New Delhi: Maldives President Mohamed Muizzu’s efforts to reset ties with India, despite his earlier China-leaning rhetoric, reflects a change of heart or seems to be so. While Muizzu’s electoral campaign emphasized reducing India’s influence, his latest decision to engage closely with India as president highlights the geopolitical and economic realities facing the Maldives validating that in geopolitics there are no permanent friends and foes as also that U Turns are ok.
After his visit to China in January 2024 Muizzu’s indirect jibe at India, saying 'no one had the licence to bully. We aren’t in anyone’s backyard. We are an independent and sovereign state,' was a blatant assertion of his anti India rhetoric. Taking another swipe at India he said, 'Though we have small islands in this ocean, we have a vast exclusive economic zone of 900,000 square kilometers. Maldives is one of the countries with the biggest share of this ocean. This ocean does not belong to a specific country,' echoing a comment China has often made that Indian Ocean does not belong to India, was sure music to the Eastern giant’s ears.
Muizzu also set a March 15 deadline for India to withdraw its military personnel from the country, additionally ditching the hydrographic survey agreement with India, while permitting Chinese research vessels to dock at Maldivian ports despite Indian concerns.
Standing to stark contrast is now…. ‘Maldives would never do anything that undermines the security of India. India is a valued partner and friend of the Maldives, and our relationship is built on mutual respect and shared interests.’ Domestic priorities and pressing socio-economic concerns mean that Muizzu would do good not to alienate India.
Is it need for money!
Muizzu is staring at a looming economic crisis and an imminent debt repayment. With Moody downgrading its credit rating, Maldives is looking at a debt default as its foreign exchange reserves have dropped to $440 million, just enough for one-and-a-half months of imports. India has already offered financial support worth $1.4 billion to the Maldives for various infrastructure and development projects.
During this visit of Muizzu to New Delhi, India has extended an emergency financial assistance to the Maldives worth $50 million for a year, the second time this year, at the request of the Maldivian government. Government of India earlier this year also extended special quota for export of essential commodities for the Maldives by one more year. SBI has rolled over USD 100 million of Treasury Bills for Maldives. Today, as per the need of Maldives, a currency swap agreement of USD 400 million and INR 3000 crore (INR 30 billion) has been concluded.
India’s Largesse
India and the archipelago share a long-standing relationship based on geographic proximity, historical ties, and strategic interests. India has been a key partner in Maldives' development, providing crucial economic assistance, security cooperation, and infrastructure support. Over 700 social housing units, water and sewerage projects in 28 islands ensuring supply of clean water to thirty thousand people, setting up Agriculture Economic Zone in ‘Haa Dhaalu’ and fish processing facility in ‘Haa Alifu’, the greater Male Connectivity Project, the largest infrastructure project in the Maldives, being funded through a mix of grants and loans from India are just few of the capacity building initiatives with Indian assistance.
Tourism Reset
Additionally, Maldives Tourism is majorly taken care of by India, a critical component of the country’s economy. Given the Maldives' dependence on tourism and foreign investments, maintaining strong relations with India is imperative for the island nation’s economic stability. The decline in tourist arrivals from India over the last one year, in the wake of the Lakshadweep-Maldives controversy that caused a diplomatic strain, has had a significant impact on the island nation’s earnings, which industry estimates peg at about $60 million. Addressing the Joint Press Briefing Muizzu said, ‘India is one of our largest tourism source markets and we hope to welcome more Indian tourists to the Maldives.’
Tourism is the largest industry in the Maldives, directly contributing close to 30% of GDP and generating more than 60% of foreign currency earnings. Muizzu’s call to Indian tourists to visit Maldives, the first such statement by him after his ministers triggered a controversy following PM Modi’s visit to Lakshadweep, is also being seen as a policy shift at a time when the island nation is facing an economic crisis.
Digital Handshake
The launch of RuPay card in the Maldives, another initiative, is expected to ease payments for Indian tourists visiting the island nation, thereby boosting its tourism sector. The card is expected to simplify transactions for Indian tourists.
Security Needs
India being Maldives immediate neighbour, is its critical security partner as well. The Indian Ocean archipelago faces numerous maritime security challenges, including piracy, illegal fishing, and potential external threats. As contrast to China, India has historically been the Maldives’ first responder in times of crisis, such as the 1988 attempted coup, where Indian forces intervened to restore stability. As a small nation with limited military capabilities, the Maldives relies on Indian support for maintaining its sovereignty and ensuring regional security.
Despite China’s growing presence in the Maldives through its Belt and Road Initiative (BRI), which has led to significant investments in infrastructure, Muizzu should recognize that the Maldives cannot afford to distance itself from India. Afterall neighbors matter most. Moreover, China’s economic involvement often comes with long-term debt obligations, a concern that the Maldives must weigh carefully.
So what appears on the face is that by resetting ties with India, Muizzu aims to strike a balance between appeasing his domestic base and securing the economic and security benefits that India offers. This foreign policy approach ensures that the Maldives remains engaged with both regional powers while safeguarding its own national interests. Ultimately, Muizzu’s outreach to India is a recognition of the unambiguous indispensable role India plays in the Maldives' stability and development, even as he navigates the broader geopolitical competition between India and China in the Indian Ocean region.
Leaders may not necessarily be born wise. Experience and situations make them.
