While some of the specifics of the deal remain unclear, it’s evident that China has been granted the authority to station security personnel on the tiny Polynesian archipelago. This includes both police and military personnel, allowing for the possibility of a PLA Navy military base some 2,000 km off the east coast of Australia at some point in the future.

The deal represents three geopolitical developments worth noting. First of all is the secrecy surrounding the negotiations. This was an agreement that, despite persistent local rumors, no one even knew about until a draft text was leaked in March – including members of the political opposition. The nature of the text was also fairly one-sided, with rights being extended to Beijing for seemingly nothing in return (though in fairness, the quid-pro-quo involved might extend into other areas/agreements not obvious at this time). In sum, given the secrecy of the deal and its corresponding direct deployment of security forces, it allows for Beijing to become directly involved in the domestic politics of the archipelago.

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The proposed host for the military base is Equatorial Guinea, a small central African country of approximately 1.4 million people. Politically, Equatorial Guinea is a one-party state ruled by President Teodoro Obiang Nguema Mbasongo for the past 42 years. The country consistently ranks among the worst in the world on human rights, with Freedom House assigning a zero score on political rights, lower than Eritrea, Iran, or Chad. Its economy is dominated by resource extraction, with crude petroleum exports accounting for 90 percent of government revenues. China is Equatorial Guinea’s largest trading partner.

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In his book The Rise and Fall of the Great Powers, historian John Kennedy touched on the concept of imperial overstretch, when an empire extends itself to such a state as to be unable to sustain its commitments. While the United States is technically not an empire like the Roman Empire or the British Empire, the United States’ leadership position in the current international system makes it similar to these empires in a practical sense. At the same time, one strategic concept from Sun-tzu’s The Art of War is to win without fighting. How does it link to China actions? China has repeatedly claimed it does not seek to replace the United States in the international system. While this may sound like propaganda, there could be some truth in it if China’s strategy is to draw the United States into imperial overstretch: China will then need to avoid falling into that same trap. Instead of becoming the dominant power in all aspects, China’s approach is likely to be to prevent any nation from gaining such power. This will allow China to selectively assert its power to shape events and systems to its advantage as and when necessary without having to maintain the expensive cost of being the dominant power all the time. In this way, China’s goal is no longer a win-lose contest between China and the United States.

Not playing the zero-sum game means China does not need to be better than the United States; it just needs to undermine U.S. dominance. This makes drawing the United States into imperial overstretch an attractive option. It maintains the appearance of U.S. hegemony, but the United States’ inability to be at all places at all times undermines its credibility, thus providing space for China to move in and take a leading role. And this appearance can be maintained as long as China continues to buy U.S. bonds to fund U.S. spending – just enough to allow the United States to keep up appearances without actual effective dominance.

We saw the first signs of such a strategy after the bankruptcy of Lehman Brothers. In 2009, while the United States and the rest of the world were trying to recover from a global recession, China was actively staking its claims in the South China Sea, requiring a response from the United States and inevitably drawing away resources from economic recovery. More recently, China has been building up its naval capabilities including those for humanitarian assistance and disaster relief (HADR). China’s ability to stage HADR operations in the Asia-Pacific region poses this question: should the United States increase its deployments in the Asia-Pacific to prevent China from becoming the regional leader in HADR operations which may result in disaster-stricken nations becoming indebted to China? And at a time when the United States is dealing with a pandemic as the nation with the highest number of deaths from COVID-19, increased Chinese activity in the Asia-Pacific region only helps to reinforce this hypothesis of imperial overstretch.

Still, U.S. policy makers are neither blind nor ignorant, and will do what they can to avoid imperial overstretch. Reaching out to allies to share the burden of commitment is one way to maintain effective dominance at less cost to the United States. Such “coalition of the willing” initiatives working with partners toward a common objective can be effective in the near-term. For example, we see U.S. allies such as Canada conducting freedom of navigation operations in the Asia-Pacific region. Japan has also taken a more proactive stance in HADR exercises with nations in the region. Long-term sustainability, however, remains in question as it is uncertain if allies – who also face their own fiscal and domestic political issues – can maintain a higher level of operations should China choose to raise its level of activities. To prevent imperial overstretch, the United States will need to find a way to secure the long-term commitment of allies and like-minded partners and develop systems to share the burden of commitment even in times of heightened Chinese activity.

The views expressed in this article are those of the authors alone and do not necessarily reflect those of Geopoliticalmonitor.com or any institutions with which the authors are associated.

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Many observers have questioned the sense in Duterte terminating an agreement that has for the past 22 years underpinned what is arguably Washington’s most strategically important security alliance in Asia. The immediate trigger appears to be the US decision in January to rescind a visa for Ronald dela Rosa – a senator and close political ally of Duterte, who in his former role as national police chief led Duterte’s violent anti-drug campaign; roundly criticized in the West over alleged extra-judicial killings.

