Note4Students
From UPSC perspective, the following things are important:
Prelims level: SAARC Currency Swap Framework
Why in the News?
The RBI has announced a Currency Swap Agreement with the Maldives Monetary Authority (MMA) under the SAARC Currency Swap Framework 2024-27.
India’s Financial Support to Maldives
- India will extend financial support to the Maldives, providing $400 million under the US Dollar/Euro Swap Window.
- Additionally, ₹30 billion (approximately $357 million) will be made available under the INR Swap Window.
- The Currency Swap Agreement will remain valid until June 18, 2027.
|
About SAARC Currency Swap Framework:
|
Details |
| Objective |
To provide short-term liquidity support to SAARC member countries during financial crises or instability. |
| Administered by |
Reserve Bank of India (RBI) |
| Launch Year |
2012 |
| Countries Involved |
All SAARC members: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. |
| Facility |
Swap arrangement in US Dollar, Euro, or Indian Rupee. |
| Interest Rate |
Based on the currency borrowed, includes a margin over international benchmark rates. |
| Purpose |
To address the balance of payment crises and provide financial stability. |
| Recent Users |
Sri Lanka, Maldives |
Maldives’ Debt Situation
- The Maldives’ debt is now estimated at 110% of its gross domestic product (GDP), with increasing risks of defaulting on its sukuk (Islamic bond).
- A failure to make payments would mark the world’s first default of an Islamic bond.
-
- Fitch Ratings estimates that the Maldives’ external debt obligations will reach $557 million by 2025 and exceed $1 billion by 2026.
- The country’s foreign reserves stood at just $437 million at the end of August, only enough to cover one-and-a-half months of imports.
- India provided a $50 million lifeline to the Maldives to help avoid this outcome.
- The Export-Import Bank of India is owed nearly $400 million, while the Export-Import Bank of China is owed about $530 million as of last year.
Significance of India’s Assistance
- Debt Relief: India’s financial aid, including a $50 million lifeline, would help the Maldives avoid debt default and stabilize its economy.
- Geopolitical Influence: With this, India can counter China’s influence in the Maldives, strengthening its strategic position in the Indian Ocean.
- Diplomatic Reset: India’s support strengthens diplomatic relations, aiding the Maldives in debt restructuring and global partnerships.
PYQ:
[2019] In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis?
- The foreign currency earnings of India’s IT sector
- Increasing the government expenditure
- Remittances from Indians abroad
Select the correct answer using the code given below:
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3 |
Note4Students
From UPSC perspective, the following things are important:
Mains level: Economic difficulties in Male
Why in the news?
Amid mounting domestic and foreign policy challenges in Male, Mohamed Muizzu appears to be seeking reconciliation with India.
Economic Difficulties in Maldives
- Debt Burden: Maldives faces severe economic strain with a debt-to-GDP ratio of 110% and significant debt servicing obligations, including around $512 million annually in 2024 and 2025.
- Foreign Reserves: Foreign reserves are critically low at $622 million, insufficient to cover debt maturities and sustain imports amid rising inflation.
- Dependence on Imports: Heavy reliance on imports for essential goods exacerbates economic vulnerabilities, particularly amidst food and fuel inflation.
- Revenue Generation: The government struggles with low domestic revenue generation capacity, further complicating fiscal management and debt sustainability.
- Diversification Efforts: Efforts to diversify economic partnerships beyond traditional allies like India and China reflect a strategy to mitigate economic dependencies and attract diverse investments.
What do the ties between India and China imply?
- Geopolitical Competition: India and China’s engagements in countries like the Maldives reflect a broader competition for influence in the Indian Ocean region. Both countries strategically invest in infrastructure and security partnerships to enhance their regional foothold.
- Economic Leverage: China’s substantial investments in the Maldives, including infrastructure projects under the Belt and Road Initiative (BRI), provide economic leverage but also raise concerns about debt sustainability and strategic dependencies.
- Strategic Alignment: While India emphasizes developmental assistance and strategic partnerships focused on security and governance, China’s engagements often prioritize infrastructure development and economic cooperation, reflecting different strategic priorities.
