Maldives Hole Punctures Debt Trap Wall - Granite Grok

Maldives Hole Punctures Debt Trap Wall

Larry Alton Maldives Debt Trap

The Maldivian Government has been in a financial crisis since the early 1990s. To solve this problem, it decided to borrow money from China and other countries. However, after borrowing more than $1 billion, the Government faces issues with its foreign debts. This article will discuss how the Maldivians are struggling to repay their loans.

Chinese President Xi Jinping meets with his Indonesian counterpart Joko Widodo during an official visit in Jakarta, Indonesia, on October 24, 2015. During his regime, the Chinese Government promised 3.4 billion dollars of Investment in unsustainable loans in Belt and Road initiative.

The Belt And Road Initiative (BRI)

China remains committed to investing in developing markets such as South Asia. As part of its Belt and Road Initiative, which aims to connect Eurasia through land routes rather than maritime ones, China plans to invest around US$900bn in roads, railways, ports, and energy pipelines throughout the continent.

However, critics argue that BRI is little more than a thinly veiled attempt to exert political control over smaller states. They point to examples where significant public funds were used to build luxury hotels and shopping malls instead of improving local infrastructure. Furthermore, the initiative has come under fire for allegedly using forced labor and environmental damage to develop new transport links. While much of this criticism focuses on countries along the route itself, others worry that China will use its investments to leverage other regional powers.

The idea of all these investments is to surround India in a “String of Pearl” with significant Investment into the neighboring countries like Bangladesh, where they are building the Chittagong port along with Burma, where they are making the Yangoon. In Sri Lanka, where they build the Hambantota port, Their last layer lies at Male in the Maldives, which completes their “String of Pearls.”

The idea was to dump billions of dollars of Chinese Loans to build infrastructure in these areas and assert Chinese dominance in these small countries with their massive loans, which they gave an unsustainable interest rate. Even the contracts to build this infrastructure were given to Chinese companies, thus increasing their profitability.

The Dark Side Of Such Investments

The problem with such Investment is that these are unsustainable loans dumped in these small economies that cannot repay such large amounts of loans, and when they cannot refund such a massive amount of loans. They lease a part of their nation to the Chinese Government. Such examples are eminent in various countries, but the most talked-about was leasing out of the Harmantotta Port to the Chinese Navy for 100 years lease. The same concept was also applied to Djibouti, and various other nations will also follow Sri Lanka’s lead. This has caused outrage among multiple countries, and many world leaders have understood the destructive potentials of these loans.

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Solutions Or Answers To BRI

Though it was supposed to be a world effort to contain Chinese aggression, few of these world leaders have realized the harmful effects of such “Loan Aggression.” China is a trading partner of most Western Nations. Many have ignored this Chinese expansionism policy. But a Small Island nation of Male has understood the potential of such an Unsustainable Loan on their EconomyEconomy. With a strong Leadership in power, they have slowly moved away from these Chinese Loans.

The Maldives was burdened with a 3.4 billion dollar in foreign debt to China. Now they have turned to India to back their infrastructure projects. India has pleasantly responded to assist the Maldives in the same.

India always wanted a simple presence in the Maldives archipelago, but the BRI project had almost cornered it off from the Archipelago. But now, the Indian Government has returned to the Island with their GCMP Project.

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The GCMP Project

The GCMP project consists of 6.74 Km of long Bridgeway connecting Male to the village Islands of Villingi, Gulhifalhu, and Thilafusi.In sharp contrast to the Chinese projects, which are driven to loans in the interest of the Chinese EconomyEconomy.India will finance this Loan at a grant of $100 million and a line of credit of $ 400 million from India. GCMP will be critical to the Maldivian EconomyEconomy and would connect it to the other four significant Islands of the country where half the country’s population stays.

Besides this, India is also funding several other Infrastructure projects in the Maldives, which include Cricket Stadium and various other Road Infrastructure. It is also investing in building a cancer hospital in Male. There are almost 10 Projects that are currently being funded with Indian Credit in the Maldives.


This is a simple Lesson that World leaders must note that China’sChina’s Debt traps are not needed to hold back the developments. Simple efforts by progressive neighbors can let development come out of such a debt trap, impacting their progress on EconomyEconomy. Instead, they must be assisted to compete and flourish in a friendly environment. The west must note this and must fiercely oppose such unsustainable Chinese investments and empower developing countries to break the debt shackles of Chinese loans.


Concluding, it can be stated that the Chinese have heavily Invested in several Projects in developing or underdeveloped economics to build a strategic opposition to its enemies. But these small developing economies have been hit hard with such policies that they have to lease out certain parts of their own country to clear their debt. Western Nations can join hands with such developing nations and help them break the debt trap as the Maldives has already done.


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