Ocean-going ships have always been a larger and more important mode of transport for sending goods from China and the Far East to the rest of the world than by camel caravans trudging along some imaginary “Silk Roads” through the deserts and over the mountains of Central Asia. And, in this regard, it is of crucial importance to China to have unhindered access to shipping lanes across the Indian Ocean.
In April 2023, Darshana M Baruah of the Washington-based Carnegie Endowment for International Peace testified before the US House of Representatives Foreign Affairs Committee on the Indo-Pacific saying: “Nine of China’s top ten crude oil suppliers transit the Indian Ocean. The Indian Ocean is also the primary theatre of transit for China for engagements with Africa, [the] Middle East, island nations, and littorals across the vast ocean. Going beyond, it is also the main trading route between China and Europe.”
China’s interest in the Indian Ocean is therefore clear, Baruah said, “at least on the economic side,” adding that “as history will tell us, the flag follows trade. There is little doubt in the strategic importance of the Indian Ocean for China and this interest will only continue to grow.” Such important trade routes need protection, and that is why the Chinese for the first time in history are busy building a blue water navy – and now have a naval base in Djibouti. It is an ideal place from which shipping lines from the Indian Ocean and onto the Red Sea and the Suez Canal can be supervised and, if necessary, defended.
There was also another reason why China chose to establish its first overseas military base in Djibouti. It is easier to set up a military base in Djibouti than anywhere else in the world. Small countries with few natural resources often become financial centres and tax havens in order to raise revenue and sustain their status as independent nations. Djibouti decided to take advantage of its strategic location and lease out plots of land to foreign countries where they can build military bases. France, the formal colonial power from the days when Djibouti was French Somaliland, has the oldest base in the country, now housing 1,450 men from the army, air force and navy.
After the terrorist attacks in New York and Washington on 11 September 2001, the US military took over Camp Lemonnier, an old French Foreign Legion base, and turned it into a modern facility. Some 4,000 Americans are stationed there along with aircraft, drones and naval vessels. Japan’s only overseas military base is also in Djibouti with 600 men from the Japanese navy and air force. The Italians have a military support base there as well, while troops from Germany and Spain are hosted by the French. In June 2023, Saudi Arabia announced its intention to build a military base in Djibouti.
The Chinese reached an agreement with the government of Djibouti to build a base there in 2015, and, two years later, it was officially opened when ships from China’s South Sea Fleet docked at the facility. Today, about 2,000 naval personnel are based there and the Chinese have built a pier long enough to accommodate aircraft carriers as well as a 400-metre runway with an air traffic control tower. While all the other foreign bases are located south of Djibouti City, the Chinese base is located close to the Port of Doraleh, 5 kilometres west of the capital.
It could be argued that one Chinese base in a foreign country is nothing compared to the hundreds of military bases the US maintains across eighty countries in all continents. But it is a new development, which should be seen in the context of Beijing’s long-term vision of gradually becoming the most powerful force in the Indian Ocean.
The Djibouti facility may be China’s only permanent naval base so far, but Chinese contractors are involved in upgrading existing ports and building new ones across the region: Kyaukpyu in Myanmar, Chittagong (now Chattogram) in Bangladesh, Hambantota in Sri Lanka, Gwadar in Pakistan and Ream in Cambodia, which is purely a military facility.
The BRI in the Indian Ocean region is an important component in that strategy, and Djibouti was one of the first countries to show interest in the BRI, joining it officially on 1 September 2018. The construction of the US$590 million Doraleh Port began before that, in 2015, and it was inaugurated two years later – the same year as the Chinese military base was opened. The port was built by a Chinese contractor and initially partially owned and operated by DP World and China Merchants Holdings. Although the Djibouti government took over its container facility in 2018, Chinese companies remain its main users.
Apart from the port, the Chinese have also invested in infrastructure projects, including the 752-kilometre-long Djibouti–Addis Ababa railway that was built to provide Ethiopia with a new outlet to the sea after the loss of Eritrea, which became independent in 1993. Djibouti’s share of the cost of the railway includes a US $ 492 million loan from China, and it is doubtful whether Djibouti will ever be able to repay it. Other loans have funded a pipeline to transport natural gas from Ethiopia to Djibouti for export to China, and a free-trade zone and business centre near Doraleh. The outcome could be that Djibouti, like several other countries that have accepted Chinese loans, ends up in a debt trap with a possible loss of strategic assets.
Involvement in such massive development projects sets the Chinese apart from the operators of the other foreign bases in Djibouti. They are only paying rent or, like the US, support in education, health, governance and democracy programmes.Or France, which has an ordinary defence agreement with Djibouti and finances a project aimed at improving the livelihood of farmers. Since French is the official language of Djibouti, the government in Paris also provides students with scholarships to institutions of higher learning in France. In Djibouti, as elsewhere, the BRI is tied to China’s geostrategic interests.
Sri Lanka is the only of the Indian Ocean countries so far that had to hand over an important asset because it was unable to repay Chinese loans. According to Cissy Zhou, a staff writer for Nikkei Asia, Sri Lanka has been a supporter of the BRI from the very beginning in 2013 and “has frequently been depicted by China critics as falling into an alleged ‘debt trap’, enticed into accepting unsustainable loans for infrastructure projects and allowing Beijing to gain strategic or military influence by seizing assets in times of financial distress.” And the critics are right. That was exactly what happened in 2017.