- Regional Stability: Both India and China play pivotal roles in ensuring stability and security in the Indian Ocean region. Their respective approaches influence regional dynamics and perceptions among neighbouring countries regarding economic partnerships and security alignments.
India’s stand
- Balanced Approach: India continues to engage with the Maldives despite geopolitical shifts and maintains a stance of constructive diplomacy, offering economic support and emphasizing mutual respect.
- Long-term Engagement: Inviting President Muizzu to Prime Minister Modi’s swearing-in signals India’s commitment to long-term bilateral relations and stability in the Indian Ocean region.
- Strategic Importance: India views the Maldives as crucial for maritime security and regional stability, underpinning its continued diplomatic efforts and economic assistance.
Conclusion: India can increase its economic assistance to the Maldives through grants, concessional loans, and capacity-building initiatives aimed at improving fiscal management and revenue generation capabilities. And focus on projects that enhance infrastructure resilience, promote sustainable development, and support economic diversification efforts beyond traditional sectors.
Mains PYQ:
Q Discuss the political developments in Maldives in the last two years. Should they be of any cause of concern to India? (UPSC IAS/2013)
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Lakshadweep
Mains level: Neighbourhood First Policy
Central Idea:
The article delves into recent diplomatic tensions between India and the Maldives, triggered by social media campaigns and statements from Maldivian officials. It emphasizes the challenges India faces in maintaining regional relationships amid a shifting dynamic in the Maldives towards a pro-China stance.
Key Highlights:
- Social Media Campaign: Post-Prime Minister Modi’s visit to Lakshadweep, a social media campaign to boycott the Maldives emerged, leading to negative reactions from some Maldivian officials.
- Pro-China Shift: President Muizzu’s visit to China and his pro-China stand mark a significant departure from his predecessor’s policies. He seeks closer ties with China and challenges existing Indian influence in the region.
- Diplomatic Fallout: Maldivian officials’ comments on India and Modi resulted in their suspension, with the Maldives clarifying that their views did not represent the government’s official stance.
- India’s Regional Importance: India’s relationship with the Maldives is crucial due to geographical proximity, shared maritime interests, and historical ties. The Maldives has traditionally supported India in international forums.
- India’s Foreign Policy Challenges: The article points out India’s diplomatic challenges, citing instances such as its stance on Russia’s invasion of Ukraine and its handling of the Israel-Hamas conflict, impacting its global standing.
Key Challenges:
- Shifting Alliances: The Maldives’ pivot towards China challenges India’s influence in the region, posing a diplomatic challenge and potential geopolitical consequences.
- Domestic Sentiments: The article highlights the impact of populist rhetoric and social media campaigns on India’s foreign policy, especially in dealing with smaller neighbors.
- Global Perception: India faces a challenge in projecting a harmonious image that aligns with both its national interests and the interests of its neighbors, as opposed to adopting a more confrontational approach seen in social media reactions.
Key Phrases:
- China’s wolf-warrior diplomacy: An assertive and combative approach to foreign relations characterized by aggressive rhetoric and actions, aimed at defending China’s interests and countering perceived challenges or criticisms from the international community.
- Neighbourhood First Policy: Refers to India’s approach emphasizing prioritizing relationships with its neighboring countries.
Key Quotes:
- “His election campaign in 2023 also contained anti-India rhetoric: he promised to remove Indian troops from the Maldives and balance trade relations, which he claimed were heavily tilted in India’s favour.”
- “India has to make those hard choices and it must make them now.”
Key Examples and References:
- Maldivian President’s Visit to China: President Muizzu’s pro-China stance and the elevation of bilateral ties with China.
- India’s G20 Summit Theme: The use of the theme ‘One Earth, One Family, One Future’ during the G20 summit.
Key Facts and Data:
- Maldivian President’s Request: President Muizzu’s request for India to remove its military personnel from the Maldives by March 15.