The visa revocation drew an angry response from Duterte, who immediately threatened to cancel the VFA and barred members of his cabinet from travelling to the US. Yet the visa issue may have provided a convenient excuse for Duterte, who has executed a pivot away from the US and toward China, since his shock election win in 2016. Duterte has routinely denounced US influence and criticized US foreign policy, claiming it has treated his nation ‘like a dog on a leash’ since the end of American rule in 1946.

Immediate and practical impacts of VFA termination

The termination of the VFA will take effect after 180 days, meaning the status-quo will be maintained until mid-August when the agreement is scheduled to expire. However, US-Philippine defense ties will not cease to exist when the six-month deadline is reached, as the two countries have two additional defense agreements, which are set to remain in place. A Mutual Defense Treaty (MDT), signed in 1951, commits the US to come to the Philippines’ aid in the event of an attack by a foreign power; while the 2014 Enhanced Defense Co-operation Agreement (EDCA), penned during the Obama administration, introduced new provisions for troop rotations, the use of military bases, and the positioning of assets.

While these two agreements are important in their own right, the VFA is vital to their implementation. It provides a legal framework for US troops to enter and exit the country without needing a passport or visa, and provides clear procedures for handling issues and disputes which may arise as a result of American presence. Above all, the VFA is a crucial tool in facilitating regular joint exercises between the two militaries. Around 390 such exercises are planned for 2020, the largest of which – referred to as Balikatan, meaning ‘shoulder-to-shoulder’ in the local Tagalog language – is due to be held in May.

The continuation of these drills after the 180-day period ends would be uncertain in the absence of a replacement for the VFA. After Duterte’s decision, US Assistant Secretary of State for Political-Military Affairs, Clarke Cooper, said joint operations would be ‘put at risk’, emphasizing that ‘all engagements’ require a facilitating legal mechanism to be in place. Foreign Secretary Locsin said as much during the Senate hearing on 6 February, noting that the VFA was the ‘substance’ that made the MDT effective.

Long-term strategic implications of terminating the VFA

Beyond these logistical issues, terminating the VFA has two significant implications for the Philippines’ national security – which may also impact regional security and wider US interests in the Asia-Pacific.

Firstly, a permanent US military presence in the Philippines, enabled by the VFA, serves as a deterrent to Chinese maritime assertiveness in the South China Sea – labelled the West Philippine Sea by Manila. Over the past decade, Beijing has reclaimed land and built military installations on contested islands in the region, where control of various portions of the sea and its features is disputed between China and five other claimant states. The area serves as a vital route for global shipping and seaborne trade.

The US has sought to push-back against Chinese maritime expansionism, for fear Beijing could assert full dominance and displace the US as the foremost naval power in the Asia-Pacific. In this sense, the Philippines is ideally located – on the sea’s eastern perimeter – as a staging post to guard against this perceived threat. The VFA, in allowing the permanent presence of US troops, has ensured a base from which the US can project power and launch freedom of navigation operations in the South China Sea. While the US does have close ties with other claimant states – such as Vietnam, on the sea’s western fringe – the relationship with the Philippines is long-established and it is considered a crucial partner. Terminating the VFA may give China the green light to continue its activities in the sea unchallenged.

Secondly, the VFA has enabled two decades of counter-terrorism co-operation between US forces and the Philippine military on the troubled southern island of Mindanao, where extreme Islamist groups, such as the notorious Abu Sayyaf, operate. The area is also home to a number of other hardline groups linked to the Islamic State, including the Maute Group and the Bangsamoro Islamic Freedom Fighters. In the aftermath of 9/11, the US deployed 600 soldiers to the region to help stem the tide of militancy, and around 100 remain stationed in Mindanao on a rotating basis. Although they don’t participate in active combat, US personnel provide intelligence and reconnaissance support, which played a key role in ending the 2017 siege of Marawi, when Philippine forces battled Islamist militants for five months.

The US has also provided equipment, financial assistance and urban-warfare training, helping to boost the capacity of the Armed Forces of the Philippines (AFP) to tackle rapidly-evolving terrorist threats in Mindanao. Several senior Filipino politicians now fear that by scrapping the VFA, the desire of the US to provide such assistance may decrease, risking worsening instability in the insurgency-prone south. Foreign Secretary Locsin stated last month that the VFA ‘allows for continued support for addressing non-traditional security threats’, adding that US forces had been ‘instrumental’ in not only combating terrorism, but also in helping to confront ‘trafficking in persons, cyber-attacks…and illegal narcotics.’ Security issues aside, US humanitarian support and disaster response has also been aided by the VFA.

A shared interest in renegotiating the VFA?

