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Maldives: Muizzu dumps China, trying to placate India

The Maldives administration has announced President Mohamed Muizzu’s (early) visit to India, which is a big development. Along with other noteworthy developments in political matters and defense/security cooperation, this development suggests that India’s patience and pregnant silence have finally paid off, returning bilateral ties to a time before the recent strains, which coincided with Muizzu’s ascent to power and political prominence.

The President is expected to travel to India shortly. Heena Waleed informed reporters at the President’s Office in Male, the capital, that talks are currently taking place between the Maldives and India to determine the ideal date. Finalizing the dates and other information, including the Maldivian delegation’s members, is still pending. Bilateral visits are typically announced in both capitals at the same time. The announcement of Muizzu’s visit to Delhi without waiting for similar diplomatic niceties appears to have highlighted the Maldivian side’s particular interest in the topic.

In a sense, by bringing up Muizzu’s plan to come and his desire to patch things up right away, the Maldivian side may have moved the goal posts. In addition, it emphasizes even more how quickly the Muizzu leadership is responding to the economic crisis that threatens to engulf the country, as it did for the common neighbor of Sri Lanka two years ago, and the expectations regarding early Indian assistance and an interim bailout package, particularly with regard to “budgetary support.”

It appears that New Delhi will wait and observe for additional signals from Male regarding the results of the bilateral discussions that External Affairs Minister (EAM) S Jaishankar had with President Muizzu, Foreign Minister Moosa Zameer, Defense Minister Ghassan Maumoon, and Finance Minister Mohamed Shafeeq during his visit to the Maldives last month.

Given the circumstances, it is unclear if the “premature” Maldivian announcement of the President’s undated travel to Delhi was merely a statement of public demand or if it also served as a warning to New Delhi about the Muizzu’s shortcomings and/or concerns, signifying a “so far, no more” strategy.

It should be noted that President Muizzu’s planned visit, when it occurs, will be his second. On June 9, he took part in Prime Minister Narendra Modi’s third consecutive swearing-in. On June 9, Indian External Affairs Minister S Jaishankar made a “return visit” to Male in order to move forward bilateral ties that had stalled because of decisions and statements made by President Muizzu, more than anyone else in the Maldivian system. Thus, the unilateral announcement of his journey to Delhi now appears to reflect a desire on the part of the Maldivian side, particularly to turn back the clock.

After Jaishankar’s visit, it’s not like nothing has changed on the Maldivian side—at least, not it appears. On the political and security fronts, bilateral tensions and strains were clearly visible. Even if it was delayed and perhaps discussed internally, the Maldivian side’s damage control has covered both sides. The abrupt resignation of two of the three junior ministers who were deemed to be “anti-India,” even though it was only symbolic, comes eight months after their offensive and impolite public behavior. Insofar as the present is concerned, it ends a bothersome past.

Regarding reversals linked to security, the same cannot be stated, but it appears that a start has been made. A delegation from the Maldivian National Defence Force (MNDF), led by Chief of Defence Staff Maj-Gen Ibrahim Hilmy, broke the ice during their recent visit to New Delhi. The purpose of the visit was to discuss ways to strengthen maritime security partnerships and cooperation through the Indian Navy, Coast Guard, and other agencies of the Indian security establishment. The discussions were held under the framework of India’s SAGAR initiative. A group from the National Defence College (NDC) in India went on a “study tour” of the Maldives at that time, during which they had “productive engagements with various ministries and institutions.”

All of these are important signs that things are starting to improve between the two parties, which had reached previously unheard-of lows following Muizzu’s takeover in November of last year. Still, it will undoubtedly take time for the scars to fade and heal, and any provocative behavior in the interim will only serve to rekindle old wounds, no matter how minor. We’ll be closely observing how the two parties handle the bilateral ties restoration process and how much the Muizzu leadership is willing and/or able to accomplish.

Even though it took longer than expected, the dismissal of the two junior ministers in this situation must be seen as a good development. It’s safe to assume that Mariyam Shiuna and Malsha Shareef, two of Muizzu’s trusted associates from his previous term as Male City Mayor, resigned on orders rather than voluntarily. Mahzoom Majid, the third minister under suspension, is still unknown.

In retrospect, Muizzu’s ‘India Out/India Military Out’ appeal during his successful presidential vote campaign, which resulted in his assumption of the elected office in November of last year, was a springboard for his anti-India and anti-PM Modi ministerial appointments. His jailed former president and estranged political mentor, Abdulla Yameen, whose conservative electoral constituency he desired, had made a similar call after the latter’s nomination for the presidential election was rejected the previous year.

