During a trip to the Maldives on Wednesday, U.S. Secretary of State Mike Pompeo announced plans to open the first U.S. Embassy in the country as the United States seeks to check China’s growing influence in the region, and as small island nations increasingly find themselves caught in the crosshairs of an escalating geopolitical tussle between Washington and Beijing.
The announcement, which follows the signing of a new defense agreement between the United States and the Maldives, a string of islands in the western Indian Ocean, comes as the country has been drawn deep into China’s so-called debt-trap diplomacy and is estimated to have racked up some $1.4 billion in debt to Beijing.
“The Maldives has a tiny number of embassies, so it’s always a statement when anyone makes a point of committing to opening an embassy there,” said Andrew Small, a senior trans-Atlantic fellow with the German Marshall Fund’s Asia Program.
Some Chinese investment in infrastructure projects, such as a bridge connecting the capital, Male, to a nearby island that is home to the country’s main international airport, has been a boon for the tourism-dependent country. But observers fear the scale of the country’s debt relative to its $5 billion GDP could be used as a Trojan horse for political leverage and power.
In Sri Lanka, the government handed control of the Hambantota Port and 15,000 acres of land around it to China in 2017, giving Beijing a strategic foothold off of the coast of India, after it was unable to pay back Chinese loans used to build the port.
During a visit to Sri Lanka on Wednesday, Pompeo lashed out at China, calling the Chinese Communist Party a “predator” and the United States “a friend and partner.”
“What America offers almost always is companies and private investment, partnerships, and friendship. That’s how we roll in the United States,” Pompeo said in an interview with Sri Lanka’s Derana TV. “We won’t show up with state-sponsored enterprises. We won’t show up with debt packages that a country can’t possibly repay. We won’t attempt to use that debt to extort actions by the government.”
But Sri Lanka, which has increased its economic and political ties with China, appeared reluctant to be drawn into the great-power competition despite Pompeo’s messages. “#SriLanka will always maintain a neutral stand in foreign policy and will not get entangled in struggles between power blocs,” Sri Lankan President Gotabaya Rajapaksa said on Twitter following Pompeo’s visit.
“Maldives is in a worse situation economically than Sri Lanka; it has a smaller economy, and a larger portion of its foreign debt is to China than Sri Lanka’s is,” said Nilanthi Samaranayake, the director of the Strategy and Policy Analysis program at CNA. But she added that the threat of Chinese influence in the Maldives was offset by the country’s long-standing security and defense ties with India.
While much has been made of China’s debt-trap diplomacy, Samaranayake noted in a paper last year that smaller South Asian countries are also at risk of falling into a “middle-income trap,” whereby they become wealthy enough to lose access to concessional assistance from international institutions but have difficulties seeking further assistance from other countries. “China is sort of a fallback option when they want to pursue these types of loans,” she said.
A change of government in the Maldives in 2018 provided an opening for the United States as the authoritarian President Abdulla Yameen Abdul Gayoom, who had steered the country deeper into China’s and Saudi Arabia’s orbits, was voted out and replaced by President Ibrahim Mohamed Solih. Solih quickly moved to reorient the country’s foreign policy back toward India.
“This is one of the sort of principal big success stories for the U.S., for India and others in the region in the last few years … the return to democracy [in the Maldives], but also effectively having a kind of friendly state in this strategically important maritime location,” said Small of the German Marshall Fund.
While the temptation of Chinese loans is alluring, analysts say many countries are increasingly aware of all the strings that come attached. “If you’re a dictator and you want to have your pockets lined, the Chinese approach is better. But if you are a democratic society, looking at the long-term costs and benefits [of Chinese financing],” said Jeff Smith, a research fellow with the Heritage Foundation’s Asian Studies Center, “I think the U.S. still has a compelling case to make.”
The U.S.-India relationship has strengthened in recent years as the countries have joined forces to check China’s increased assertiveness in the Indo-Pacific region. On Tuesday, Pompeo and Defense Secretary Mark Esper were in New Delhi, the first stop on a tour of four nations in Asia that Pompeo said will focus on the “threats” posed by Beijing.
“Our leaders and our citizens see with increasing clarity that the CCP (Chinese Communist Party) is no friend to democracy, the rule of law, transparency, nor to freedom of navigation, the foundation of a free and open and prosperous Indo-Pacific,” Pompeo said on Tuesday.
Pompeo and Esper signed a major new military agreement with their Indian counterparts during the trip, which would give New Delhi increased access to U.S. geospatial intelligence required for targeting missiles and armed drones. The move comes as India and China are locked in an intense standoff at their shared border in the Himalayas, the most significant escalation of tensions in over four decades.
The Maldives aren’t the only small island nation to be roped into the Trump administration’s campaign to counter China. In August, Esper visited Palau, a small Pacific island nation that has diplomatically aligned itself with the United States and is one of only 14 countries to have formal diplomatic relations with Taiwan rather than China. Esper was the first U.S. defense secretary ever to visit Palau.
A 2019 study by the Rand Corp., the Pentagon’s go-to think tank, described a group of small island nations in the Pacific as “crucial to the promotion of Washington’s Indo-Pacific Strategy” and “tantamount to a power-projection super-highway running through the heart of the North Pacific into Asia.”
While the Maldives lies outside this so-called highway, its geostrategic importance is cut from the same cloth, presenting the latest front in the simmering diplomatic battlegrounds of so-called great-power competition between Washington and Beijing.
Last month the largest province in the Solomon Islands, an archipelago off the northeast coast of Australia, announced plans to hold an independence referendum after the national government announced last year that it would end its 36-year relationship with Taiwan to establish diplomatic relations with Beijing.
Weeks after the announcement, Washington pledged $25 million in aid to the province, which is 500 times the total amount of aid received by the province from all countries in 2018, according to Australia’s ABC news.
A public affairs officer for the U.S. Embassy in Papua New Guinea, which is also responsible for the Solomons, told ABC that the move was not motivated by geopolitics and that the aid had been planned for two years.