Despite senior figures in his administration voicing their concerns, Duterte appears intent on sticking with his decision. He has pushed back against those ‘trying to save’ the VFA, voicing a desire to ‘rely on ourselves’ in the defense sphere. Meanwhile, US President Donald Trump responded to reporters with apparent indifference when asked about the move, remarking ‘I really don’t mind…we’ll save a lot of money’. Despite these assertions, some Filipino politicians have stated a preference for the VFA to be reviewed rather than scrapped, and the 180-day notice period may afford time for negotiations.

It is in the interests of both parties to maintain the kind of co-operation that the VFA facilitated, even if the agreement must now be revived in a different form and under a different name. A renegotiation of aspects of the VFA as part of a new deal, acceptable to both Duterte and Trump, may be possible if both men opt to put the shared security interests of their respective countries ahead of political gain in the domestic sphere – where their populist bases are largely supportive of an isolationist approach to foreign policy. Longer-term, the future of the US-Philippine security alliance will be passed into the hands of new leaders: Duterte’s single six-year term ends in 2022, while Trump is seeking re-election in November. A US-friendly leader in Manila, or a Democratic president in the US, would likely lead to a return to the more engaged Obama-era relationship between the US and its Southeast Asian allies: centered on strengthening security partnerships, and opposing Chinese actions in the maritime realm.

Yet with Duterte and Trump at the helm, the US-Philippine security alliance appears to be weakening; and with the VFA set to be terminated, the defense establishments of both countries will hope for no lasting damage.

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Climate change has the potential to dramatically alter the geopolitical scene in the 21st century. While the phenomenon will have a worldwide impact, its effects will be particularly marked in the Arctic. As the polar ice cap melts, new maritime shipping lanes will open in the region. The so-called Northern Sea Route (NSR) has the potential to become a game-changer in the world’s geopolitical order. As a matter of fact, it would be a new and much shorter connection between Eastern Asia and Europe, with huge potential implications for trade. Moreover, the Arctic is estimated to host considerable hydrocarbon deposits, which attracts the attention of powers like Russia, China, Japan and others. As the Arctic becomes an area of increased maritime traffic, energy exploitation, and possibly great power competition, the Bering Strait will gain significant strategic relevance.  Considering that it separates two rival powers in the United States and Russia, and that China would be one of the main economic beneficiaries of the NSR’s opening, it is likely that the Bering Strait will gradually be militarized moving forward.

Background

It is widely accepted that global warming is causing the polar ice caps to melt. Apart from the considerable environmental concerns, this phenomenon also has major economic and geopolitical ramifications.

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China’s dependency on the sea lanes of communication (SLOC) for trade and energy supply is a well-known fact, just like the security problem it creates for the PRC: all ships to and from its territory must cross several chokepoints that could be easily blocked off by a hostile power in the case of a military conflict. Considering the mounting rivalry with the United States and its allies, this prospect has become a serious challenge for China’s security planners. Unsurprisingly, the leadership in Beijing is taking measures to solve the issue, which could possibly include setting up new military bases abroad.

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These developments are not going unnoticed, and Washington is waking up to China’s challenge, which promises to turn various international waters into contested zones. Indeed, the 21^st century will be one of naval competition between an established seafaring power and a land power increasingly turning its focus toward the seas.

As a maritime nation, the United States has a deep appreciation for its naval power projection.  Some of the major wars of the past two centuries would have been impossible to win without the warships that enabled America’s entrance into these war zones as well as the maintenance of open lanes of supply and communications. History provides myriad examples on the impact of naval forces during state-to-state conflict. For instance, had Germany succeeded in enclosing the European continent by denying access to Anglo-American troops through the maritime domain in both World Wars, German victory would have almost certainly been inevitable. Additionally, both British and American naval forces exploited German dependence on seaborne trade by blockading the maritime trade routes depriving Berlin of its economic lifeline.

History also illustrates the correlation between the shrinking of blue-water navies sustaining the global order and outbreaks of previously contained conflicts. For example, among key factors that empowered Japanese aggression in the Pacific was the naval disarmament initiated by the Washington Naval Conference. Though Japan eventually ignored the limitations set by the agreement, both Washington and London continued to adhere to the treaty partially due to the looming economic depression. Furthermore, former Secretary of Navy John Lehman in his recent book Oceans Ventured: Winning the Cold War at Sea, makes a strong case against naval reductions citing the tragic consequences they produce. Consider the outbreak of the Korean War which was somewhat the outcome of President Truman’s campaign to drastically reduce the size of the Navy and curtail its influence. As a staunch supporter of air power, Truman believed that in the age of strategic bombers naval power would become redundant. Hence, the Truman-backed naval disarmament shrank the size of the Navy by almost 100 ships, leaving only five aircraft carriers for global missions. The unilateral reduction of naval forces including the marines, encouraged China and the Soviet Union to adopt a more hawkish posture in the Korean Peninsula. As a result, in 1950 the North Koreans – emboldened no doubt by America’s naval disarmament– invaded the South. Truman would soon realize that the Navy was essential for imposing a blockade of the Peninsula, and it lacked the necessary number of ships to enforce the American position in the region. The immediate response was the reversal of previous policies and the commencement of a massive naval rearmament, which included reactivation of abandoned aircraft carrier programs.

