Nasheed reignites ‘debt trap’ row with Chinese ambassador

Speaker of Parliament Mohamed Nasheed drew a sharp rebuke from the Chinese ambassador on Friday after repeating accusations of China grabbing land and dragging the Maldives into a debt trap.

In multiple interviews during a visit to India last week, Nasheed contended that Chinese-funded infrastructure projects were carried out at inflated costs and designed to allow China to demand an ownership stake. “Assets created by debt is not equal to it, so we can’t pay the debt. When you are unable to pay debt, they ask for equity and with equity we very often relinquish land and sovereignty,” the former president told ANI.

Nasheed, president of the ruling Maldivian Democratic Party, also declared that a free trade deal signed with China by the previous administration was “dead” as parliament would not pass legislation needed to implement zero tariffs.

“In terms of other construction contracts, we must get the contracts done. We can’t stop them halfway,” he told WION. “It will not do any good to anyone. At the end of the day, we have to pay the bill but my point view is, the Chinese government must restructure the debt and it is up to them to do it and I hope they will do it.”

Nasheed vowed to continue raising the issue at every platform despite angry denials by China. As on previous occasions, Chinese ambassador Zhang Lizhong hit back at the “sensational but baseless remarks” with a series of tweets.

Part 1. Again, sensational but baseless remarks on China by some Maldivian politician! Does China grab Maldivian land? Absurd! China’s investment in Maldives is no different from any other country.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Part 2. So far, only a few Chinese private companies invested in Maldivian tourism islands, not yet operational.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Part 3. Reconstruct debt to China? My answer is: please honor the agreements. It is good to uphold the credibility of a sovereign country.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Part 4. On China-Maldives FTA, I trust Maldivian Government will make wise choice on an agreement already signed by the two governments after years of negotiations and consultations on equal footing.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Part 5. Debt trap? It is a fiction. China is a contributor, not a trap maker. China is a development partner and biggest tourist source market for Maldives.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Part 6. We hope Maldivian politicians have an objective and responsible attitude on bilateral ties, cherish what we have achieved so as to keep this important relationship on healthy and correct track.@MohamedNasheed @ibusolih @abdulla_shahid

— Amb. Zhang Lizhong (@AmbassadorZhang) December 13, 2019

Nasheed previously clashed with Lizhong over the scale of the debt owed to China. Citing statistics from the Maldives central bank, the ambassador said it was US$1.5 billion out of a total national debt of US$3.2 billion. But Nasheed argued the figure was US$3.5 billion when private loans and sovereign guarantees were taken into account.

“Our GDP is about five billion dollars, but in 2022, we will have to pay China 700 million dollars,” he told reporters in India.

The speaker’s criticism has been at odds with the more conciliatory and diplomatic stance of Foreign Minister Abdulla Shahid, whose maiden visit to Beijing in September was hailed as a restoration of political trust between the countries.

Shahid told The Hindu on Friday that there was “goodwill in the Chinese leadership” to discuss the debt Maldives owed. “To be fair to China, it has been a generous donor. It has invested in housing and infrastructure projects. There has been irresponsible borrowing by the previous government and unfortunately we have to deal with it,” he said.

Asked whether he shared Nasheed’s position, Shahid declined to comment. “I think the speaker should be allowed to speak for himself,” he added.

The current administration came to power after criticising debt owed to China – which financed former president Abdulla Yameen’s flagship projects such as the US$200 million Sinamalé bridge – and quickly moved to repair relations with its geopolitical rival India. The foreign minister’s visit to China came nine months after assuming office.