From China tilt to a balancing with Beijing and Delhi

From calling India a “bully” to visiting New Delhi as an invitee to the swearing-in of Narendra Modi as the Prime Minister of India for a third term, in June 2024, Mohamed Muizzu’s India policy is one of blowing hot and cold.

Maldives Balancing with Beijing and Delhi

Ever since his swearing-in in November 2023 as the President of the Maldives, Mr. Muizzu has embraced a “pro-Maldives” policy that reduces his country’s dependence on India, increases relations with China, and diversifies its foreign policy with others.

• More than six months after his swearing-in and impairing Male’s ties with India, his foreign policy is now seeing some recalibration.
• Mr. Muizzu’s foreign policy is shaped by domestic and external factors.
• Coming to power through a party that has led the “India Out” campaign, the leader has used anti-Indian rhetoric and diversification from India to further nationalist and religious sentiments and voter base in the Maldives.
• Both he and his party also enjoy close ties with China and deem it as a “pro-efficient” partner that would fund their ambitious projects.
• Further, owing to the increasing geostrategic importance of the Maldives and Male’s interest in reducing ties with India, he hopes to deepen the Maldives’s relationship with Japan, Saudi Arabia, Türkiye, the United Arab Emirates, the United Kingdom and the United States.

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Male’s Economic Difficulties

However, economic difficulties at home in Male, extra-regional powers falling short of expectations, and India’s accommodative policy are now compelling Mr. Muizzu to rethink his strategy.

• First, the economy of the Maldives continues to be in deep trouble – there are increasing debt maturities, low revenues, and a decline in foreign reserves.
• It has a debt-to-GDP ratio of 110% and a foreign reserve of $622 million, while its annual debt servicing accounts for $512 million for 2024 and 2025, and around one 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 Policy

First, India has maintained high-level engagements despite Male’s anti-Indian rhetoric and close relations with China.

• India’s Minister of External Affairs S. Jaishankar has met his Maldivian counterpart on multiple occasions.
• In addition, India replaced its 76 military personnel with civilian experts at the request of the new Maldivian government.
• It has increased its development assistance from ₹400 crore to ₹600 crore (a 50% increase) for 2024, and its export quota of food products to the Maldives by 5%, and construction items by 25%.
• Second, China is falling short of Male’s expectations. Mr. Muizzu’s visit to China in January 2024 saw both countries signing over 20 Memorandum of Understanding.
• There was also agreement to revive the Belt and Road Initiative projects and free trade agreement with China.
• The Maldives also signed a defence pact with China in March 2024, has agreed to explore implementing the Global Security Initiative, has upgraded the relations to a ‘China-Maldives Comprehensive Strategic Cooperative Partnership‘ from 2024 to 2028, and even permitted a Chinese ‘spy’ ship to dock in Male.
• On its part, besides a few strategic investments, Beijing is hesitant to invest in the country’s mega- infrastructure.
• China’s focus is on community development and housing projects, and capacity-building initiatives.
• Reports estimate that the Maldives owes China around $1.5 billion.
• While China promised a five years’ debt relief earlier, it is now disclosed that debt relief would complicate the prospects of future borrowing.
• The Chinese Ambassador has also expressed wariness in offering new loans because of Male’s increasing debt burden, declaring that Beijing would assist in the form of grants.
• This has fractured Mr. Muizzu’s hopes of attracting funds and investments from China, which happens through commercial loans, and not grants.
• Similarly, other countries have also been slow to reciprocate to his demands of economic partnerships and have primarily focused on capacity building and maritime security due to their other strategic preoccupations and commitments.
• Third, India’s accommodative policy and fulfilment of Mr. Muizzu’s demands and requests have facilitated this rapprochement.

The Signal from New Delhi

Amid these economic hardships and China’s lacklustre response, the Maldivian Foreign Minister, Moosa Zameer, visited India in May, marking the first high-level visit of the government.

• India expressed to him the need to uphold “reciprocal sensitivities” and responded to the Maldives’ request by extending a $50 million treasury bill for a year on zero interest (through the State Bank of India).
• This visit also saw India inviting Mr. Muizzu to Mr. Modi’s swearing-in.
• On India’s part, the invitation extended to Mr. Muizzu indicates that New Delhi will continue to engage with Male, regardless of who is in power.
• There is hope that the Maldivian leader, now with a super-majority in the Maldivian Parliament, would reciprocate India’s accommodative policy by respecting its sensitivities.
• On the other hand, with nearly 65% of Indian EXIM loans yet to be disbursed and prospects of additional grants and concessional loans, Mr. Muizzu hopes that the invitation offers an opportunity to improve bilateral ties with India and rescue the country’s economy.
• This is not to suggest that Mr. Muizzu has embraced a pro-India policy.
• Along with an attempt to deepen partnerships with others, his equation with China remains unchanged.
• Both countries even continue to maintain regular high-level exchanges.
• What has perhaps changed is his realising that he cannot completely alienate India and that he would 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, Mr. Muizzu is possibly betting on increasing his agency to further the Maldives’ interests.

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Conclusion

Mr. Muizzu’s recalibrated foreign policy aims to balance relations with India and China, leveraging their competition to bolster the Maldives’ economic and strategic interests.