Maldives President Mohamed Muizzu recent visit to India marked a crucial step in reviving bilateral ties between the two nations. After a period of strained relations, largely due to Muizzu’s earlier “India Out” campaign and pro-China leanings, the visit represents a significant diplomatic effort to mend fences.
The visit resulted in several key agreements, including a substantial financial package from India, and highlighted the Maldives’ economic reliance on its South Asian neighbor. Here’s an overview of the outcomes of this visit and what it means for both nations.
Maldives President Mohamed Muizzu Opens New Chapters of Alliance with India
Both countries signed critical agreements, including a $400 million currency swap and a 30 billion INR ($357 million) facility to aid the struggling economy. This financial support aims to address the foreign exchange crisis and offer stability to economy.
Additionally, HIndustan pledged to support key infrastructure projects, such as the redevelopment of the Hanimaadhoo International Airport and the Greater Male Connectivity Project.
The Currency Swap Agreement: A Lifeline for the Maldives
One of the major agreements signed during the visit was a bilateral currency swap deal worth USD 400 million, along with an additional INR 30 billion facility. This agreement is critical for the Maldives as it struggles with an economic crisis, including dwindling foreign exchange reserves.
The State Bank of India also extended the duration of Treasury Bills it subscribed to, providing immediate financial relief to the island nation. These actions will help stabilize the foreign exchange reserves, which are currently only sufficient for about one-and-a-half months of imports.
Maldives President Mohamed Muizzu open new chapters of alliance with India
Maldives President Mohamed Muizzu visit to India marked a significant shift in diplomatic relations between the two nations, following tensions over his earlier “India Out” campaign. The visit resulted in key agreements, including a $400 million currency swap and an additional INR 30 billion facility to manage its foreign exchange crisis.
Hindustan also pledged support for infrastructure projects like the Hanimaadhoo Airport and Greater Male Connectivity Project, while strengthening defense cooperation.
INdia-maldives Strengthening Economic Ties: Free Trade Agreement Discussions
In addition to the financial support, Both countries also initiated talks on a Free Trade Agreement (FTA) to boost economic cooperation. This agreement, once finalized, could significantly enhance trade between the two nations, particularly in sectors such as tourism, infrastructure, and fisheries, which are vital to the Maldivian economy. The discussions mark a pivotal step in bringing the two countries closer after the rocky diplomatic phase last year.
Infrastructure and Development Projects
During the visit, Prime Minister Narendra Modi and Maldives President Mohamed Muizzu inaugurated the newly redeveloped runway at Hanimaadhoo International Airport. This development project, funded by Indian credit, is crucial for boosting tourism.
Modi also promised further assistance in developing a new commercial port and expediting the completion of the Greater Male Connectivity Project, both of which will have long-term benefits for the economy.
Additionally, HIndustan handed over 700 social housing units, a move that underscores It’s role in supporting the social and infrastructural development of its island neighbor.
Defence and Security Cooperation
The two leaders also agreed to strengthen defence and security cooperation. India pledged support to the MNDF by providing essential defence platforms and equipment to improve the country’s maritime and security capabilities.
This includes enhancing the MNDF’s surveillance and monitoring systems with the provision of radar systems. The agreement extends to capacity-building programs and training for MNDF and other Maldivian security forces under ITEC programs.
Diplomatic Shift: From “India Out” to “India First”
PM, who campaigned on an “India Out” platform during the 2023 elections, has since moderated his stance, acknowledging the critical role India plays in the Maldives economic recovery.
His earlier leanings towards China raised concerns in New Delhi, particularly when his administration allowed a Chinese research ship to dock. However, during this visit, Muizzu emphasized his reliance on neighbouring nation for socio-economic and infrastructure development, demonstrating a shift in diplomatic strategy.
Key Outcomes of the Visit of Maldives President Mohamed Muizzu
- Currency Swap Agreement: USD 400 million plus INR 30 billion facility to stabilize the economy.
- Infrastructural Projects: Inauguration of Hanimaadhoo International Airport runway and promises for further projects, including the Greater Male Connectivity Project and a new commercial port.
- Social Housing: Got over 700 social housing units.
- Defence Cooperation: Enhanced maritime surveillance and defence collaboration.
Conclusion
Maldives President Mohamed Muizzu visit marked a significant shift in diplomatic relations between the two nations, following tensions over his earlier campaign. The visit resulted in key agreements, including a $400 million currency swap and an additional INR 30 billion facility. Also pledged support for infrastructure projects like the Hanimaadhoo Airport and Greater Male Connectivity Project, while strengthening defense cooperation. This visit signals a renewed partnership as Mohamed acknowledges critical role in the economic recovery.
FAQS
What was the purpose of Maldives President Mohamed Muizzu visit to India?
The visit aimed to strengthen bilateral relations, particularly after a period of strained ties following His 2023 campaign. The focus was on improving economic, infrastructural, and defense cooperation between the two nations.
What were the key agreements signed during the visit?
Key agreements included a $400 million currency swap deal and an additional INR 30 billion facility to tackle foreign exchange crisis. Also committed to supporting major infrastructure projects like the Hanimaadhoo International Airport redevelopment and the Greater Male Connectivity Project.
How does the currency swap agreement benefit the Maldives?
The $400 million currency swap and INR 30 billion facility are designed to stabilize the foreign exchange reserves, which were critically low. This financial support helps the country address its economic challenges and avoid a debt default.
What infrastructure projects did India commit to during the visit?
India pledged to support several key infrastructure projects, including the redevelopment of Hanimaadhoo International Airport, the Greater Male Connectivity Project, and the development of a new commercial port.
How did the visit impact defense cooperation between India and the Maldives?
Hindustan agreed to strengthen defense ties by providing the MNDF with essential equipment and support for maritime security. This includes enhancing the MNDF’s surveillance and monitoring capabilities, as well as providing training slots under ITEC programs.
What is the significance of Maldives President Mohamed Muizzu shift from the ‘India Out’ campaign to strengthening ties with India?
His visit marks a significant diplomatic shift from his earlier 2023 campaign. Given the economic struggles, the visit demonstrated a recognition of Hindistan’s critical role in the country’s socio-economic and infrastructure development.
What other areas of cooperation were discussed during the visit?
In addition to financial and defense support, Both nations initiated discussions on a Free Trade Agreement (FTA), which would enhance trade relations and boost sectors like tourism, infrastructure, and fisheries.
What role does India play in the Maldives’ economic recovery?
India is one of the Maldives’ key development partners. Through financial aid, infrastructure development, and defense cooperation, It plays a pivotal role in stabilizing the economy and addressing its urgent foreign exchange issues.
