A $400-million—about ₹3,000 crore—currency swap agreement has given a boost to India and the Maldives’ attempts to patch up relations. The accord came within a year of two serious diplomatic fallsouts between the two countries, including critical public remarks about Prime Minister Narendra Modi by three Maldivian ministers.
The agreement was announced during Maldives President Mohamed Muizzu’s maiden state visit to India. Arriving in Delhi on Sunday evening, President Muizzu was accorded a ceremonial reception by President Droupadi Murmu and Prime Minister Modi at Raj Bhavan. He paid homage to Mahatma Gandhi at Rajghat and later called on the Prime Minister for talks.
After their meeting, in a joint statement, Prime Minister Modi said that India was a “close friend” of the Maldives as he revived his ‘neighborhood first’ foreign policy for the island nation. He highlighted India’s commitment as a first responder to emergencies affecting the island nation, including the supply of COVID-19 vaccines. “Whether it’s essential commodities, vaccines, or drinking water, we have acted as a good neighbor,” he said.
The Prime Minister also announced the virtual inauguration of the Hanimaadhoo International Airport on Haa Dhaalu Atoll and outlined the handing over of 700 social housing units, along with a drinking water and sewerage project that benefits close to 30,000 residents across 28 Maldivian islands.
During this discussion, the Prime Minister outlined the vital role the Maldives played in ensuring security in the Indian Ocean Region. This has been highlighted more recently since the election of President Muizzu amidst an ‘India Out’ campaign, which called for the withdrawal of 90 Indian military personnel operating humanitarian and medical aid aviation platforms, including two helicopters and a Dornier aircraft gifted by India. After these requests, India replaced military personnel with “competent technical staff.”
The diplomatic climate further deteriorated when a Chinese spy ship, masquerading as a research vessel, anchored in the Maldives amid alarms given similar incidents earlier in Sri Lanka. Despite tensions over these developments, President Muizzu has said India is a key partner in promoting regional stability and denied any agenda to push India out. He has made it clear that this was just a people’s demand: “Maldives does not want a foreign soldier.”
The currency swap agreement will aid the Maldives in addressing foreign exchange reserve challenges, which is crucial when India is trying to counter emerging Chinese influence in the region. India has also approved a $100 million rollover of Treasury bills in this connection. “The ₹30 billion, in addition to the $400 million bilateral currency swap, will be instrumental in addressing our forex issues, ” President Muizzu said.
Other future cooperation includes the issuance of the RuPay card by the National Payments Corporation of India and the infrastructural work in the Greater Male region. All in all, both countries seem positive about the results of President Muizzu’s visit, and the agreements and discussions held depict a new spirit of cooperation after recent bilateral tensions.
