President Mohammed Muizzu of the Maldives finds himself navigating a complex diplomatic and financial landscape, as his country faces an escalating economic crisis. The president, who begins a five-day visit to India on Sunday, is expected to request a substantial bailout package from New Delhi in a bid to stabilize the island nation’s faltering economy.
The Maldives, a tropical paradise for tourists, is currently facing a grim economic situation. Its foreign exchange reserves have plunged to just $440 million (£334 million), barely enough to cover one and a half months of essential imports. With the global economy still recovering from the shocks of the COVID-19 pandemic and tourism, a crucial revenue source, yet to fully bounce back, the Maldives is on the edge of a potential debt default.
Global credit agency Moody’s recently downgraded the Maldives’ credit rating, warning that “default risks have risen materially.” The agency highlighted that the government’s external debt service obligations are staggering, with $600 million due in 2025 and over $1 billion in 2026. Such looming payments have placed immense pressure on the small island nation, which has limited resources and relies heavily on external aid and tourism for income.
However, despite these dire warnings, President Muizzu remains optimistic. In an email interview with the BBC ahead of his visit to India, Muizzu expressed confidence in India’s willingness to step up and help ease the burden.
“India is fully cognizant of our fiscal situation, and as one of our biggest development partners, will always be ready to ease our burden, find better alternatives and solutions to the challenges we face,” Muizzu said.
Muizzu’s conciliatory stance toward India marks a sharp departure from the anti-India rhetoric he employed during his election campaign a year ago. Back then, his campaign was built around the slogan of “India Out,” calling for the withdrawal of Indian military personnel stationed in the Maldives. This movement was fueled by nationalist sentiments, tapping into sections of the electorate wary of India’s growing influence in the region.
During the campaign, Muizzu had raised concerns about sovereignty and foreign interference, especially regarding the presence of Indian troops, which were stationed in the Maldives to operate and maintain helicopters and aircraft donated by India. His campaign resonated with voters who were concerned about foreign military presence on their soil, helping him secure the presidency.
Yet, his recent statements reflect a notable change in approach. While he has not directly addressed the “India Out” campaign during his current outreach, Muizzu emphasizes diplomacy, stating that any differences between the two countries can be “addressed through open dialogue and mutual understanding.”
Experts have noted this shift, interpreting it as a pragmatic acknowledgment of the Maldives’ economic realities. “Muizzu’s tone has softened because he understands that the Maldives is in dire need of external financial support, and India is a key player in the region,” explains Dr. Azim Zahir, a Maldivian political analyst.
The recent warmth in Muizzu’s rhetoric contrasts with the strained relations that have characterized his presidency since he took office in November 2023. Shortly after assuming power, Muizzu chose to visit Turkey and China, two major players in the geopolitical arena, before making the traditional trip to India. His January visit to China was particularly seen as a snub to New Delhi, breaking the long-standing diplomatic tradition of Maldives’ leaders visiting India as their first foreign destination after taking office.
Moreover, diplomatic tensions were further strained when derogatory remarks made by Maldivian officials about Indian Prime Minister Narendra Modi caused an uproar in Indian media. Compounding this was Muizzu’s ultimatum to India to withdraw the 80 military personnel stationed in the Maldives. While these soldiers were involved in maintaining Indian-donated helicopters and aircraft, Muizzu pushed for their removal as part of his “India Out” stance. In the end, both nations reached a compromise, agreeing to replace the soldiers with Indian civilian technical staff.
Despite these tensions, Muizzu’s administration has also made some decisions that further strained relations, such as canceling a hydrographic survey agreement with India, which had been signed by the previous government. The agreement had allowed India to map Maldivian seabeds, a critical step in securing maritime territories and resources. Defending the decision, Muizzu said it was based on “evolving domestic interests and strategic priorities,” emphasizing the mandate of the Maldivian people who had elected him 10 months prior.
These moves have been interpreted by many as part of a broader effort to recalibrate the Maldives’ foreign policy and reduce India’s influence, while fostering closer ties with China.
Muizzu’s efforts to engage more deeply with China, a growing global superpower, have not gone unnoticed. In February 2024, the Maldives allowed a Chinese research vessel, Xiang Yang Hong 3, to dock at its ports. This move caused concern in India, with analysts warning that the research conducted by the vessel could be used by China to gather data for military purposes, particularly for submarine operations in the Indian Ocean.
India, which sees the Indian Ocean as its strategic backyard, has been wary of China’s expanding influence in the region. For New Delhi, the docking of the Chinese research vessel was yet another signal that the Maldives under Muizzu might be aligning more closely with Beijing. However, Muizzu rejects this characterization, insisting that his administration follows a “Maldives First” foreign policy, which prioritizes national interests over aligning with any major power.
“I have made clear our foreign policy the day I took office – that it is a ‘Maldives First’ policy. Our relationships with other nations are guided by the principles of mutual respect and trust, non-interference, and the pursuit of peace and prosperity,” he said.
While Muizzu may reject the notion of being pro-China, analysts have pointed out that financial support from Beijing has been conspicuously absent, despite his overtures. China, which has been active in providing infrastructure loans to various countries through its Belt and Road Initiative (BRI), has not extended significant financial assistance to the Maldives to help with its current crisis.
With limited options left, Muizzu’s upcoming visit to India is seen as a crucial diplomatic move. New Delhi has already provided $1.4 billion in financial aid to the Maldives for various infrastructure and development projects, and now, Muizzu is expected to ask for even more assistance to prevent an economic collapse. Analysts believe that this visit is an acknowledgment of how dependent the Maldives is on India, particularly when it comes to economic lifelines.
“Muizzu’s Delhi visit is a realization of how dependent the Maldives is on India, a dependency that no other country will find easy to fill,” says Dr. Zahir.
India’s economic ties with the Maldives are deep-rooted. Beyond financial aid, India is one of the largest markets for Maldivian tourism, and Indian investments play a key role in the island nation’s development projects. Muizzu is likely aware that a further deterioration in relations with India could have dire consequences for the Maldivian economy, particularly as the country struggles to avoid a debt default.
However, while economic cooperation is expected to be the main agenda, Muizzu’s government will have to tread carefully, balancing domestic sentiments with diplomatic necessities. The “India Out” campaign still has supporters in the Maldives, and any move seen as overly reliant on India could lead to political backlash at home.
As President Muizzu embarks on his visit to India, he faces a delicate balancing act. The Maldives’ economic woes demand immediate action, and India remains the most likely partner to provide the necessary financial support. However, this will require Muizzu to set aside, at least temporarily, the nationalist rhetoric of his election campaign and focus on maintaining stable relations with India.
Muizzu’s shift in tone and approach appears to be driven by the harsh realities of governing a small island nation in a tumultuous global economic climate. His ability to secure a bailout from India could determine not only the future of his presidency but also the economic fate of the Maldives in the years to come. As such, his visit to India will be closely watched by both regional and global actors, each with their own stakes in the Indian Ocean’s strategic waters.
