Maldives: Joint sea-exercises with India amidst economic crisis, political uncertainty

maldives: joint sea-exercises with india amidst economic crisis, political uncertainty

Representational image. PTI

As if putting the differences of the past weeks behind, possibly for good, the Maldives joined India’s biennial ‘Milan’ naval exercise in the eastern coastal city of Vishakapatnam, from 19-27 February. Not stopping there, the archipelago-nation has also been hosting the ‘Dosti-16’ Coast Guard exercises, also involving Sri Lanka forming the third arm and Bangladesh participating as an ‘observer’.

Started in 1995, this was the 10th edition of the Milan exercise and was among the largest assemblage of international navies in the Indian Ocean, not far away from the Maldivian coast. The Maldivian participation gave the nation’s navy greater exposure and experience.

Against this, Maldives and India launched the Dosti series in the aftermath of the 1987 coup-bid against President Maumoon Abdul Gayoom, which the Indian forces helped, thwart through ‘Operation Cactus’ in 1988. The aim was to synergise bilateral strengths to meet future eventualities but it soon expanded the scope to focus more on non-formal security concerns, starting with ecology and maritime environment. Sri Lanka joined in on invitation in 2011, two years after the end of the LTTE War.

This evolved into what is euphemistically called the ‘Colombo Security Conclave’ (CSC), with Mauritius too becoming a full member and Seychelles and Bangladesh signing in as observers. The permanent secretariat of the CSC in located in the Sri Lankan capital, thus indicating that the Indian influence on the apparatus is limited to being only one of the sovereign members.

Arrival statement

The Maldives’ participation in India’s Milan exercises and since hosting Dosti-16 came in the aftermath of the nation, now under the elected presidency of Dr Mohamed Muizzu, staying away from the annual CSC meeting of National Security Advisors (NSA) of the CSC member-nations in Mauritius. It was unclear if the Muizzu dispensation had felt that the CSC was India-centric or the Maldivian absence owed to his government wanting to revisit the IMBL dispute settlement with Mauritius, as arrived at by the predecessor Solih government — or both.

However, days after the boycott, the government announced that it all owed to the lack of planning by the previous dispensation. Maldives’ participation in Milan and its now hosting Dosti-16 may attest their claims in the matter, whatever communication gap had happened during the transition period of the two presidencies. By extension, Muizzu’s call for India’s withdrawal of 87 military personnel seems to have been a one-off affair, an ‘arrival statement’ aimed at offsetting all critics nearer home.

Even otherwise, things seem to be moving on the positive side for bilateral relations between Maldives and India. At the second round of the high-level core group meeting, initiated by President Muizz and Prime Minister Narendra Modi in distant Dubai, the two sides settled on a tentative time-table for New Delhi to replace the unarmed military personnel manning the three aerial platforms gifted to Maldives with civilian pilots and technicians. Significantly, unlike as assumed by the small number of India-haters in Maldives, the aerial platforms will remain.

Significantly, Muizzu’s campaign call for the presidency for India to withdraw the military personnel did not actually include the simultaneous withdrawal of the aerial platforms. Even his estranged mentor, jailed former President Abdulla Yameen, at the height of his public campaign during the Solih regime, kept alternating between ‘India Out’ and ‘India Military Out’ calls.

After being provoked by hard-liners in their immediate vicinity, both Yameen and Muizzu seemed to become aware of the historic linkages between India and Maldives, and their contemporary cooperation need to continue for more reasons than one. India needs the Maldives to ensure regional security and non-involvement of ‘extra-regional powers’ in these parts. China is in focus, be it in the Maldives or common neighbour Sri Lanka — or, India’s land neighbours in South Asia.

Being an archipelago-nation of small and thinly-populated islands, Maldives has been procuring essential food articles like rice, sugar and flour, and also medicinal products from the northern neighbour. After choosing Ankara for his first official visit as President, Muizzu declared that he would not depend on a ‘single source’ and would procure them all from distant Turkey. However, there is a strong feeling in Maldivian street-opinion that the cost will be prohibitive for the common man, owing to basic price differences and also higher transportation and insurance costs, owing to the distance.

With Maldives’ participation in Milan, a beginning may have been made for India and Maldives to patch up recent differences — rather, for Maldives to do so. Yet, for Maldives to return to the middle-path after Muizzu’s maiden state visit, which was to China, his government would have to do more than stopping with symbolism of the Milan kind. India, for its part, too may have to be seen as taking the middle-path in Maldivian domestic politics in these weeks ahead of the crucial parliamentary polls.