- China-Maldives Comprehensive Strategic Cooperative Partnership: An agreement indicating deepening ties between China and the Maldives.
Critical Analysis:
The article critically examines India’s foreign policy challenges, emphasizing the need for a balanced approach and the potential repercussions of adopting a confrontational stance, drawing parallels with China’s diplomacy.
Way Forward:
The article suggests that India needs to navigate its foreign policy with a globalist perspective, taking into account the complexities of regional relationships, avoiding populist rhetoric, and making strategic decisions that align with its long-term interests.
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Key facts
Mains level: India and Maldives ties, challenges, recent developments and future prospect
What’s the news?
- Recent changes in the Maldives’ leadership have raised questions about the future of its relationship with India.
Central idea
- While leadership changes may bring some alterations, the fundamental ties between the two nations remain intact. From the era of Maumoon Abdul Gayoom to the present day, India and the Maldives have maintained a close and friendly relationship, with occasional challenges. Therefore, it’s essential not to rush to judgment regarding the current situation.
Background
- Historical Ties: The relationship between India and the Maldives is deep-rooted. From Maumoon Abdul Gayoom’s leadership until today, both nations have maintained a close bond, despite occasional hiccups.
- Geographical Proximity: The Maldives spans 90,000 sq km, mostly covered by the sea, with the remaining land spread across 1,200 islands. Situated just 70 nautical miles away, India has always been the Maldives’ closest ally. As Ibn Khaldun stated, geography is destiny.
Challenges in the Maldives
“Maldives, despite its 98% literacy rate, faces various contradictions that pose challenges to democratic governance.”
- Constitutional Restrictions: The Maldivian constitution bars anyone who isn’t a Sunni Muslim from becoming a citizen. This can be seen as restrictive and exclusive, which may not align with broader principles of democratic governance.
- Nascent Civil Society: The civil society in the Maldives is still emerging. This means the public structures and mechanisms that can hold the government accountable and ensure the active participation of citizens in the governance process might be underdeveloped.
- Drug Abuse: The Maldives has been grappling with an increasing problem of drug abuse, which poses social and health-related challenges.
- Distorted Labor Market: This implies there might be imbalances in employment opportunities, perhaps with certain sectors having too many workers and others having too few, or challenges related to wages and workers’ rights.
- Growing Inequality: Despite its successes in areas like tourism, the Maldives faces growing economic disparities among its population.
- Foreign Influence and Debt: China’s policy of extending debt and subsequently interfering in the internal politics of the Maldives, as well as supporting conservative elements, poses challenges. This not only can lead to a debt crisis but also threatens the democratic progression of the country.
- Legacy of Controlled Regime: The influence of the Gayoom years and the alignment with China by certain elements for narrow gains might not serve the broader interests of the Maldivian nation in the long term.
India’s Role
- Historically: From Buddhism’s prevalence in the Maldives to its dependence on India during the British protectorate era (1887–1965), India has always played an influential role.
- Economically: The State Bank of India has been instrumental in boosting the Maldives’ tourism economy and remains the largest bank there.
- Assistance: Whether during the 1988 coup, the 2004 tsunami, or the 2014 water crisis, India has always been the first to assist. India also supplies essential items in bulk and contributes significantly to the Maldivian education and health sectors.
- Defence and Security: India has been a robust defense partner, conducting joint exercises and providing security assistance.
India’s Concerns Regarding the Maldives
- China’s Growing Influence: China’s increasing role in the Maldives is driven by debt financing. This kind of influence, particularly through debt traps, could lead to the consequent hegemony of China in the region, which is a matter of concern for India given the strategic importance of the Indian Ocean Region.
- Internal Interference by External Powers: China’s policy of interfering in the internal politics of the Maldives, especially its support for conservative elements, is worrisome for India. This could hinder the development of a robust democracy in the Maldives and potentially impact the bilateral relationship between India and the Maldives.
- Economic Interests: With projects like greater Male connectivity and being a major supplier of essential goods to the Maldives, India has vested economic interests. Any disruption or potential shift in trade relations can impact India’s economic engagement.