President Muizzu insisted that New Delhi remove military pilots and technicians operating three India-gifted aerial platforms used for aerial surveillance and medical evacuations, which were under the command and control of the Maldives National Defence Force (MNDF), citing perceived pressure from his conservative constituency base. In the midst of bitter protests abroad, the Maldivian administration decided to keep the aerial platforms and swap out the Indian military personnel with civilian pilots and technicians.

If that represented hope for the first time since Muizzu took office, then the two countries have also, in a number of ways, rekindled their security collaboration. Shortly before Jaishankar’s visit, the Maldives rejoined the Colombo Security Conclave (CSC), a multilateral regional effort, after the Muizzu regime had boycotted the previous yearly gathering of member countries’ National Security Advisors (NSA) in Mauritius.

Some Western observers quickly concluded that the boycott was directed (also) at New Delhi, given the complex circumstances surrounding the relations between India and the Maldives at the time. But, just a few days after the meeting in Mauritius, the Maldivian government explained it away as a misunderstanding brought on by a deficiency of information provided to the “transition team” by President Ibrahim Solih’s previous administration. If nothing else, it suggested a desire to correct the record and maybe make a late effort to salvage the situation.

It’s not far to search for the causes. As of now, the CSC is more than just a bilateral relationship. The very mechanism was a carryover from the bilateral “Dosti” Coast Guard exercises on matters of non-traditional security, which were instituted following the Indian military intervention to neutralize a mercenary-led coup attempt against President Maumoon Abdul Gayoom’s government in 1988. This is what, however, made the earlier Maldivian “boycott” and its immediate return intriguing.

India is now more important to the Maldives than it has ever been, primarily in terms of economic cooperation and assistance. The elections for president in Sri Lanka on September 21 will be closely watched by Maldivian politicians and the public, starting with Team Muizzu. The incumbent, Ranil Wickremesinghe, is running on a platform of being the “savior who stabilised the economy” and for a mandate to carry out the IMF-centric reforms that have increased taxes and tariffs but haven’t succeeded in bringing down prices or inflation.

Following the lowering of the Maldives’ credit rating from CAA1 to CAA2, international rating agency Moody’s made evident the fragile state of the country’s economy—a legacy problem shared by Sri Lanka. For nearly identical grounds, Fitch’s Ratings, another agency, likewise reduced the Maldives’ ranking in August, moving it from “CCC+” to “CC.”

The reasons include, among other things, low foreign exchange reserves relative to external debt servicing and the ongoing influence of excess domestic liquidity from the Covid era on the exchange rate peg. Rating agencies and international organizations such as the World Bank and IMF have been pointing out that debt payments will cost over a billion dollars in 2026 and $600-700 million in 2025.

On paper at least, the Muizzu dispensation has gotten off to a good start with its acceptance of the economic realities and its steadfast commitment to correcting internal issues to the extent that it is both necessary and possible. The Maldivian Inland Revenue Authority (MIRA) has modified tax regulations on expected lines for dollar-earning individuals and companies, starting with those in the mainstay tourism sector, to pay all of their governmental dues in US currency. This is the latest and most significant initiative in this regard.

The official currency of the Maldives is rufiyaa, although more than larger economies in the region and possibly beyond, the US dollar has emerged as the standard currency of the nation. The dollar rate on the gray market also indicates the state of the country’s foreign exchange reserves and economy. Following a decline during the previous year’s presidential election, it is now rising once more.

The simplest aspect is for dollar earners in the nation to order payments in dollars to the government. Additionally, President Muizzu faces political danger because it’s possible that he’s already mounted the tiger and can only move forward. Any retreat will be seen as weakness, and any attempt to advance will likewise be seen as a sign of increased danger.

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Questions have already been raised over the abrupt resignation of the European CEO that Solih chose, as well as the three Western assistants he appointed to manage the joint-sector Bank of Maldives Ltd (BML), following the country’s biggest bank becoming embroiled in two scandals in a matter of weeks. The results of the police investigation into claims of a “MBL-MDP plot” to overthrow the government, involving the opposing Maldivian Democratic Party, two years ago, are also being sought by opposition-backed media and social media sections. It is implied that the plot idea was created to deflect attention away from budgetary mismanagement and an imminent economic collapse.

It is no secret that wealthy foreigners dominate Maldivian politics and the country’s economy, but the President’s People’s National Congress (PNC) party has a sizable number of legislators who possess a “super-majority,” meaning that they too may face hardships. Many of them may feel impacted because they own resorts and/or other profitable enterprises.

With this one decision, Muizzu may have let the cat among the pigeons, though the comparison should end there. Such seemingly innovative policy measures have the potential to retrieve the fiscal, if not overall, economic situation for Muizzu. Even symbolism of the decision will have a positive popular impact, yes, but then it is time Muizzu begins watching (even) his shadow as it is possibly daggers drawn otherwise—and hidden, too.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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