Continental powers too, have long had aspirations for maritime supremacy. After all, many land powers had to eventually build fleets to beat their maritime foes at sea. Land-locked Sparta went to sea to beat Athens at her own game. Similarly, the Soviet Union initiated a massive naval build-up to challenge the U.S. and her allies in international waters. Before Admiral Gorshkov was able to elevate the Soviet Union to its naval glory, both Stalin and Khrushchev experienced first-hand how crippling the lack of sea power leverage can be. Stalin could not fully intervene in the Spanish Civil War due to the weakness of the Soviet navy. Khrushchev, upon assuming the leadership of the Communist Party, dismantled the Naval Ministry of the Soviet Union and fired Captain-in-Chief Admiral Kuznetsov for entertaining blue-water navy aspirations. Then as the Cuban Crisis unfolded, the Soviet navy was unable to enforce the Kremlin’s stance, thereby serving as a humiliating wake-up call for Moscow. Finally, it was Khrushchev’s dismissal that unleashed Admiral Gorshkov’s blue-water navy that became a global force.

The role of the Navy in winning the Cold War cannot be underestimated. Apart from checking adversaries worldwide it engaged the Soviet Union in a naval competition, which the latter could not sustain. In the last decade of the Soviet Union, the Raegan Administration launched an immense naval build-up to create a 600-ship navy. The Navy had once again witnessed major cuts during the Carter Administration, while the Soviets enhanced their naval capabilities. Operation Oceans Ventured ’81 set the stage for enormous naval exercises for the remainder of the decade continuously deploying warships to the distant shores of the Soviet Union. As a response, the Soviet Union began conducting major exercises, dramatically increasing its naval expenditure. The attempt to keep on par with the U.S. unequivocally contributed to the eventual collapse of the Soviet economy.

With the breakup of the Soviet Union, virtually all geopolitical calculations changed. The United States became a victim of her own success and reduced the size of the Navy. There was simply no power that could challenge the U.S. therefore the calls for defense cuts intensified. Today, however, the United States and her allies exist quite in a different world. The post-Cold War world as we know it is coming to an end. The United States is facing an adversary who promises to challenge America’s global influence in multiple realms. That adversary is, of course, China. Having flown under the radar for the past several decades, the Chinese are just starting to flex their muscles. Apart from the cyberspace, this rivalry will primarily play out in the maritime domain as evidenced by China’s robust shipbuilding and modernization programs. As Andrew Erickson argues, “China’s naval buildup is only part of an extraordinary maritime transformation—modern history’s sole example of a land power becoming a hybrid land-sea power and sustaining such an exceptional status. Underwriting this transition are a vast network of ports, shipping lines and financial systems, and—of course—increasingly advanced ships.”

Though the US Navy continues to be the most lethal and mightiest naval force in the world, China’s maritime expansion has raised questions over America’s naval supremacy in the long-run and revived the debates over naval force structure. It seems that policymakers and experts in Washington grasp the significance of keeping America’s naval dominance intact. Nonetheless, this realization is coupled with the burgeoning costs of maintaining such a powerful navy. The national goal is a 355-ship Navy, but many remain skeptical given the operating cost of current ships as well as the rising number of decommissioned ships. The most expensive assets of the U.S. Navy are of course the nuclear-powered aircraft carriers around which the strike group forms. The power projection of carriers is truly remarkable. Serving as land bases in international waters they bring air power to adversaries’ shores. The firepower of these seagoing giants has the capacity to devastate entire cities most of which are located in littoral zones. Additionally, in times of crises it is not always certain that American allies allow the use of land bases for airstrikes. Perhaps the most famous recent case is Turkey’s refusal to let the US military launch aircraft from the Incirlik air base during the Iraq invasion in 2003. As a result, some of the major strikes were conducted from a nearby carrier.

The utility of aircraft carriers cannot be denied, and America’s rivals have long envied the nation’s ability to build and operate such expensive and complex warships. However, the recent debates—while appreciating the role carriers play— have raised concerns over their applicability in 21^st century. First and foremost, the new Ford-class is extremely costly with the recent one being more than $12 billion. To put this into perspective, Canada’s entire annual defence budget is $25 billion. Secondly, carriers take years to build and by the time they are ready for deployment, some of the technology built in is already outdated. Critics also point out the increasing vulnerabilities of aircraft carriers as rivals—China in particular—develop missile systems that can cause critical damage. Though an attack on a carrier would rapidly mobilize the United States in full force against the belligerent, the fact is that thousands of sailors operating a single carrier would be killed instantly.

