Juggling ties with China and India is a struggle all small states face, Maldives ex-president says

Small states in the eastern hemisphere are at risk of being dragged into the orbit of either China or India, a former Asian president said Friday.

But Mohamed Waheed Hassan, who led the Maldives in 2012 and 2013, added that there's an area the region's superpowers and its smaller nations could easily work together on.

"Emerging markets are caught between big powers," he told CNBC. "All small states, whether they are developed or underdeveloped, are going through this experience," he said, citing Singapore and Sri Lanka as fellow Asian nations facing the same challenge of appeasing both their Chinese and Indian neighbors.

But, according to Waheed, an area that all countries could collaborate on is security.

While the Maldives has traditionally relied on India, and by proxy its historical ally the U.S., for regional security, "if China can contribute to that kind of collective security arrangement it should be welcome," Waheed said. "Why would they have separate exercises?"

China and India were both present on the sidelines during a political crisis in the Maldives in February, during which its current president, Abdulla Yameen, imposed a state of emergency.

While Indian Prime Minister Narendra Modi ultimately abstained from intervention, China’s defense ministry told Reuters that its presence in the area was “not aimed at any third party.”

The Maldives, a tiny nation located on a cluster of islands in the Indian Ocean and best known as a tropical holiday destination, has close ties to India given both its proximity and cultural heritage. But, the dynamic of its relationships in Asia has changed in recent years.

"China was very distant from us but over the last few years we've gotten closer to China purely for economic reasons," Waheed said.

China had been "very helpful" in providing loans for the infrastructure the Maldives badly needs, he said. The state's coffers are heavily reliant on tourism but outside of the capital any incoming wealth is not felt. During Waheed's 2012-2013 tenure as president, he announced $500 million in loans from China, a significant portion of which was dedicated to infrastructure and housing projects.

As part of China's Belt and Road Initiative, a multi-billion dollar spending plan to revive ancient trading routes, it is "heavily involved" in a $830 million plan to upgrade the Maldives' international airport in the capital Male. China is also financing the building of a new population center and bridge nearby costing $400 million, according to a March report by Washington-based think tank the Center for Global Development.

"India can provide assistance, but it's more complicated. Not that it doesn't have the resources, but the procedures are more complicated," Waheed said. China is an easier friend to maintain "for economic reasons," but he added that the Maldives was closer to India on security issues.

The Maldives' relationship with both China and India has met difficulties.

In May, Indian navy chief Sunil Lanba said that the Maldives presented a "challenge." "The present government in Maldives is more inclined towards China. The constitution has been tweaked and some islands have been given to the Chinese for development," he said, as reported by local media.

"The Maldives wants to be close to India but both the local opposition in the country and also the press in India has not made it easy," Waheed said. "Speculation within the media that the Maldives is getting closer and closer to China doesn't make it any easier."

China has created a "debt trap" that it will use as a "disciplining agent" on the Maldives, former President Mohamed Nasheed, who lives in exile in Sri Lanka after being ousted in 2012, told Reuters in an interview earlier this week. "We would have to renegotiate. It is a big cheat," Nasheed said, as he attempts to campaign ahead of an expected election in September.

But, China has hit back on similar claims made by Nasheed earlier this year. Responding in February to an article by the former leader, Chinese Foreign Ministry spokesperson Geng Shuang said that Beijing never attached any political conditions to loans to the Maldives, dismissing Nasheed's view as "nonsense."