Economic crisis

Muizzu’s Maldives possible change-of-heart viz India has come in the midst of two global financial institutions, namely the World Bank and International Monetary Fund (IMF), cautioning the country about a severe economic crisis. It was the third year in a row, implying that much if not all of Muizzu’s problems on this score are inherited ones. Thankfully or otherwise, the government has acknowledged the crisis but then the looming political uncertainty that has gripped the nation between the presidential poll last September and the presidential poll due by April have the potential to rock the boat as never before.

After meetings with local officials in capital Male, the IMF observed that ‘despite strong post-pandemic growth (but) without significant policy changes… Maldives remains at high risk of external and overall debt distresses’. The IMF called for ‘urgent policy adjustment’, echoing the World Bank’s earlier assessment on the continuing fiscal strain. On specifics, the Bank called for ‘urgent measures to reduce government-spending’ and yet acknowledged the ‘impressive development results, including … health, education, housing and other public services’ in the first-ever ‘Human Capital Review for Maldives’ study report. Incidentally, much these development results owe to high government-spending over the past close to five decades.

President Muizzu was the first to acknowledge the economic distress. Addressing an island audience after the twin meetings, he said that the ‘next two to three months could be economically difficult… If we work this way in the future, from the second quarter to the third quarter… at least by the end of July, things will start picking up’. He attributed it to the ‘huge inherited debt’ from the previous government. He was also Economic Development Minister Mohamed Saeed claimed that the World Bank-IMF duo had acknowledged that the government was ‘on the right track’ and the IMF in particular has welcomed the President’s ‘fiscal reforms agenda’. Saeed said that cutting down on government expenditure has commenced and the economy will grow at 5.5 percent this year, commencing January.

Boosting real GDP

According to the Minister, the government aimed to boost real GDP to $12 billion and even higher (obviously over time) from the current $6 billion, requiring an annual tourist arrival of four to five millions, up from 1.8 m in 2023 and a targeted 2.3 million in the current year.. He claimed that the government had MVR 7 b in outstanding bills when it took over, and has paid MVR 3.5 m in overdue bills. At the same time, the government has also issued MVR 40 billion as loans to businesses and individuals, and also disbursed MVR 250 of a total MVR 440 m due to fishermen, as part of Muizzu’s poll promise, ‘even if it entails a loan’.

On the seemingly positive side, the Statistics Bureau reported that inflation stood below 3.3 per cent last year against 5.4 per cent predicted by Maldives Monetary Authority (MMA), the central bank. However, the Finance Ministry anticipates the highest price rise since 2013 to occur in the current fiscal. The government has collected MVR 2.1 billion from the sale of Treasury Bills, which was less than half the target, indicating the market’s lack of appetite for the same, and has now floated another MVR 2.5-billion worth of T-Bills. There is also continuing controversy over the central bank hiking dollar-purchase limits, which was among Muizzu’s poll promises especially for students studying abroad.

True independence, but…

In his maiden presidential address to Parliament, Muizzu declared that ‘true independence can be achieved only through economic prosperity’. His linking ‘independence’ to ‘economic prosperity’ is a straight lift from his estranged mentor and jailed former President Abdulla Yameen’s new foreign policy of 2014., whose aim was to cut out India-dependence but only by shifting increasing dependence on China.

By making China his maiden overseas destination for a State visit, meeting counterpart Xi Jinping and signing 20-plus agreements, starting with one on ‘strategic cooperation’ but limited to the incumbent’s five-year elected term ending 2028, the incumbent has signalled the shift early on. No other leader of a smaller nation in the sub-continent has been as blatant as Muizzu, who said eslewhere that the nation’s ‘economic strength comes from geographic location’, thus implying that he would brazenly play the regional Peter against the global Paul(s), the US included, independent of the inherent geo-strategic dangers it entailed.

China’s grants and loans

During Muizzu’s visit, China has since announced $130 m in developmental assistance, focussed on civil works in capital Male, similar to $140 m India had initially pledged during predecessor Solih’s maiden India visit. Later, India also committed $ 400-m in Exim Bank line-of-credit on relatively easy terms, for the prestigious Thila-male sea-bridge with an additional $ 100-m grant. Regardless of the continuing bilateral tensions at present, India has since earmarked Rs 770.9- crore developmental funding for Maldives in the upcoming financial year (April-March), up from Rs 400 crores in the current Indian fiscal.

According to World Bank data, Maldives owes China $1.37-b, mostly a legacy issue dating back to the Yameen regime (2013-18). This accounts for 40 per cent of public debt. There is no knowing at least as yet the Maldives’ repayment commitment on projects to be funded by China under the revived BRI scheme, and also under Beijing’s Global Security Initiative (GSI) and Global Civilisation Initiative (GCI). Going by the Sri Lankan neighbour’s experience over the Hambantota Port, Maldives should be prepared for China’s territorial claims as a part of early settlement of dues under pressure.

