Maldives says China to lend it $500 million

Tuesday, 4 September 2012 00:30 - - {{hitsCtrl.values.hits}}

MALE (Reuters): China will grant $500 million in loans to the Maldives, its president said on Friday, underscoring Beijing’s growing ties with the politically troubled Indian Ocean nation.

The loans will comprise “an agreement for a $150 million, primarily for infrastructure and housing projects”, plus $350 million provided by China’s trade-focused Eximbank, Mohamed Waheed told Reuters in an interview. He gave no further details.

China has in recent years ramped up its presence in the Maldives, where it competes for influence with Asian rival India.

Waheed travels to China on Friday, leaving a country hit by street protests organised by his predecessor Mohamed Nasheed, who has called on supporters and the army to oust the government by force.

The Maldives, a nation of 1,192 islands famous as a haven for tourists with pristine beaches and high-end resorts, has witnessed a huge influx of Chinese visitors in recent years.

China hastily set up an embassy in the Maldives ahead of a South Asia summit last year that India also attended - becoming one of only a handful of countries with a full diplomatic presence there.

A spokesman at the embassy in Male said late on Friday the loan package from Beijing was not confirmed but would be announced during Waheed’s visit.

“The purpose of this visit is we have a growing relationship with China,” said Waheed. “The most tourists from one nation are coming from China. So it is really important to have a good relationship and to also encourage Chinese tourists to continue to come to the Maldives.”

Former president Nasheed was seen as having closer ties to New Delhi, which has long been concerned by any moves Beijing makes to boost its presence in neighbouring countries, citing the so-called “string of pearls” ambition to expand Chinese maritime influence in the Indian Ocean and beyond.

‘Protests will die down’

Waheed took power in February in what Nasheed says was a coup at gunpoint by mutinying police and soldiers. A Commonwealth-backed commission into the incident rejected that claim in a report released on Thursday.

Nasheed tried and failed to wrest back power this week by sending thousands of his supporters onto the streets to protest against what they said was an illegal government. Police arrested at least 12 people in the early hours of Friday.

“I am expecting these protests to die down now because we have established ... a formal, fairly respectable process,” Waheed said. “Therefore there is no need for street-level actions, because there is a way to discuss through the parliament.”

The Maldives, a sultanate for almost nine centuries before becoming a British protectorate, held its first fully democratic elections in 2008. Nasheed defeated Maumoon Abdul Gayoom, an autocrat who was then Asia’s longest-serving leader, having been in power for 30 years.