Why in news?

PM Modi and the visiting President of Maldives Mohamed Muizzu met on 7 October 2024. They comprehensively reviewed the entire gamut of bilateral ties while noting the progress made by both countries in deepening their historically close and special relationship.

What’s in today’s article?

• Key outcomes of the bilateral meeting
• Analysis of this visit

Key outcomes of the bilateral meeting

• Vision Document released to transform the bilateral relationship
  • Both sides agreed to transform the bilateral relationship to a Comprehensive Economic and Maritime Security Partnership.
  • In this regard, a Vision Document was released which has detailed sections on various aspects of the bilateral relations between the two countries. 
  • It is a blueprint for relations that has been charted out for the next several years and provides a framework for the ongoing visit.
  • The document also aims to bring together the objectives for India's own development as have been set out under the Viksit Bharat 2047 plan and Maldives’ own action plan and objectives to become a developed country by 2040.
• Economic and Financial Support
  • India has extended financial support to Maldives, offering INR 30 billion and USD 400 million through a bilateral currency swap agreement.
    • This assistance aims to alleviate Maldives' financial struggles, as the country's foreign exchange reserves have dropped to dangerous levels.
  • The two sides have also initiated negotiations for a Free Trade Agreement (FTA) to boost economic cooperation and Indian investments in various sectors of Maldives.
  • The two sides also agreed to settle trade transactions in local currencies.
• Political Exchanges
  • Both countries agreed to intensify political exchanges, including among parliamentarians and local government representatives.
  • A Memorandum of Understanding (MoU) will institutionalize cooperation between the two Parliaments.
• Reviving Defence and Security Cooperation
  • India and Maldives agreed to bolster their defence and security cooperation, which had suffered after President Muizzu ordered Indian military personnel out of the country earlier this year.
  • India will refit and repair a Maldivian Coast Guard vessel, and both nations will collaborate on maritime security, disaster response, and defence capacity building.
  • Several initiatives have been launched to strengthen Maldives' maritime capabilities, including the provision of radar systems, defence platforms, and infrastructure support.
• Defence and Maritime Security Initiatives
  • Both countries recognized the importance of collaboration in defence and maritime security, agreeing to:
    • Enhance Maldives' surveillance and monitoring capabilities.
    • Support the Maldives National Defence Force (MNDF) with equipment and infrastructure.
    • Strengthen disaster response, risk mitigation, and information-sharing capabilities.
    • Inaugurate the Maldivian Ministry of Defence building constructed with India's assistance.
• Key Agreements Signed
• Five pacts were signed during the meeting, including agreements on a bilateral currency swap, training of judicial officers, prevention of corruption, law enforcement training, and youth and sports cooperation.
• Additionally, the two leaders inaugurated 700 social housing units and a new runway at the Hanimaadhoo International Airport was launched in the Maldives.
• The two sides also launched the RuPay card in Maldives, which will enhance ease of payments for Indian tourists visiting Maldives
• Development cooperation
  • India and Maldives will collaborate on multiple infrastructure projects, including ports, airports, roads, and housing. Key projects include:
    • The timely completion of the Greater Malé Connectivity Project (GMCP).
    • Feasibility studies for island connections and a commercial port at Thilafushi.
    • Joint development of an Agriculture Economic Zone and fish processing facilities.
• Digital Cooperation
• India will assist Maldives in developing its digital and financial infrastructure, including launching services like UPI and RuPay for better e-governance and payment ease for tourists.
• Health Cooperation
  • India will help in establishing Jan Aushadhi Kendras and enhancing emergency medical evacuation capacity.
• Capacity Building and Training
  • India will continue to provide customized training for civil servants and launch a program for women-led development.
  • They also plan to establish a Start-up Incubator-Accelerator in the Maldives to support youth innovation.
• Strengthened People-to-People Ties
  • The two nations also agreed to expand their people-to-people connections.
  • Plans were announced to establish a consulate of Maldives in Bengaluru and a consulate of India in Addu City.
  • Both countries acknowledged the strong ties formed through tourism, education, and healthcare, with India being a key source market for tourists visiting Maldives.
  • India will support the establishment of higher education institutions and skilling centers in Maldives.
  • An ICCR Chair will be established at Maldives National University to foster academic exchange.

Analysis of this visit

• Background: Strained Relations Between India and Maldives
  • Maldivian President's visit to India comes after a period of tension between the two countries.
  • Muizzu, who assumed office in November 2023, had campaigned on an ‘India Out’ platform, calling for the withdrawal of Indian military personnel from the Maldives.
  • This led to strained relations, as Muizzu was perceived to be closer to China, evident from his official visits to Turkey and China soon after taking office, bypassing India.
    • Traditionally, India had been the first destination for Maldivian presidents.
  • Relations worsened when Maldivian officials made derogatory comments about Indian PM Modi, which sparked a social media conflict between Maldivians and Indians.
  • The tensions earlier this year affected tourism, with Indian tourist numbers to the Maldives dropping by 50,000, causing a loss of $150 million.
    • India was the biggest source market for tourism to the Maldives in 2023, accounting for over 11% of the 1.8 million tourist arrivals. 
• Muizzu’s Shift in Stance
  • Muizzu’s softened approach toward India reflects his realization of the Maldives' domestic and economic challenges.
  • Despite his earlier rhetoric, Muizzu emphasized that the Maldives would not compromise India's security and stressed the importance of maintaining a balanced relationship with both India and other countries, including China.
  • Facing a looming economic crisis, including debt repayments and downgraded credit ratings by Moody’s, Muizzu’s visit is seen as an attempt to seek financial assistance from India.