The PLA Navy is still behind in terms of building carriers that match the technologically sophisticated Ford class behemoths. But to take the shortcut, China has developed the so called “carrier-killer” missiles or DF-21D. Harry Kazianis explains how these missiles operate: “The missile is mobile and can travel anywhere via a truck, making its detection difficult. When launched, the weapon is guided using over-the-horizon radars, new satellite networks, and possibly even drones or commercial vessels being used as scouts. The system also has a maneuverable warhead to help defeat missile-defense systems. When it does find its target, it can descend from the sky and strike at speeds approaching Mach 12. Worst of all, the missile has a range of 1,000 miles.”

Advantages and vulnerabilities taken into account, it doesn’t seem that the U.S. will reconsider aircraft carriers in the foreseeable future. In fact, the Navy is expecting to receive its next carrier in the coming years; it’s named after John F. Kennedy (CVN-79) and currently around half-way complete. As mentioned above, the decades to come will witness growing naval competition between China and the United States. The United States will maintain its maritime dominance in upcoming years. However, it is highly unlikely that the U.S. government will be able to dramatically increase the size of the Navy to counter China numerically. Bloated bureaucracy and rising costs will contribute to this issue. For this reason, the United States will continue emphasizing the need for burden-sharing with allies to compensate for the shrinking size of its fleet. China has a clear advantage over the U.S. in the South China Sea due to its geographic location. Therefore, it is in the interest of the United States to adopt a realist naval diplomacy to engage states in the region which are fearful of growing Chinese encroachment. It would be nearly impossible for the U.S. to counter China without reinvigorating its partnerships with Japan, South Korea, Thailand, Australia, India, New Zealand, and Singapore. Though a NATO-style alliance is unlikely in Asia, a coherent bloc would still keep China in check. Furthermore, calls among defense experts regarding allocating more funds to the Navy will grow, forcing the Pentagon to prioritize the domain where great power competition is emerging once again: the vast oceans.

The opinions, beliefs, and viewpoints expressed by the authors are theirs alone and don’t reflect the official position of Geopoliticalmonitor.com or any other institution.

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Ibrahim Mohamed Solih has defeated the incumbent president Abdulla Yameen by approx. 40,000 votes – an unassailable margin in this small island nation of 417,000. Turnout in the weekend election was an eye-popping 89%.

Yameen has officially accepted the result and will now make way for his opponent. His departure marks the end of a tumultuous phase in Maldives politics. Since coming to power in the wake of a 2012 military coup, Yameen presided over a trend of deepening authoritarianism, rolling back press and individual freedoms and arbitrary jailing political opponents. The situation came to a head late last year when Yameen declared a state of emergency and shuttered the Supreme Court after it appeared as though an impeachment petition was on the verge of being approved.

Of course, the impact of the Solih victory goes well beyond domestic politics. The island nation has historically fallen within India’s sphere of influence, yet China had been making new inroads over the past decade as a key economic partner. This new triangular arrangement was reflected in the political arena: China supported Yameen in its usual ‘no-strings-attached’ manner, and India – along with the UK and US – supported the beleaguered opposition and decried the ongoing erosion of rights and freedoms.

With Solih’s victory, India has won the battle – but the war is far from over.

Impact

A surprise victory for Solih. There was a widely-held assumption that President Yameen would win the weekend’s election, if nothing because he had created a system that made it impossible for his opponents to unseat him. Over the past year, politicians have been harassed and/or imprisoned by security forces; media airtime has been restricted for opposition groups; and Yameen has successfully seeded key institutions like the judiciary and election commission with close allies. Just days before the election, police raided the opposition’s campaign headquarters for reasons that remain unknown.

It also wasn’t clear how voters would respond to Ibrahim Mohamed Solih. Solih is a longtime parliamentarian, but he lacks the name recognition of the handful of leaders who have alternated ruling the Maldives since the Nasir presidency ended. In hindsight, Solih likely benefited from his relative obscurity, as it put him beyond the pale of the corruption allegations that have dogged past presidents, whether Abdulla Yameen, Mohamed Nasheed, or Maumoon Abdul Gayoom.

Maldives in the Chinese debt trap? Chinese economic engagement deepened dramatically under the Yameen presidency, prompting concerns that the Maldives was being saddled with an unserviceable debt burden. Several islands have been leased by the Chinese government on long-term agreements, and Beijing has financed a variety of development projects – some with dubious long-term value. One such project is the China-Maldives Friendship Bridge, a 2.1 km bridge joining the island of Malé with Hulhulé, where the airport is located. The bridge will cost $210 million, with $126 million coming as grant-in-aid from the Chinese government. Though the project will go a long way in alleviating traffic congestion in Malé, its inflated cost (over three times as much as former president Nasheed’s estimate in 2011) has fueled corruption concerns. The bridge, like many other China-financed projects in the Maldives, was the result of a closed bidding process involving only Chinese companies.

