“We will have to renegotiate loans with China, they have to understand it is not commercial,” said Mohamed Nasheed.
Former President of Maldives and current speaker of his country’s parliament Mohamed Nasheed at a fireside during the Kigali Global Dialogue in Kigali, Rwanda, praised India’s partnership in Maldives’ development, pushed back against China’s high cost “commercial” involvement and made a stirring case for political and institutional leadership in renewable energy planning. A leading voice on climate change leadership, Nasheed is pushing the international community to “do the sums” and assess the impact of climate change not as an ethical or moral issue but as one which has fundamental implications of economic viability.
Speaking extensively on a hot button issue, Nasheed revealed that India’s GMR company submitted a $77 million quotation for the Male-Hulhumale bridge but the project went to China’s CCCC company which has sunk Maldives into a $300 million debt for this project alone. Maldives owes “various Chinese companies” over $3.4 billion and will double down on renegotiating the debt, Nasheed said.
Nasheed spoke with Samir Saran, President, Observer Research Foundation. We bring you excerpts from the interview.
Samir Saran: How do you view the recent politics of Maldives? Do you fear things may turn ugly again?
President Mohamed Nasheed: Not many nations get a second chance on democracy. In 2008, we were able to amend our Constitution and have our first multiparty elections. But then in 2012, we lost it to a coup. Then we had this 5-7 years of authoritarian rule. In 2013, we again had elections but those elections were stolen but we conceded that and we did not want to raise the confrontation and discontent any further. We feared that if we did that (confrontation), the risk of civil conflict would rise. We stayed back and we wanted another election. I wasn’t able to contest because the government wouldn’t allow me to contest. Our parliamentary leader Ibrahim Mohamed Solih contested and we won with a massive mandate. After that we had parliamentary elections. Your question is, are we going to vote again? Can we stabilise? I think we will stabilise. I also think our development partners, especially India, do understand what’s going on in the Maldives and therefore they would also keep an eye on the situation. Most recently India has assisted in our development a lot. Recently, when our President visited your country, India has pledged $1.4 billion of assistance. So, that is going to go a long way. We think the future is bright.
Most recently, India has assisted in our development a lot. Recently, when our President visited your country, India has pledged $1.4 billion of assistance. So, that is going to go a long way. We think the future is bright.
Saran: There’s a second significant partner you have engaged with — China. I invoke them because they too have invested in infrastructure projects the Maldives. They too have invested in the Maldives, they are significant economic actors anywhere in the world, they have a big treasury to disburse loans and assistance and aid. How do you assess your relationship with these two emerging actors with the ability to shape development agendas?
Nasheed: Everyone must understand that we are an Indian Ocean country. India is just a few miles away from our northernmost island. We read the same books, we watch the same films, we eat the same food, we listen to the same music, we are the same people! People to people contact and dialogue between India and the Maldives runs far back than any other countries. Also because of geography, we are right next to you, so everyone must understand our relationship with someone else cannot be at the expense of our relationship with India. We are trying to tell everybody that yes, we want to have friends, we want to have good relations but please don’t try and suggest that that relation should be at the expense of something else. Once China understands that, and I think they will understand that, we will have far more stability in the Indian ocean. The Maldives does not want to be sandwiched in between hostilities between any two countries. In terms of contribution from China, much of it was commercial loans from commercial banks and most of the projects were priced very high. They came in, they did the work and sent us a bill. It’s not the loan interest rate as such, but the (high) costing itself. For instance, for the (Male- Hulhumale) bridge, GMR gave us a quotation for $77 million and the Chinese gave us a bill for $300 million. What we are seeing is that in other countries, they are asking for equity and with that we relinquish both land and sovereignty.
For the (Male- Hulhumale) bridge, GMR gave us a quotation for $77 million and the Chinese gave us a bill for $300 million. What we are seeing is that in other countries, they are asking for equity and with that we relinquish both land and sovereignty.
Saran: Your country, although the per capita income is many times that of India, your economic size is small. How does a country of Maldives’ size manage this Chinese debt diplomacy as it were. Will you need help from others to get out of this? What is the plan?