The Chinese government financed the first phase of the construction of a new port at Hambantota on the southern coast of Sri Lanka. It was supposed to benefit from its location along the shipping route from the Malacca Strait to the Suez Canal and was a showcase project, which the then President Mahinda Rajapaksa launched shortly after the Sri Lankan government in 2009 had won a twenty-seven-year-long war against the separatist Liberation Tigers of Tamil Eelam (LTTE), or the Tamil Tigers.
The Exim Bank of China lent an estimated US$306 million to the project, while the Sri Lanka Ports Authority’s share was around US$46 million. The interest rate was set at an exorbitant 6.3 per cent and the loan had to be repaid in biannual instalments over a period of eleven years. The China Harbour Engineering Company was contracted to build the port, and the second phase of the project became even costlier: US$800 million at the same interest rate.
The port was never a success and did not generate any substantial revenue. Sri Lanka defaulted on the loan and the then Prime Minister, Ranil Wickremesinghe, had to go to Beijing to try to solve the issue. The solution was that a new entity called the Hambantota International Port Group (HIPG) was created to take over the project. It became a joint venture after China Merchant Ports, a Hong Kong-based, Chinese-controlled company, bought an 85 per cent stake in HIPG and was awarded the sole right to operate and develop the port for ninety-nine years. In effect, Chinese interests took over the port and it will remain in Chinese hands at least until the year 2116. Although the Sri Lankan government has repeatedly said that the port is purely for commercial use and no Chinese naval vessel will be permitted to use it as a base, the Australian defence expert David Brewster believes that such a scenario cannot be ruled out: “New Delhi worries that China’s influence will one day reach a point where the Sri Lankan government simply cannot say no.”
The fate of a nearby, new international airport looks no better. A loan to cover US$190 million of the total cost of US$209 million was provided by the Exim Bank of China. But because it is located far from the capital, Colombo, and major tourist centres, the Mattala Rajapaksa International Airport – “Mattala” after the nearest town and “Rajapaksa” after the President – became a financial burden as well. India stepped in and pledged to pay US$300 million for a joint venture that would get a forty-year lease to the facility. In effect, India would buy out Sri Lanka’s debt to China and, in the process, hopefully get some goodwill in its island neighbour. But that deal fell through and Sri Lanka is stuck with what has been described as the world’s emptiest international airport. And yet another huge debt to China.
But Sri Lanka seems unfazed. Wickremesinghe went to China in October 2023 to participate in the celebrations of the tenth anniversary of the BRI, and assured Xi of Sri Lanka’s continued active participation. Sri Lanka’s total foreign debt amounts to US$46.9 billion, of which 52 per cent is owed to China, the largest lender. Eager to minimise China’s influence, India has provided Sri Lanka with US$4 billion in assistance to mitigate its worst economic woes. But that may not be enough for India to reassert the influence it had in Sri Lanka before the Chinese arrived in the early 2000s.
Today, China is also the main supplier of military hardware to Sri Lanka’s armed forces, and Chinese weapons helped the government defeat the LTTE. China helps train Sri Lankan military personnel as well. Colombo has repaid China diplomatically by supporting its “one China principle” – that Taiwan is part of China – and Sri Lanka was one of the fifty-three countries that supported China’s crackdown on its pro-democracy movement in 2020 and the draconian security laws that were imposed on the former British colony Hong Kong.
Before international tourism to the Maldives began in the 1970s, Sri Lanka – or Ceylon in the old days – was the main gateway to the islands, first by ship and, after an airport was built in 1960, by plane. There was also a weekly flight to and from Trivandrum (now Thiruvananthapuram) in southern India and irregular flights, but only for British military personnel, to a Royal Air Force base on Gan Island in the southern Addu Atoll. That base was established in 1941 and closed in 1970. Today, land has been reclaimed to enlarge Hulhule, the island on which the Maldives’ airport was built, and a bridge links it with the capital Male, a separate island. The airport has direct flights to Europe, the Middle East, Japan, China, Singapore and Bangkok. The Maldives has successfully promoted its islands and coral atolls as a destination for luxury tourism, and the country has prospered as a result.
Before tourism took off, no buildings in Male were taller than two storeys and the roads were unpaved. It is now a modern city with high-rise buildings and shopping centres. But in order to shield the local Muslim population from the sight of scantily clad tourists, all resorts are located on outlying atolls to which foreign visitors are carried by speedboats directly from the airport. More than half of the people who work in those resorts come from India, Sri Lanka, Nepal, Indonesia, Bangladesh and the Philippines. Many managers are Westerners. The resorts are a world apart from the rest of the country.
China’s interest in the Maldives – as expressed by President Xi Jinping when he visited the islands in September 2014 and told fairy tales about a ‘Maritime Silk Road’ and Zheng He’s supposed exploits to his hosts – is not, needless to say, primarily in the booming and highly lucrative tourism industry. The Maldives may be a small country in terms of land area, 298 square kilometres, and with a population of only 515,000, but its exclusive economic zone covers about 859,000 square kilometres of ocean and its more than a thousand widely scattered islands offer strategic vantage points from which to monitor, even control, vital shipping lanes from East and Southeast Asia to the Middle East and Europe.
Excerpted with permission from The End of the Chinese Century? How Xi Jinping Lost the Belt and Road Initiative, Bert Litner, HarperCollins.