China is also upgrading the Maldives’ international airport – a project valued at around $830 million.

According to Gateway House, the Maldives is on the hook for at least $1.5 billion in Chinese loans. The terms of the various agreements haven’t been made public, but available evidence suggests they’re highly onerous. In July, former president Mohamed Nasheed claimed that the country is devoting over 20% of the national budget to interest payments (keep in mind the political imperative to exaggerate the figure at the time). A more conservative estimate puts the current amount at $92 million a year, or 10% of the Maldives annual budget.

The World Bank predicts that the Maldives’ debt load will reach 121% of GDP by 2020, nearly doubled from the 60% of GDP that the Yameen government was projecting for the end of 2018.

Looking ahead, we may see a situation similar to Malaysia, where Prime Minister Mahathir pledged to review projects agreed upon by his pro-China predecessor. The likely result would be public disclosures of the true cost of projects currently under construction, and potentially the actual terms of repayment as well. The Solih administration inherits a strained fiscal outlook; it will be in its immediate interests to unload as much responsibility as it can onto its predecessor.

The Indian government gets a geopolitical reprieve. At the height of this year’s political crisis in the Maldives, many were clamoring for India to get directly involved via a military show of force. They argued that the crisis was a consolidation of Chinese power in India’s historical backyard, and that this wasn’t just a case of Beijing supplanting New Delhi – eventually, likely via debt default, the Maldives would be handing over a strategic asset that would put a permanent PLA Navy installation on India’s doorstep. They viewed events in the Maldives as the latest advance of China’s ‘string of pearls’ strategy to encircle its major strategic competitor in Asia. Their fears were all but vindicated when the PLA Navy dispatched warships to the Indian Ocean at the height of the constitutional crisis in February.

But New Delhi restricted its concerns to diplomatic channels, and its patience has now paid off. Incoming president Ibrahim Mohamed Solih is generally considered to be pro-India, and a warming can be expected between New Delhi and Malé. However, we should not presume that India-Maldives relations will be returning to the ‘good old days.’ While China lost its champion in Yameen, it will remain a major player in the region. After all, Chinese loan financing – onerous though it can be – is often the only show in town for developing countries struggling to develop their basic infrastructure. Looking ahead, the Maldives-India-China triangular arrangement is here to stay.

A temporary setback for the China model. The election comes as a blow for Beijing, not only because of what it represents for China’s short-term interests in the Maldives, but also for the Belt and Road Initiative (BRI) ‘China model’ of development as a whole. There have been a few setbacks for BRI of late, notably in Malaysia, Pakistan, and now the Maldives. Malaysia and the Maldives both produced shock election results that unseated firmly pro-China politicians, and the new government of Pakistan, though far less disconcerting to China given the country’s lack of geopolitical wiggle room, is said to be pushing for a renegotiation of CPEC contracts. These setbacks have also come amid a more widespread scrutiny of Chinese lending to vulnerable countries, and the ongoing US-China trade war. As a result, we could see a somewhat softer face of BRI lending over the short-term as President Xi tries to rehabilitate the public image of his landmark initiative, perhaps in the form of maturity extensions for some of China’s most debt-distressed borrowers.

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At first glance, this might seem like nothing more than an emerging, ambitious state attempting to free itself from a constrictive contract. Yet in fact, the spat has major geopolitical implications, particularly for the United States. By bloodying the nose of DP World, Djibouti risks upsetting the balance of power in one of the world’s most politically sensitive regions and giving a major boost to China, at a time when the frostiness between Washington and Beijing is fueling talk of a new cold war.

Djibouti has been trying to get rid of DP World since February, when it terminated the company’s joint venture contract on its Doraleh Container Terminal and seized control. DP World has since secured an injunction from a UK tribunal ruling the seizure illegal, and won a separate verdict from London’s High Court preventing Doraleh’s majority shareholder, Port de Djibouti SA, from ejecting it. Yet now the Djibouti government has responded by nationalizing PDSA, effectively taking Doraleh out of commercial hands.

Officials briefing on behalf of Djibouti’s president, Ismail Omar Guelleh, say the government is simply trying to protect “national sovereignty and economic independence.” The battle with DP World is certainly consistent with Guelleh’s aggressive economic policy, which seeks to exploit Djibouti’s position as a gateway to the Red Sea and Suez Canal. Almost all maritime trade between Europe and Asia, worth some $700 billion per year, brushes the country on its way through, and Guelleh’s administration wants to turn Djibouti into a regional trading hub – not dissimilar, in fact, to Dubai. He’s launched a frenzy of development projects, opening three new ports in the past year alone – and he’s planted a huge new free trade hub on the disputed Doraleh terminal, expected to be the largest such facility in Africa.