- Security and Defense Cooperation: The defense cooperation isn’t just about tangible assets like helicopters but extends to joint exercises, training, and disaster management. Any shift in Maldivian policies that affects this cooperation can be concerning.
- Legacy of Assistance: India’s role as a primary responder to Maldivian crises and its consistent support over the years hold significance. India would be concerned if such efforts and goodwill aren’t recognized or are undermined by external influences.
- President Designate Mohamed Muizzu: Mohamed Muizzu, described as a Western-educated engineer, is expected to take over the reins of leadership. His past roles and his education may influence the Maldives’ direction, both domestically and in terms of foreign relations.
- Former President Yameen’s Situation: Yameen’s shift from jail to house arrest indicates changing political dynamics within the Maldives. Given that Yameen’s tenure was marked by a pro-China policy, any change related to his influence might hint at a shift in foreign policy alignment.
Conclusion
- India’s unwavering commitment has significantly shaped the Maldives, and any impulsive decisions could be detrimental for the latter. Given the deep historical ties and mutual interests, it’s crucial for the new leadership to recognize and value the long-standing bond. As history has often shown, taking relationships for granted can have grave consequences.
Also read:
The Maldives, the evolution of a democracy
Note4Students
From UPSC perspective, the following things are important:
Prelims level: UTF Project
Mains level: India- Maldives Relations
Central Idea: The article discusses the recent commissioning of the Indian grant-in-aid UTF (Uthuru Thila Falhu- Island) Harbour Project, the coastal surveillance radar system, in the Maldives. The project is a significant milestone in the growing defence ties between the two countries.
What is the UTF Project?
- The UTF project was announced during External Affairs Minister S Jaishankar’s visit in February 2021.
- It is among the biggest Indian grant-in-aid projects in the Maldives.
- It is aimed at developing a maintenance and repair hub for naval vessels and will help the Maldives become self-sufficient.
Importance of the Project
- The project marked a major step in growing defence cooperation between India and Maldives.
- The facility will strengthen the capability of the Maldivian Coast Guard and facilitate regional humanitarian assistance and disaster relief efforts.
Controversy Surrounding the Project
- There were allegations that the project was a cover for Indian military presence in the Maldives.
- An “India Out” campaign was launched in the island nation backed by its opposition leader Abdulla Yameen.
- Maldives President Ibrahim Solih banned anti-India protests as a threat to national security.
Defence Cooperation and Other Projects
- India has gifted a Dornier aircraft and a patrol vessel to the Maldives in the past.
- India has provided 24 vehicles and a naval boat and will build police facilities on 61 islands in the country.
- The joint statement released by India and Maldives after Defence Minister’s visit highlighted ongoing defence cooperation between the two neighbours.
- The countries have agreed to explore additional avenues for cooperation, including in areas of defence trade, capacity building, and joint exercises.
- Both the countries are working closely to address challenges, including those on maritime security, terrorism, radicalisation, piracy, trafficking, organised crime, and natural disasters.
- India has financed the Greater Male Connectivity Project (GMCP), a $500 million project, to build a 6.74 km bridge and causeway linking the capital of Maldives, Male, with neighboring islands.
India-Maldives Relations: A backgrounder
- India and Maldives are neighbors sharing a maritime border.
- Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
- India was one of the first nations to recognize Maldives’ independence.
- Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
- Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.
Causes for the anti-India sentiments
- Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
- Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
- Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
- Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.
Restoration of ties
Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.
Major irritants in ties
- Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
- Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
- Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
- Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.
Recent gestures by India
[1] 2014 Male drinking-water crisis
- In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
- India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.
[2] 2020 Covid-19 crisis
- During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
- Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.
[3] Greater Male Connectivity Project
- India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
- This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.
Maldives’ significance for India
- Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
- Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
- Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
- Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
- People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
- Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.
Way forward
- India continues to be an important partner of the Maldives.
- India must not grow complacent over its position and must remain attentive to the developments in the Maldives.
- India must play a key role within Indo-Pacific security space to ensure regional security in South Asia and surrounding maritime boundaries.
