Sino-India Rivalry Heats Up in Mauritius

As Sino-Indian competition heats up for influence in the Indian Ocean region, the rivalry between the two Asian neighbors appears especially sharp in Mauritius, a tiny island nation peppered with beaches, lagoons and reefs that lies 5,100 km. southwest of India’s shores.

While Indian Prime Minister Narendra Modi has intensified engagement with Africa extensively with India-Africa summits and major outreach initiatives, the Chinese are proving formidable rivals with their famed Belt and Road Initiative, designed to use infrastructure to tie the region to Beijing.

Behind the scenes, the rivalry is related to yet another Indian Ocean speck 2,100 km northeast of Mauritius – Diego Garcia. When Mauritius was a British crown colony, Diego Garcia was a Mauritian dependency. It was detached from the newborn country for inclusion in the British Indian Ocean Territory, a collection of pinpoints flecking the Indian Ocean. The Mauritians have applied to get it back. In 2017, the United Nations General Assembly voted to send the matter to the International Court of Justice.

Between 1968 and 1973, the entire population of Diego Garcia was forcibly moved off the island and to Mauritius and the Seychelles. The United States then built a huge naval base that serves as America’s chief listening post and launching pad for much of Asia. Bristling with antennas, it features two 3,700-meter runways, parking aprons for heavy bombers, 20 ship anchorages, a deep-water pier, port facilities for the largest naval vessels in the American or British fleet, aircraft hangars, maintenance buildings and an air terminal and a 1.3 million-barrel fuel storage area. Thousands of US Naval personnel and contractors live on the island.

The orientation of Mauritius’s government, leaning either toward India or China, has caught the attention of US authorities if the island government were to get Diego Garcia back. And as Asia Sentinel has reported in the past, a rising number of countries are finding themselves in a debt trap to China that is beginning to affect their political orientation.

Why India & China are wooing Mauritius

Despite its somewhat unsavory reputation as a tax haven and hub for offshore banking, Mauritius, only 788 sq mi with a population of 1.2 million, remains the most prosperous and politically stable of the independent states in the Indian Ocean.

Studies have shown that the Indian Ocean region will likely become a leading source of new global growth over the next 20 years. Indian Ocean channels carry two-thirds of the world’s oil shipments, a third of the bulk cargo and half of all container traffic. Diego Garcia, with its huge US Navy presence, is one of the most important facilities watching over the traffic.

The strategy thus dovetails with Chinese premier Xi Jinping's overarching “string of pearls” policy through which China has built significant relations across the Indian Ocean, from Gwadar (Pakistan) to Hambantota (Sri Lanka) to Kyaukpyu (Myanmar).

This is rattling India, which, as pointed out by François Verges, a political scientist and Chairman, Global South, Paris, in an article in the national daily The Hindu – “wants to exert itself in the same region and has developed reciprocal agreements with Australia, France and the U.S. to take advantage of bases as far flung as Cocos Islands (Australia) and La Réunion (France).”

Nuclear-armed ballistic missile submarines from India (Arihant) and from China (Song, Shang and Jin) will soon ply these waters. They will join the Ohio class (US) and the Rubis class submarines (France) that already operate here."

Given China and India's clout, Mauritius aims to maintain political and security links with India while letting China facilitate its plans to re-orient its role as a financial center towards Africa. However, balancing relations with the two super powers will need the skills of a juggler. And Mauritius appears loath to choose between the two nations.

"We don’t have to make choices — we want to be friends,” Rama Sithanen, the chair of local financial services group IFS and a former minister of finance told Financial Times. “We’ve never been asked to make those choices.”

High stakes for India

Like the Chinese, the Modi government is attaching increasing importance to the Indian Ocean with former Foreign Secretary S Jaishankar favoring “reviving the Indian Ocean as a geopolitical concept.”

Inviting Seychelles and Mauritius to join the existing maritime security cooperation arrangement among India, the Maldives and Sri Lanka in 2015, Modi underlined that New Delhi seeks “a future for Indian Ocean that lives up to the name of SAGAR – Security and Growth for All in the Region.” He emphasized seeking “a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other’s interests; peaceful resolution of maritime security issues; and increase in maritime cooperation.”

In 2015, India and Mauritius signed an agreement that allows India to “develop infrastructure” on the islands. The phrase, say experts, is a euphemism for the building of military bases. Mauritius is the largest source of FDI into India, since multinational corporations have been able to take advantage of the India-Mauritius Double Taxation Avoidance Treaty and the lax tax regime to avoid paying taxes.

The increasing affinity between India and Mauritius, 68 percent of whose residents are of people of Indian descent, reflects in Modi fondly referring to Mauritius as “Little India.” The Mauritian political elite has powerful historical ties to India. Many are girmitya, descendants of Indian indentured laborers who came to work on sugarcane plantations under British rule.

Despite ancestral links with India, in recent years, both Chinese tourism and economic cooperation have grown in scale and significance. China recently funded the construction of a new terminal at Mauritius’ international airport through a generous loan from the Export-Import Bank of China. Chinese firms are now involved in more than 40 other projects on the island.

A glittering "Eden Garden," located at the heart of China-built Jinfei Economic, Trade & Cooperation Zone (Jinfei Zone) in western Mauritius led Mauritian Prime Minister Anerood Jugnauth to say it would herald a new era of economic revival. The project straddles a huge swath of Jinfei Zone, the first smart city to be developed in Mauritius through a partnership with China. The state-of-the-art economic and trade zone occupies 211 hectares of land located 3.5 kilometers west of the Mauritian capital of Port Louis.

India has dominated investment flows to Mauritius since it opened up as an offshore center 30 years ago. However, analysts have noted that China’s state-led approach to foreign investment is eroding Indian influence, including through a US$700 million investment in a special economic zone that has serviced Beijing’s expansion in Africa. "China combines business and government interests, which is in stark contrast to India’s more fragmented style that often has less backing from the state," notes one observer.

India also trails China in regional diplomatic clout. While China has 43 missions in the African continent including one in Rwanda, India had only 29 missions till recently until Modi pushed for opening 18 new ones this year in African countries which took India's tally up to 47 from 29. The 18 will be opened over a four-year period to 2021.

However, as India plays catch-up in trying to woo Mauritius, it can derive solace from the fact that though the Chinese are building infrastructure in Mauritius, there is growing alarm about the terms for such infrastructure investment.

"These projects accentuate what has been referred to as China’s “debt trap diplomacy” where tiny nations are ensnared in opaque terms and predatory loan practices for projects without social or environmental assessments,' said Subir Patnaik, a venture capitalist who works with some Chinese firms. "India's outreach is more partnership-based."

Be that as it may, India will still need to step up its engagement with Mauritius while keeping an eye on China lest its rival beat it at its own game in its own strategic backyard.

Neeta Lal is a New Delhi-based editor & journalist who tweets at @Neeta_com and a longtime contributor to Asia Sentinel.