Context:

Financial Challenges which Maldives is facing

Outcomes of the Meeting

A major currency swap agreement with the Maldives for $750 Mn.
Swap arrangement for $400 Mn.
Additional $357 Mn signed between RBI and the Maldives monetary authority (will be available until 2027).
Launch of the RuPay Card in Maldives.
Handover of 700 Houses built with assistance by India.
MoUs inked between the CBI and the Anti-Corruption Commission of the Maldives.
Between Policing Institutes and Judicial training Institutes.
Cooperation in sport and youth affairs.
To work on a FTA.

Inaugurated a jointly constructed runway for an International Airport at Hanimadhoo Island. GS2 2024

Geographical Location:Maldives is geographically located in a position that makes it resemble a ‘toll gate’ between the chokepoints of the western Indian Ocean (Gulf of Aden and the Strait of Hormuz), and the eastern Indian Ocean (Strait of Malacca).
Economic Significance: It is strategically located at the crossroads of several important trade routes that run through the Indian Ocean. Through this region passes more than 97% of India’s total international trade by volume and 75% by value.
Geostrategic Significance:
The significance of the Maldives has steadily increased since China’s naval expansion into the Indian Ocean.
Maldives is now at the centre of geopolitical affairs on a global scale.
The Republic of Maldives is a party to the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
Security:
Under the Presidency of Abdullah Yameen, there was a rapid increase in radicalization.
It was frequently said that the archipelago was responsible for one of the highest numbers of foreign fighters in Syria in terms of the number of fighters per capita.
Yameen’s Government (2013-18) as well as current government of Muizzu also had a very prominent pro-China tilt which was/is detrimental to India’s interests in Maldives and the Indian Ocean Region.

Challenges

Political:
The incumbent President Muizzu has a very prominent pro-China approach.
He won elections in the Maldives last year on the back of an India out campaign.
Insisted that India withdraw military personal from the Maldives by May 2024.
He did not make India his first destination abroad and visited Turkiye, UAE and China instead.
Chinese Influence:
China has enhanced its influence in Maldives (and in Indian Ocean).
Maldives is an essential ‘pearl’ in China’s ‘String of Pearls’ initiative in South Asia.
Radicalization:
A large number of Maldives citizens had joined violent extremist organizations such as the Islamic State (IS).
There has been a steady rise in recruits joining jihadi groups in Pakistan over the last decade.
There is now a greater risk that terrorist organizations based in Pakistan will use the Maldives as a staging ground for attacks on India and Indian assets.

Way Forward

First, India should increase development assistance to Maldives.
Second, India should target projects that have a larger impact on general population of Maldives. This will enhance India’s goodwill among the people of Maldives.
Third, Should not be seen as interfering in the internal politics of Maldives.
Fourth, Engaging with political opposition of Maldives.