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By deferring repayment of the $50 m treasury bill of Maldives for one more year, India has shown that it’s a friend, not a master of its neighbour. But as China is involved, it needs to draw red lines for the future

By Col R Hariharan

Many Indians probably see Maldives President Mohamed Muizzu as putting on a Dr Jekyll and Mr Hyde act when he deals with India after winning the presidential election using the anti-India rhetoric. Using the same rhetoric, he won a thumping majority in the recently held parliamentary election too. 

Muizzu’s Dr Jekyll act was prominent in his first speech as president, when he called for “foreign troops” to quit by the March 15 deadline. The only foreign troops present in the island-nation were 80-plus Indian support staff, who manned the surveillance and casualty evacuation aircraft—two helicopters and a Dornier aircraft—gifted by India. He held in abeyance all agreements with India and cancelled the pact for carrying out hydrographic survey.

His act continued when he opted to make his first state visit to China rather than the traditional visit to New Delhi. He described China as Maldives “closest development partner” and committed to implement the stalled Free Trade Agreement with it. The signing of the Maldives-China “comprehensive strategic cooperative partnership” agreement led to the signing of 20 agreements. They involve China in virtually every sphere of activity in Maldives. Weeks later, the two countries went on to sign a military pact that could lead to free military supplies from China.

Despite cash crunch, President Muizzu procured Bayratkar TB2 unmanned aerial vehicles (UAV) costing around $37 million from Turkiye to inaugurate the Maldivian National Defence Force (MNDF) Air Corps for carrying out surveillance of its waters. The whole exercise was probably to show that Maldives was not dependent on India for surveillance of Maldives Exclusive Eco­nomic Zone (EEZ).

More damaging was the Maldives agreement with China allowing free access to the Chinese “research vessel” Xiang Yang Hong 3 despite strategic concerns expressed by both India and the US over the spy ship’s activity in the Indo-Pacific. According to media reports, the Chinese vessel began its journey to Maldives a day after Muizzu concluded his trip to China. It arrived in the vicinity of Maldives 15 days later, and docked in Male on February 22. It headed to the boundary of the Maldives EEZ, and returned a month later to dock in Thilafushi harbour on April 25. Maldives authorities claim they have not been informed of its activities during this period.

Apparently, Muizzu’s stance to curb Indian influence paid off politically when his People’s National Congress won 66 of 93 seats in parliament. The coalition partners, Maldives National Party (MNP) and Maldives Development Alliance (MDA), won one and two seats respectively. The Jumhooree party won one seat. Former President Ibrahim Mohamed Solih’s pro-India Maldivian Democratic Party (MSP) took a heavy drubbing, winning only 12 seats. The rest of the 11 seats were won by independents.

But that will be trivialising the influence of local issues, particularly housing, healthcare and communication affecting the voters. In his inaugural address, Muizzu had promised to overcome the country’s debt burden, complete the Velana mega project expansion to generate revenue and overcome the housing shortage. In the run up to the parliamentary poll, he promised construction of 1,000 housing units in B. Eydhafushi, identified as one of the urban centres. After the election, the government signed a contract for the construction of the housing units with China’s Sinohydro Corporation.

Similarly, Muizzu’s emphasis on Maldivian identity and language and assertion of the island-nation’s strategic importance in Indian Ocean security also probably created a positive impact in his favour.

However, when mounting debts confronted Muizzu at home, Mr Hyde seems to have taken over. In Muizzu’s first ever interview to the local media in March, he emphasised that he had not taken any action nor made any statement that may strain Maldives’ relations with India. He “fervently” hoped that India would accommodate debt relief measures for the loans successive governments in Maldives had taken from India. Maldives continued to discuss debt relief measures with India.

Maldives’ Foreign Minister Moosa Zameer made his first high-level visit to New Delhi on May 9 to meet External Affairs Minister S Jaishankar. Terming India as a “development partner in the Maldives”, Zameer confirmed that debt relief was part of the talks. He further confirmed that Indian tourists to Maldives had “tremendously decreased”. He also probably wanted to ensure that India conforms to the May 10 deadline for all Indian troops to quit Maldives.

Apparently, Zameer’s trip was successful. The Indian High Commission in Male in a statement on May 14 said the Indian government had provided budget support to the Maldives in the form of a rollover of the $50 million Treasury Bill for an additional year. India’s action was at the request of Zameer.

India’s bailout action took further traction after the International Monetary Fund cautioned Maldives about “debt distress” due to heavy borrowing from China. Maldives foreign debt reached $4.038 billion in 2023, approximately 118% of its GDP. China’s Export Import Bank owns 25.2% of its external debt. The IMF advised the government to take urgent measures, including revenue increase, spending cuts and reduce external borrowings to avert an economic crisis.

It will be interesting to see how President Muizzu handles the economic challenge. Maldives had a trade deficit of $ 243.80 million in March 2024; it will have to curb imports. Remittances in Maldives increased to a record $613.80 million in 2023 from $564.60 million in 2022. Action will have to be taken to increase it further this year.

Obviously, China will be playing a big part in rescheduling Maldives’ debts. If we go by Sri Lanka’s experience, China is a Shylock as far as international debts are concerned. Muizzu will be truly tested in handling the Chinese on this count. The president will have to defer his ambitious plans to procure more drones to expand the MNDF Air Corps. And probably scale down some of the mega construction projects on the anvil.

According to its tourism ministry, tourist arrivals totalling 8,22,723 as on May 11 showed an increase of 11.9% compared to the same period last year. However, Indian tourists who had topped the list last year seem to have downgraded Maldives in their travel plans after some Maldivians took to social media to do India-bashing. Some deft re-packaging of with add-ons will be needed to get the Indian tourist back.   

China may not consider India as the main factor in the Indo-Pacific region, though for India it is. President Xi Jinping is on an international power projection mode. Xi is on a quest for a New World Order where it will occupy the main stage. Maldives is astride the international shipping route of the Indian Ocean, with 15 ships passing through its channel every minute. This is one reason why China is wooing Maldives as it is important for domination of Indian Ocean security. Maldives is also important in the overall security of the Indo-Pacific, with the US base Diego Garcia, located 700 km from it. And of course, it is too close to Indian territory and the west coast.

With Muizzu walking the economic tight rope, India can expect more calls for “emergency assistance” from him as it happened in Sri Lanka. By deferring the repayment of the $50 million treasury bill of Maldives for one more year, India is showing it is a friend and not a master of Maldives, its Indian Ocean neighbour. But India must remember China is a preferred defense partner of Maldives and its fragile ecosystem. So probably India needs to lay down some red lines for Maldives to observe. I presume India’s adroit external affairs minister may already have laid down this to his Maldivian counterpart. If not, no time should be lost. 

—The writer is a retired military intelligence specialist on South Asia associated with the Chennai Centre for China Studies

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