With anyone investing $1bn now able to own land in perpetuity, concerns are growing that the Maldives will become the focus of an Indian Ocean cold war
A new law allowing foreigners to own land on the Maldives, the island nation known for luxury tourism, has sharpened regional competition for influence over one of the busiest oceans in the world.
On Thursday Abdulla Yameen, the controversial president of the Maldives, approved a law allowing foreign ownership of land in the country for the first time, triggering concern in Delhi over a possible opportunity for China to extend its reach in the Indian Ocean region.
Dozens of foreign companies already run luxury resorts on islands that they lease from the government of the honeymoon islands for a maximum of 99 years.
The law would allow foreigners who invest more than $1bn (£650m) to own land in perpetuity, provided 70% of it is reclaimed from the sea.
India has watched warily as the Maldives, which held its first free elections in 2008 after more than three decades of autocratic rule, has tilted towards China in recent years.
The two emerging Asian powers are battling for influence in the region, with Delhi concerned at what it sees as aggressive moves by Beijing in what it considers its backyard.
India won the most recent round of manoeuvring when President Mahinda Rajapaksa of Sri Lanka was ousted in a surprise defeat in January. Rajapaksa had increasingly looked to China for investment and diplomatic support. The new Sri Lankan president, Maithripala Sirisena, has shifted Sri Lanka’s policy back towards Delhi.
The Maldives have also seen competition. An Indian company had a major contract to extend the existing airport cancelled, while the Chinese are helping to build a crucial $300m road link between the airport and the capital, Malé. India was also closer to the former president and current opposition leader Mohammed Nasheed, who was ousted in 2012 and is currently under house arrest.
Yameen went out of his way to reassure India in an address to the nation. “The Maldivian government has given assurances to the Indian government and our neighbouring countries as well to keep the Indian Ocean a demilitarised zone,” the president was quoted as saying by the local Minivan News website.
Yameen said the foreign policy of the Maldives would not change and the new move would not pose “any danger to either the Maldivian people or our neighbouring countries”.
Officials in Delhi said they were examining Yameen’s statements closely.
Lawmakers in the Maldives voted on Wednesday for the bill, which easily passed after a brief debate, with 70 members in favour and 14 against, the assembly said in a statement.
But opposition MPs expressed fears that their small nation, made up of about 1,200 tiny islands, would be caught in the “a cold war brewing between India and China”.
Since Nasheed was jailed for 13 years in March there have been regular protests on Malé’s streets.
Loyalists have argued that the detention of the human rights activist turned politician is an attempt to shut down opposition to the government of Yameen.
David Cameron called last month for “political dialogue [and the] release of Nasheed and all political prisoners” in the Maldives.
The Maldivian prosecutor general said on Friday that he would appeal against Nasheed’s conviction.