Mutual Fund

South Asia geopolitics: Contain China with the Quad

There’s good news for India from the Indian Ocean nation of the Maldives. And it comes primarily in the form of its new president, Ibrahim Solih, being sworn in last Saturday after defeating the incumbent, Abdulla Yameen, against all odds. Solih, upon taking up presidentship, almost immediately sought a review of China-backed projects in the archipelago nation After Sri Lanka and Malaysia, Maldives is another country in the region whose people have expressed its opposition to their country’s leadership signing up for projects with China under the latter’s Belt and Road Initiative (BRI) and has led to a debt trap. Change in the Maldivian regime, however, isn’t going to bring any relief to countries that have taken substantial Chinese loans already and cannot service the debt. Sri Lanka already lost the Hambantota port when it signed a lease agreement with China on a 99-year lease for $1.12 billion. Projects like the ‘Friendship Bridge’ in Male have already been completed, and others are underway. Already, over 70% of Maldives’ foreign debt is owed to China, of which the loan interest alone is more than 20% of the country’s budget. Malaysia cancelled all its projects with China before they could reach a stage where pullout was impossible. Prime Minister Mahathir Mohamad described the decision to avoid “a new version of colonialism”. India, the US, Japan and Australia who form the Quadrilateral — Quad —have pledged to help infrastructure and connectivity projects, and to keep the oceans free and open. India has also initiated talks with the US to partner it in joint investment in infrastructure development, energy, transport, tourism and technology. The Quad must work together on infrastructure and connectivity projects, and capacity building for better synergies to avoid duplication of work and waste of resources It should involve the private sector that invests and develops a sustainable business model. This will ensure investments or loans are viable, and not become white elephants for the recipient country. India, the US, Japan and Australia should together work on helping smaller countries with their existing debt. It can be by grants, loans or through international lending institutes.

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