Context:

Maldives President Mohamed Muizzu has accepted the invitation to attend Prime Minister’s swearing-in ceremony. Since the swearing-in of the new Maldivian President, a “pro-Maldives” policy has been embraced that reduces the country’s dependence on India, increases relations with China, and diversifies its foreign policy with other nations. More than six months after this swearing-in and initially straining Male’s ties with India, the foreign policy is now seeing some recalibration.

Influences Shaping Foreign Policy and Economic Challenges in Maldives

• Domestic and External Influences on Foreign Policy
  • The foreign policy is shaped by both domestic and external factors. Coming to power through a party that has led the “India Out” campaign, the new leadership has used anti-Indian rhetoric and diversification from India to further nationalist and religious sentiments, appealing to their voter base in the Maldives, enjoying close ties with China and view it as a “pro-efficient” partner that would fund their ambitious projects.
  • Additionally, given the increasing geostrategic importance of the Maldives and Male’s interest in reducing ties with India, they aim to deepen the Maldives’ relationships with Japan, Saudi Arabia, Türkiye, the United Arab Emirates, the United Kingdom, and the United States.
• Economic Difficulties in Male
  • The Maldives' economy is in deep trouble, facing increasing debt maturities, low revenues, and a decline in foreign reserves. The country has a debt-to-GDP ratio of 110% and foreign reserves of $622 million, while its annual debt servicing accounts for $512 million for 2024 and 2025, and around $1 billion in 2026.
  • With its heavy dependence on imports, food and fuel inflation, and a low production base, the government is struggling to maintain its foreign reserves. It has even convinced its top import partners, India and China, to pay for imports in local currency.

Ties with China and India's Accommodative Policy

• China Falling Short of Male’s Expectations
  • During the President’s visit to China, over 20 Memoranda of Understanding were signed, including agreements to revive Belt and Road Initiative projects and establish a free trade agreement with China. Additionally, in March 2024, the Maldives signed a defense pact with China, agreed to explore implementing the Global Security Initiative, upgraded their relationship to a ‘China-Maldives Comprehensive Strategic Cooperative Partnership’ from 2024 to 2028, and allowed a Chinese ‘spy’ ship to dock in Male.
  • Despite these strategic agreements, Beijing has shown reluctance to invest in the country's large-scale infrastructure projects, instead prioritizing community development, housing projects, and capacity-building initiatives.
  • The Maldives reportedly owes China around $1.5 billion. Although China had previously promised a five-year debt relief, it has been revealed that such relief could complicate future borrowing. The Chinese Ambassador has expressed caution in offering new loans due to Male’s increasing debt burden, indicating that Beijing would provide assistance in the form of grants.
  • This shift has dampened hopes of attracting funds and investments from China, which typically come through commercial loans rather than grants. Similarly, other countries have been slow to respond to demands for economic partnerships, focusing mainly on capacity building and maritime security due to their other strategic priorities and commitments.
• India’s Accommodative Approach
  • On the other hand, India’s accommodative policy and fulfillment of the President’s demands have facilitated a rapprochement. India has maintained high-level engagements despite Male’s anti-Indian rhetoric and close relations with China. The Indian Minister of External Affairs has met his Maldivian counterpart on multiple occasions.
  • Additionally, India replaced its 76 military personnel with civilian experts at the request of the new Maldivian government, increased its development assistance from ₹400 crore to ₹600 crore for 2024, and expanded its export quota of food products to the Maldives by 5% and construction items by 25%.

Balancing Act: India and China

• The Signal from New Delhi
  • Amid economic hardships and China’s lackluster response, the Maldivian Foreign Minister’s visit to India marked the first high-level visit of the new government. India emphasized the need to uphold “reciprocal sensitivities” and responded to the Maldives’ request by extending a $50 million treasury bill for a year at zero interest through the State Bank of India. This visit also saw India inviting the President to the Indian Prime Minister's swearing-in.
  • For India, the invitation extended to the President signals New Delhi’s intent to continue engaging with Male, regardless of the ruling party. There is hope that the Maldivian leader, now with a super-majority in the Maldivian Parliament, will reciprocate India’s accommodative policy by respecting its sensitivities. With nearly 65% of Indian EXIM loans yet to be disbursed and prospects of additional grants and concessional loans, the President sees the invitation as an opportunity to improve bilateral ties with India and rescue the country’s economy.
• Navigating a Balanced Foreign Policy Strategy
  • This is not to suggest that the President has embraced a pro-India policy. Along with attempts to deepen partnerships with other nations, his relationship with China remains unchanged, with regular high-level exchanges continuing between the two countries.
  • What has changed is the realization that completely alienating India is not viable and that the Maldives stands to benefit more by balancing and playing one country against the other rather than taking sides. As India and China compete and try to outdo each other in the region, the Maldivian leadership is likely betting on increasing its agency to further the Maldives’ interests.

Conclusion

With Male facing increasing domestic and foreign policy challenges, the Maldives is possibly aiming at a reconciliation with India. The evolving foreign policy reflects a pragmatic approach to balancing relations with both China and India while navigating the complexities of domestic economic pressures and international strategic interests. By adopting a strategic approach that prioritizes national interests, manages debt burdens, and explores diverse partnerships, the Maldives can achieve a more balanced and sustainable foreign policy. This will require clear communication with all partners, a focus on domestic development, and a willingness to compromise. The success of this strategy will depend on the Maldives' ability to maintain a pragmatic approach and avoid getting caught in the middle of the India-China rivalry.

Source- The Hindu