A Hidden Hand

But behind the Djiboutian government’s bombastic rhetoric, it’s clear to see the influence of a hidden hand – and it extends from Beijing. China is building a global trade network through its $1 trillion ‘Belt and Road’ investment program and sees Djibouti as a key piece of the jigsaw, a conduit to Africa and specifically to Ethiopia, one of its key investment destinations. Chinese banks have lent Djibouti over $1.4 billion in the last two years, more than 75% of its GDP, and financed a number of those infrastructure projects, notably the railway to Addis Ababa. Crucially, the new free trade zone at Doraleh has been built with Chinese money and manpower, and it will be operated in a joint venture with the state-owned China Merchants Holdings.

Unsurprisingly, this has infuriated DP World, which has threatened China with legal action over what it sees as an attempt to cut it out of the Doraleh deal. But the opprobrium isn’t solely confined to Dubai; concern is also being felt in Washington, where lawmakers have discussed in worried terms the possibility that Guelleh will give the entire Doraleh port to China as a gift. Were this simply a commercial matter, it probably wouldn’t warrant a Congressional hearing. But it’s far more than just a commercial matter: China has already built a military base at Doraleh, next door to the container terminal, and this spells trouble for the U.S., whose own military installation, the massive Camp Lemonnier, is just a short walk away.

Debt Diplomacy

China, of course, insists Belt and Road is simply about building a 21^st century trade network, and President Xi Jinping assures us he will treat Djibouti as an equal partner. But to the critics, China’s expansion in Djibouti is straight from an extremely cynical playbook, one in which Beijing lures its poorer ‘partner’ into a debt trap with cheap loans before snapping it shut to snare a strategically vital asset. This gift-wrapped clientelism has already yielded a number of key foreign facilities, notably the port of Hambantota in the Indian Ocean, which was greedily gobbled up by China Merchants on a 99-year-lease after the Sri Lankan government buckled under its repayment plan.

With Djibouti’s debt-to-GDP ratio already up to 85%, thanks largely to the Chinese loans, it’s easy to see why critics believe Doraleh will go the same way. And if this were to happen, it could be disastrous for the US, which has already hit out at China for pointing military-grade lasers at its fighter pilots over Djibouti. American military leaders fear that, if China had full control of Doraleh, it could prevent American ships from refueling there, effectively imposing a chokehold on Camp Lemonnier.

As Donald Trump bids to bring China to heel with a fresh round of sanctions, this threat is particularly unwelcome, and could serve to undermine Washington’s leverage in its deepening stand-off with Beijing. What’s more, it comes at a time when the Somali government is threatening to fall apart and the Yemeni civil war, a proxy power struggle between Saudi Arabia and America’s Iranian nemesis, continues to rage. Camp Lemonnier serves as a jump-off point to both Somalia and Yemen; the US needs full and unimpeded access to Camp Lemonnier, now more than ever.

Guelleh and his colleagues might claim China’s growing involvement poses no threat to the U.S., but that olive branch is unlikely to convince its intended recipient. After years of encouraging foreign powers to set up camp in the country, Djibouti has created a potential powder keg, and now holds the match in its hand. Some might suggest Djibouti is too small, too insignificant, to spark a confrontation between the US and its eastern foe. But then, they probably said the same about the Bay of Pigs.

The opinions, beliefs, and viewpoints expressed by the authors are theirs alone and don’t reflect the official position of Geopoliticalmonitor.com or any other institution.

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For the Communist Party, the significance of this event goes beyond the Square, as it also aims at reinventing Chinese identity under the leadership of President Xi Jinping. Though a defence ministry spokesman, Geng Yansheng said the parade is to “commemorate victims of World War II” and demonstrate its firm stance with the rest of the world to “maintain world peace and stability.” Speculation is already rife that the parade will also serve as a warning to its critics such as Japan or even the Philippines against a backdrop of territorial disputes in regional waters.

Geopolitical Considerations

In a historical context, the military parade by China will send a message to Japan over the latter’s refusal to admit its war-time aggression, a thorny issue that has dominated the relationship of the two giants in the past. For Beijing, Japan’s lack of remorse over the atrocities committed during the World War II era necessitates it to constantly highlight this issue via different means in order to prevent the latter from rewriting history by whitewashing past military aggression. With the declaration of September 3 as “Victory Day of the Chinese People’s War of Resistance against Japanese Aggression” by the legislature last year, Beijing is definitely ramping up pressure on Japan to do more in addressing this issue with this military parade, where many world leaders are expected to be present.