It is also in this background Muizzu’s seeming slow-down in anti-India rhetoric needs to be viewed. Possibly targeting Yameen for his ‘India Out’ while in the Opposition, Muizzu claimed that Indian troops cannot be removed by ‘shouting short tempers’ on the streets but it required tougher initiatives like his. However, he has continued maintain his pre-poll stance vis-à-vis southern Ocean neighbour, Mauritius. The government has appointed a committee under a former AG, Dr Muhamad Munnavar, to revisit the Solih government’s peaceful settlement of the International Maritime Border Line (IMB), which both claimed was a ‘sell-out’.

In context, Muizzu’s approach to ‘sovereignty’ issues viz China would be keenly watched as Muizzu had also promised the voters to seek parliamentary approval for all international agreements.

Apart from the 20 something agreements with China, Parliament, at present controlled by the 55-member Opposition combine of mainline MDP and breakaway Democrats in a House of 87 MPs, may be keen also to study the government’s decision to open 20 new resorts and also revive the Yameen era initiative of opening exclusive resorts for so-called Chinese tourists with the government having not to disclose the details. All these at a time when China has reclaimed the pre-Covid top place and pushed India to the fifth slot in tourist-arrivals after the recent ‘Boycott Maldives’ social media calls in India, after which Sri Lanka has surpassed the total figure for the country.

Tight-rope walk

Even without it all, the Opposition-controlled Parliament has cut short the traditional honeymoon period for President Muizzu after promising cooperation, if only to stall his runaway policies that they feel could damage the nation’s interests. After voting to shift parliamentary polls from 17 March to any day falling outside the Islamic fasting month of Ramadan, Parliament is now seized of President Muizzu’s re-nomination of three Cabinet ministers, after denying them confirmation once earlier.

In an unprecedented move, Parliament has seemingly taken on the Judiciary too, with Speaker Mohamed Aslam, elected on an MDP ticket, taking exception to the Supreme Court ‘meddling with the Legislature’ and putting amended rules for presidential impeachment on hold, pending a full hearing. The MDP combine has however held back the impeachment motion, as threatened, even as the government party has now withdrawn the no-confidence motions against Speaker Aslam and Deputy Speaker Ahmed Saleem. Hence, an impending Legislature vs Judiciary tussle may have been avoided, and rightfully so.

In the midst of all these political drama nearer home, Muizzu was away in the UAE, meeting with Mohammed Saif Al Suwaidi, the Director-General of the Abu Dhabi Fund for Development (ADFD), discussing bilateral cooperation, translating as the much-needed budgetary support that China is not known to extend client-States. Saudi Arabia, a sure-fire Islamic friend of Maldives, cancelled what should have been President’s maiden overseas visit, literally at the last-minute, purportedly owing to his proximity to Turkey within the global religious ummah.

In this overall background, the upcoming parliamentary polls, whenever rescheduled by the Election Commission (EC), on the lines mooted by the Majlis, has greater consequences for the Muizzu leadership than any previous one in its democratic avatar since 2008. In particular, the voter will be keenly watching Parliament’s mood and methods on the impeachment motion against not only President Muizzu, but possibly against Vice-President Hussain Mohamed Latheef. All of it has political and constitutional consequences for the nation’s political and economic stability, and geo-strategic equations, now and later. The parliamentary elections are expected to guide the future direction, one way or the other.

Nasheed’s precedent

For now, New Delhi has spent or ear-marked nearly $93 million, or almost twice the budgeted funds on projects in the Maldives during this fiscal year, ending in March. From a realistic Maldivian stand-point, the nation needs greater support than ever in the past, particularly in terms of budgetary support and other fiscal assistance as different from developmental investments.

India, and not China, has been a strong supporter of Maldives in the past, independent of political dispensations, if only to ensure that the nation stays afloat. Doubting Toms in Team Muizzu would have to only recall common neighbour Sri Lanka’s worst days in 2022, when India alone stood by the nation and supported it economically in every way possible.

The Indian assistance in cash and kind totalled $4 billion, unparalleled by any other source, including China and the IMF. As for Maldives, taking the IMF route is strewn with domestic tax and tariff-hikes, the kind of which that made the country’s first democracy President Mohammed Nasheed (2008-12) unpopular long before the GMR issue involving India’s fair name and religious concerns too joined, leading to his abrupt resignation.

There is a lesson in this for Muizzu!

The writer is a Chennai-based Policy Analyst & Political Commentator. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.

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