- At present, the ‘India Out’ campaign has support from a limited population but this cannot be taken for granted by the Indian government.
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Note4Students
From UPSC perspective, the following things are important:
Prelims level: NA
Mains level: India-Maldives relations
Maldivian President Ibrahim Mohamed Solih issued a decree banning the ‘India Out’ campaign, now led by former President Abdulla Yameen, terming it a “threat to national security”.
The India-Out Campaign
- Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
- ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
- It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.
Causes for the anti-India sentiments
- Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
- Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
- Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
- Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.
Restoration of ties
- Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.
India-Maldives Relations: A backgrounder
- India and Maldives are neighbors sharing a maritime border.
- Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
- India was one of the first nations to recognize Maldives’ independence.
- Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
- Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.
Major irritants in ties
- Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
- Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
- Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan-based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
- Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.
Recent gestures by India
[1] 2014 Malé drinking-water crisis
- In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
- India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.
[2] 2020 Covid-19 crisis
- During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
- Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.
[3] Greater Male Connectivity Project
- India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
- This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.
Why is Maldives significant for India?
- Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
- Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
- Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
- Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
- People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
- Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.
Conclusion
- There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
- India must use its Diaspora more extensively for strengthening its relations.
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Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much
Mains level: India-Maldives relations
The Government of Maldives has said that it “strongly rejects attempts to spread false information” criticizing its ties with India, its “closest ally and trusted neighbor”.
The India-Out Campaign
- Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
- ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
- It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.
Causes for the anti-India sentiments
- Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
- Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
- Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
- Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.
India-Maldives Relations: A backgrounder
- India and Maldives are neighbors sharing a maritime border.
- Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
- India was one of the first nations to recognize Maldives’ independence.
- Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
- Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.
Restoration of ties
- Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.
Major irritants in ties
- Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
- Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
- Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
- Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.
Recent gestures by India
[1] 2014 Malé drinking-water crisis
- In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
- India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.
[2] 2020 Covid-19 crisis
- During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
- Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.
[3] Greater Male Connectivity Project
- India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
- This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.
Why is Maldives significant for India?
- Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
- Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
- Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
- Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
- People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
- Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.
Conclusion
- There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
- India must use its Diaspora more extensively for strengthening its relations.
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Note4Students
From UPSC perspective, the following things are important:
Prelims level: Maldives and its location
Mains level: Read the attached story
Maldives has announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP) with India.
Greater Malé Connectivity Project
- This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.
- It will connect the Maldives capital Malé with the neighbouring islands of Villingli, Gulhifalhu and Thilafushi.
- The seeds of the project were planted during the External Affairs Minister’s visit to Malé in September 2019.
- The GMCP is not only the biggest project India is doing in the Maldives but also the biggest infrastructure project in the Maldives overall.
Significance of the Project
- This project is significant because it facilitates inter-island connectivity in the country
- Transport is a major challenge for residents who have to take boats or seaplanes to distant islands.
- It becomes even more difficult during the monsoons when the seas are rough.
- This bridge that would connect Malé with the three neighboring islands would ease the process.
The Chinese-made 1.39 km-long Sinamalé Bridge connects Malé with the islands of Hulhulé and Hulhumalé and this project, four tiles longer, would link the other three islands.
Why it is needed?
- Male is one of the most densely populated cities in the world.
- Close to 40% of the entire population of the Maldives lives in Malé, which has an area of approximately 8.30 square kilometres.
- It is very congested and land is a major issue.
Why these islands?
- On the island of Gulhifalhu, a port, is at present being built under the Indian line of credit.
- Located some 6 kilometers from Malé, since 2016, the island has been promoted as a strategic location for manufacturing, warehousing and distribution facilities due to its proximity to the capital city.
- Located 7 km from the capital, the artificial island of Thilafushi was created and designated as a landfill in the early 1990s, to receive garbage created mostly in Malé.
- The Maldives has plans of expanding industrial work on Thilafushi, making this bridge’s connectivity to the capital indispensable for the transport of employees and other services.
Why did Male opt for India’s offer?