While historical events serve as the official reason to hold this parade, China is also using this opportunity to warn the current leadership of Japan to back off from its nationalistic agenda to revise Article 9 of the constitution and instead adheres to its pacifist path that prohibits the Self Defence Forces from striking the first blow. In the eyes of China, Japanese attempt to revise the constitution is a direct threat as it was aimed at containing Beijing’s growing clout in the increasingly tense Asia-Pacific region. The decision by Japanese Prime Minister Shinzo Abe last year to reinterpret the country’s pacifist constitution, thus allowing its military to aid friendly countries that come under attack, also adds to the Chinese reasoning for this military parade.

It is not only Japan that the Chinese have a message for. The parade to a certain extent also reminds the United States that Beijing is neither comfortable nor impressed with the “pivot” to Asia strategy announced by President Obama in 2011. As China is engaged in multiple territorial disputes with US allies in the East and South China Seas as well as the Taiwan issue, the parade also seeks to reinforce the message that Beijing will not rule out military option should situation spirals out of control and the United States must therefore play a constructive role in ensuring regional peace and stability. Furthermore, it is also a commonly-held view in China that countries like Japan and Philippines are able to antagonise it because the United States is using these countries to advance its containment agenda.

Soft Power on Display at the Military Parade

Although military strength will often be classified under the category of hard power, there is also a soft power dimension for China to hold this World War II commemoration parade. As disclosed by officials, foreign militaries will be invited for the first-time ever to participate in this massive parade, which usually takes place on 1 October to mark the country’s founding. According to official sources, both Russia and Mongolia have confirmed their participation for the event with reports claiming that China has also extended invitation to the two Koreas as well as Taiwan.

For China, the participation of foreign forces will bolster its reputation abroad as a great contributor to global peace, an element that has been critical to Beijing’s “peaceful rise” agenda. As the former leader Hu Jintao once stressed during the Communist Party Congress in 2007, China has been under what he described as “soft power assault” by Western media and Beijing will need to do more correct the misconception associated with its rise. With the expected attendance of world leaders, China is also keen to frame this event as an international parade that promotes the role its military forces play in global peacekeeping efforts instead of a showcase of latest military technologies as it did in the National Day parades.

A commentary in the state-run news agency, Xinhua confirmed this view when it quoted a senior military official who said that the parade “will convey to the world that China is devoted to safeguarding international order after World War II rather than challenging it.” The commentary further added that the presence of foreign dignitaries will boost China’s influence in the international arena, something it has invested heavily in over the past decade. As it appears, China does seem to be working toward elevating the status of this parade similar to the Victory Day in Russia or Bastille Day in France. The question is whether a successful parade will necessarily translate into better perception of a rising China among audiences abroad.

Military Parade shows Xi Jinping’s Growing Clout in Zhongnanhai

From the domestic politics perspective, the parade is yet another signal that Xi is cementing control over Zhongnanhai (the Chinese equivalent of the White House or the Kremlin) as well as the Communist Party as a whole. Since taking office in 2013, Xi has steadily consolidated his grip on power by purging once powerful senior officials such as Zhou Yongkang and Bo Xilai, launching a new doctrine called the “Chinese Dream” as well as moving away from the “collective leadership” style the party practised since the death of Mao.

In the case of the parade, Xi, who typically would have to wait for another four years for the one marking the country’s founding has instead chose to hold it now in order to show that the military is firmly under his control. While Hu struggled to consolidate power throughout his presidency, Xi’s meteoric rise according to analysts is matching that of Deng Xiaoping, who was considered as one of China’s most prominent leaders. Shortly after Deng took power, he similarly took the bold step to revive a military parade that has been put on hold for 25 years due to the Cultural Revolution and economic hardships among other reasons. The parade at Tiananmen Square in 1984 was a clear political message to others that Deng had emerged with a firm grip on power in the aftermath of chaos caused by the Gang of Four.

Xi’s ability to break the normal conventions can be interpreted as following Deng’s footsteps of quickly establishing a solid political base by taking command of numerous committees in party as well as neutralising critical elements including military and security that might become a threat to his leadership in the future. A successful parade will be vital for Xi to tell the domestic and international audiences that he is the commander-in-chief of the military and more importantly, the sole person-in-charge in the vast land of 1.3 billion people.

Though the exact details of the parade are still scant at the moment, the expected appearance of Russian President Vladimir Putin standing alongside Xi (just like Obama alongside Indian Prime Minister Narendra Modi at the Republic Day’s celebration in January) are already raising eyebrows among Western observers about the geopolitical message these leaders intend to send to the rest of the world. For others, it will be interesting to see if China will use this opportunity to showcase its latest military hardware including the DF-41 intercontinental ballistic missile, rumoured to be the world’s longest ranged missile, which failed to make an appearance during the 2009 parade.

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