Nasheed: First, we have to save. We owe about $3.4 billion to various Chinese companies. Come next year, 2020, we will need to spend 15% of our budget to pay 15% for education and 15% for health. I can’t see how our development can be that rapid and that amount of growth to have that amount of saving. So, we will have to renegotiate. China must understand that this is not commercial.
Saran: Has the new Government reached out to China?
Nasheed: Yes, the foreign minister has visited China. This is not commercial. What happened between the Chinese EXIM bank and the Chinese state owned enterprises is not commercial and therefore we must not go into commercial arbitration. I believe China will understand that we cannot handle this.
Saran: How has your appraisal of India’s engagement with Maldives been? Do you have a sense that India should have done more or do you think they have got the balance right?
Everyone must understand that we are an Indian Ocean country. India is just a few miles away from our northernmost island. We read the same books, we watch the same films, we eat the same food, we listen to the same music, we are the same people!
Nasheed: They have got it right. I have been very critical but after seeing everything, what I know is that they have struck the right balance. Indian diplomats are clever and they have done an excellent job. Hats off.
Saran: Now, moving to climate change without getting into its politics. The reality is that sea waters are rising. Some parts (of the globe) are getting warmer, some parts are getting colder. Bio-diversity is shrinking, plants are dying, the earth is scorched. You have been ahead of the world in terms of climate change leadership. You hosted your first cabinet meaning under water to shock the world into understanding the urgency of climate change. That was 10 years ago. Has the global governance mechanism failed to respond and create a viable framework to respond to perhaps the most significant challenge of our times?
Nasheed: Has the UN failed? If we take climate change as an ethical issue or a human rights issue, it is very difficult to go forward. But once we start seeing it as an economic issue and its economic viability, then things look very different. The economic viability of renewable energy and low carbon development is not because of UNFCCC. The power purchasing agreements in Germany and solar panels in China meant that these things were available to everybody. Now, in any given situation, solar is cheaper than coal. The business case for solar is strong. India became the largest installation base for solar last year. But India has invested a lot in coal (stock) and we (Maldives) have invested a lot in diesel. Many countries are in this problem. The electricity departments are unwilling to get into power purchase agreements for renewable energy because they are already locked in. We need to get into some arrangement to buy off or retire these old plants. If the World Bank and the financial institutions can find a mechanism to buy out existing coal plants and existing diesel and then decommission them.
The World Bank and the IMF have not even done the sums. They have not thought about retiring and decommissioning a coal plant.
Saran: Let’s go back to the international financial system. Unfortunately for countries such as India and Maldives and some others, while we may be loud voices and a big market, the decisions are still being made in New York and London…
Nasheed: The World Bank and the IMF have not even done the sums. They have not thought about retiring and decommissioning a coal plant. Instead of spending their money on new plants even if it is renewable, it will be better for them to buy existing plants and decommission them and allow the market to come up with a viable economic solution.
Saran: In many countries of the world, this could work but energy access is still a mirage in many places. It is incumbent on the state to provide that public utility. If you were to take a 100 million debt from a country, your monetary policy will go for a toss because your GDP size is so small. So, for these countries even getting international loans at discounted prices is very hard.
Nasheed: Look, in Africa, there are no plants. They did not have phones. Now, you have more communication happening with new technology. Fortunately, most of Africa is not powered by coal plants because they are not powered at all. So, the new plants when they come up, it should must be renewable. If they do the sums, if they come up with these pledges and these kinds of views and ideas and policies and run elections based on that…
Fossil fuel is Victorian technology. It’s cumbersome, it’s old, it’s obsolete. You don’t touch it, it’s unviable.
Saran: Is it time for people like you to mobilise political leaders around the world and come up with a climate manifesto?
Nasheed: It is the Planet B manifesto. For the 2018 elections in the mountains, that’s exactly what we did. Everything was environmentally sustainable. When people lose elections, the losers would be thinking of a manifesto for the next election. That’s the time to go and tell them — look you’ve been trying to sell this old idea and there are no buyers anymore. The minute you come up with something new, you can promise jobs, health centres, transport, education, schools, everything — but in renewables. Fossil fuel is a Victorian technology. It’s cumbersome, it’s old, it’s obsolete. You don’t touch it, it’s unviable.