1.4bn – still a huge sum for the islands.

The Maldives GDP is around $4.9bn and if you go by Mr Nasheed’s figures, then the debt is more than a half of the country’s annual economic output. If government revenues fall it may struggle to repay the loan by 2022-23.

If the Maldives defaults, Mr Nasheed worries his country could face the same fate as nearby Sri Lanka – it owes billions of dollars to China after borrowing to rebuild after years of civil war.

Among the projects, the Sri Lankan government spent nearly $1.5bn on building a port in Hambantota. But within a few years the port proved to be economically unviable and Colombo defaulted on its loan commitment.

After the debt was restructured, a Chinese state-run enterprise acquired a 70% stake in the port on a 99-year lease in 2017. In addition, Sri Lanka also agreed to give 15,000 acres around the port to China to build an economic zone.

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Hambantota port in Sri Lanka was funded by Chinese money

For China, the port is a valuable strategic asset overlooking one of the busiest shipping lanes in the Indian Ocean. The port is also a few hundred kilometres off the southern coast of China’s rival, India.

Last year US Secretary of State Mike Pompeo hit out at China for what he described as “corrupt infrastructure deals in exchange for political influence” and using “bribe-fuelled debt-trap diplomacy”.

Beijing rejected his comments as “irresponsible”.

In a rare BBC interview, the Chinese ambassador in Male, Zhang Lizhong, also dismissed t

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