Modi's Strategic State Visit To The Maldives

Prime Minister Narendra Modi  will stop over for a state visit to  the Maldives on July 25–26, on his way back from London, his first since President Mohamed Muizzu swept into power on an anti-India platform in 2023.

The PM’s visit is an attempt to shore up India’s standing in its immediate neighbourhood. Nearly a decade after his “Neighbourhood First” policy was announced with much fanfare, Modi’s outreach has yielded few tangible gains—with ties fraying with several South Asian neighbours and China making inroads in the region.

The visit to Male is also aimed at recalibrating relations with the pro-China government of President Mohamed Muizzu, who has kept New Delhi at arm’s length at the start of his presidency.

Muizzu won the presidential elections of 2023 with the "India out" was the campaign slogan. He also skipped the traditional practice of  making New Delhi the first  overseas visit for newly elected presidents. Instead, he went to China and Turkey.

The India Out slogan had much to do with local concerns about a small contingent of Indian military personnel stationed in the Maldives following the gifting of two Dhruv advanced light helicopters by New Delhi to Male.

The helicopters were mainly for humanitarian and reconnaissance operations, but many sections, especially opposition political parties used the presence of the soldiers to fuel fears  about India’s motives.

Many were genuinely  concerned that its huge neighbour could exploit the tiny Indian Ocean island nation.

Sensing the public mood political parties also fueled anti-India sentiments. Muizzu turned to China like  former president Abdullah Yameen had done. Since the rise of China and its wooing of countries in India’s neighbourhood,  smaller nations have often used the competition between the two Asian powers to their advantage.

Thanks to Muizzu’s anti-India rhetoric during the campaign, he is largely regarded as leaning towards China. However most powers are neither for one or the other and much like New Delhi has a foot in both the US and Russian camp for its national interest, so do India’s neighbours with China.

Muizzu had promised during his election campaign to send the foreign soldier out of the island. Once the military personnel were replaced by civilians, the deck was cleared for improved political relations. 

Bilateral ties  have turned around since, and according to foreign secretary Vikram Misri this was due to the hard work put in to mend relations with the Maldives. The Prime Minister will be an honoured guest, as the island nation celebrates 60-years of independence from Britain.

However, it was the country’s economic condition that forced Muizzu to change  track and turn round the relation. He now regards India  as a "valued partner.’’  

The boycott of Maldives by Indian tourists, following PM praise of Lakshadweep as a tourist destination, led to mocking words at the Indian leader by three Maldivian ministers. 

The boycott resulted in a 33 percent drop in Indian tourists to the Maldives and led to heavy economic loss for the island nation. This, added to the fact that a Covid-hit Maldivian economy was struggling against all odds to survive,  as  payback time for the large infrastructure projects promoted by China and India was staring the new Muizzu government in the face, led to a rethink.

So by early 2024, after his party won a resounding victory in the April parliamentary elections, Muizzu was ready to repair ties with India.

The Maldives economy was in bad shape, following the pandemic. By the time Muizzu assumed office, the island’s economy was in dire  straits.

By March 2024, the Maldives debt-to-GDP ratio was 110%, by September last year the foreign reserves were $360 million worth a month’s import. Today, the Maldives owes around $1.1 billion  to China.

"Relations have improved basically because of economic compulsion, Maldives is going through major economic challenges.  There was acute dollar shortage last year. In August foreign exchange was just enough to import for one and a  half months. On top of that there was the  heavy debt burden. Maldives asked both India and China to restructure the debt repayment schedule. New Delhi agreed and  Indian swap agreement and additional financial assistance helped Maldives to evade debt default, paving the way for improved political ties,’’ says Gulbin Sultana of the IDSA, a prestigious New Delhi based think tank.

India’s Helping Hand

When Muizzu finally came for his delayed India visit from October 6-10, in 2024, he was given a red-carpet welcome. He had briefly visited in June for the PM’s swearing in ceremony.

Muizzu went back from the state visit with India giving Maldives a $400 million currency swap as well as another $357 million agreement that would allow companies to do trade in local currencies instead of the US dollar.

The State Bank of India has also continued to re-subscribe to Maldives treasury bills. India is also one of the island nations largest trading partner with bilateral trade at around $ 500 million.

FTA and Investment Treaty.

Foreign secretary, Vikram Misri told reporters at a briefing ahead of the PM’s visit that India and Maldives are negotiating a Free Trade Agreement as well as an Investment Treaty.

`` We have always been the first on hand to respond to the needs of Maldives in times whenever it has faced crises, natural or manmade. There has been a robust political relationship which as discussed, bolstered by regular visits at high levels,’’ Misri told reporters.

Adding `` The relationship with the Maldives is comprehensive and multifaceted. It's been paid attention to by leadership at the highest levels, and we believe that this visit by the Prime Minister will contribute further to consolidating these strong ties and contribute to peace, prosperity, and security in the Indian Ocean region that both of us inhabit.’’

The Prime Minister is expected to inaugurate some India assisted projects that are now complete and may announce more development aid. In short India will ensure that it stays relevant in this crucial Indian Ocean island nation.