- After a five-year grace period, the interest rate is 1.75% and the Maldives has to repay it over a 20-year period.
- India’s loans are less expensive and more transparent, unlike China’s.
- The Maldives hasn’t really been clear about how much debt it owes to China.
Importance of Maldives for India
- Geo-strategic importance: Maldives, a Toll Gate in the Indian Ocean. Located in the southern and northern parts of this island chain lies the two important sea lanes of communication (SLOCs).
- Trade: These SLOCs are critical for maritime trade flow between the Gulf of Aden and Gulf of Hormuz in West Asia and the Strait of Malacca in Southeast Asia. Nearly 50% of India’s external trade and 80% of its energy imports transit these SLOCs in the Arabian Sea.
- Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
- People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
- Economic Cooperation: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.
What hinders India in Male?
- Unstable governments: India’s major concern has been the impact of political instability in the neighbourhood on its security and development.
- Religious extremism: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based madrassas and jihadist groups has been increasing.
- Affinity with China: China’s strategic footprint in India’s neighbourhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia. It has also started using the China card to bargain with India.
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Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much
Mains level: Paper 2- India-Maldives relation
The Soleh government’s ‘India First Policy’ provides respite to India when contrasted with the approach of the predecessors.
India-Maldives relations
- India and the Maldives have had bilateral relations for centuries.
- Maldivian students attend educational institutions in India.
- Patients from the Maldives come here for super speciality healthcare.
- A liberal visa-free regime extended by India has aided the patients.
- The Maldives is now a major tourist destination for some Indians and a job destination for others.
- Given the geographical limitations imposed on the Maldives, India has exempted the nation from export curbs on essential commodities.
Assistance to the Maldives
- In 1988, under Operation Cactus when a coup was attempted against President, India sent paratroopers and Navy vessels and restored the legitimate leadership.
- The 2004 tsunami and the drinking water crisis in Male a decade later were other occasions when India rushed assistance.
- In COVID-19 disruption, India rushed $250 million aid in quick time and also rushed medical supplies to the Maldives, started a new cargo ferry and also opened an air travel bubble, the first such in South Asia.
Strategic comfort to India
- Abdulla Yameen was President when the water crisis occurred.
- Now, the Yameen camp has launched an ‘India Out’ campaign against New Delhi’s massive developmental funding.
- Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
- Mr. Yameen’s tilt towards China and bias against India when in power was evident.
- It is against this background that the Solih administration’s no-nonsense approach towards trilateral equations provide ‘strategic comfort’ to India.
Concerns for India
- India should be concerned about the protests as well as the occasional protest within the ruling Maldivian Democratic Party (MDP) of Mr. Solih.
- There are apparent strains between Mohamed Nasheed, who was the nation’s first President elected under a multiparty democracy and Mr. Yameen.
- This strain could affect the MDP during the run-up to the 2023 presidential polls.
- Also, Mr. Nasheed’s on-again-off-again call for a changeover to a ‘parliamentary form of government’ can polarise the overpoliticised nation even more.
Conclusion
Given this background and India’s increasing geostrategic concerns in the shared seas, taking forward the multifaceted cooperation to the next stage quickly could also be at the focus of relations of the two countries.
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Operation Sanjeevani
Mains level: India-Maldives Relations
An Indian Air Force (IAF) C-130J transport aircraft o delivered 6.2 tonne of essential medicines and hospital consumables to Maldives under Operation Sanjeevani.
Operation Sanjeevani
- At the request of the govt. of Maldives, the IAF aircraft activated Operation Sanjeevani and lifted these medicines from airports in New Delhi, Mumbai, Chennai and Madurai before flying to the Maldives.
- Among other things, these medicines include influenza vaccines, anti-viral drugs such as lopinavir and ritonavir — which have been used to treat patients with COVID-19 in other countries.
- The flights are being operated on commercial basis following demands from pharmaceutical companies and their intermediaries and will carry cargo on inbound as well as outbound flights.
- The cargo operations will help the airline earn some revenue at a time there is a ban on passenger flights and the entire fleet is grounded.
