Aug 19, 2024 09:29 PM IST
EAM S Jaishankar’s visit to the Maldives marked a pivotal moment in India-Maldives relations, focusing on economic aid, developmental projects, and defense cooperation.
External affairs minister (EAM) S Jaishankar’s recent visit to the Maldives marked the first ministerial-level visit from India after Maldivian president Mohamed Muizzu’s swearing-in. His visit came after several high-level political engagements from the Maldives — indicating that a recalibration is in the making. Muizzu’s policy has seen some shifts in recent months, for the following reasons: India respected the government’s decision to withdraw troops from the Maldives; a majority in parliament offered Muizzu the conditions to tone down anti-India rhetoric and mend ties; other countries (including China) are falling short of his expectations over investments, assistance, and diversification; a brewing economic crisis where Indian and Chinese help is crucial; and India’s accommodative policy that has incentivised engagement over escalation. The recent visit puts India-Maldives relations on the right track and underscores India’s importance and diverse engagements with the island nation.
A crucial aspect of the visit was the demonstration of India’s people-centric development approach. India is working on over 65 High Impact Community Development Projects (HICDP) in the Maldives. Some recently inaugurated projects include a mental therapy unit, a speech therapy unit, and an educational support unit. Besides, India also handed over water sewage projects across 28 islands worth over $110 million. India also inaugurated a link bridge and land reclamation in Addu. These projects demonstrate New Delhi’s assistance model that helps people with day-to-day activities, boosts the local economy and helps overcome challenges related to housing and the climate crisis. To further this people-centric cooperation, India has also scaled up its slots for training and capacity building by over 1,000 slots. Besides, the EAM took stock of infrastructure projects like the Gan International Airport and the Greater Male Connectivity Bridge.
Cooperation in economic and financial sectors has taken precedence, too. The Maldives has proposed to upgrade the current Preferential Trade Agreement to a Free Trade Agreement. Jaishankar met the Maldivian economic and trade minister and finance minister. The meetings come at a time when the Maldives is experiencing an economic crisis with maturing debts, declining foreign reserves, and a worsening budget deficit. Given India’s commitment to its SAGAR vision and Neighbourhood First policy, it is likely that discussions would have orbited around the disbursement and restructuring of Indian loans, and additional budget assistance; India pledged budget assistance of ₹400 crore to the Maldives and offered a year’s extension to a T-bill worth $50 million. Another T-bill worth the same amount is set to expire next month. India and the Maldives also signed an MoU related to introducing India’s Unified Payment Interface (UPI). The understanding will expand the country’s e-commerce, and make financial services more accessible. This would benefit the Maldives’s tourism and economy, especially as UPI allows Indian travellers to transact without worrying about currency exchange rates. Discussions have also commenced to trade in local currency and access a currency swap agreement and credit line.
Discussions between the EAM and Maldivian defence minister Ghassan Maumoon highlighted the crucial aspect of India-Maldives relations — security and defence cooperation. The meeting underscored India’s concerns about Chinese ambitions in the Indian Ocean region. During his visit to China, Muizzu upgraded his country’s relations with China to a strategic comprehensive partnership and agreed to participate in the Global Security Initiative. The Maldives signed a defence pact with China and consented to dock a Chinese ship in the capital. On the other hand, the Maldivian government declined to renew the hydrography agreement with India. It also halted India’s naval harbour project at the UTF, where China will now develop an agricultural zone. For Delhi, which sees China’s expanding defence and security cooperation as a red line, the visit served as a crucial platform to assert that its neighbour has an equal responsibility in upholding peace in the region.
The visit has put India-Maldives relations on the right track, but the path ahead is not free of hurdles. Beijing will continue to leverage ties with the Male to expand its presence in the region. Muizzu’s party enjoys good relations with Beijing, and there are expectations that the latter will offer additional grants, loans, and investments. China is also the biggest bilateral lender, and approximately 70% of the Maldives’ sovereign guarantees are owed to Chinese lenders. With several Chinese loans maturing soon, Beijing has promised a grace period on interest and principal payments. These factors will hinder extensive engagement with India. The fact that no new projects were signed during the EAM’s visit demonstrates the cautious balancing that Muizzu is practising.
Harsh V Pant is vice-president, Observer Research Foundation, and professor at King’s College London. Aditya Gowdara Shivamurthy is associate fellow, ORF.The views expressed are personal
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